orders of magnitude. Consequently, tax and regulatory constraints on carbon energy can have significant social costs. The TSDs are oblivious to the potentially serious adverse impacts of climate policy on public health, consumer welfare, economic development, international trade, national security, scientific integrity, and democratic institutions. Our comment letter concludes with several recommendations for OMB. Among the most important are these:
OMB should disband the IWG, which inflates the pretense of knowledge and precision already inherent in SCC analysis.
OMB should return any rule to an agency that relies on SCC estimates for a benefits justification in the rulemaking. If the IWG is retained, OMB should ensure that future TSDs:
carbon’s social cost
cannot be discerned in meteorological or
economic data and “exists” only in the virtual world of
Acknowledge that SCC estimates rely on climate models that are on the verge of complete statistical failure.
Use only IAMs that incorporate substantial CO
Use only IAMs that incorporate updated climate sensitivity estimates.
Include SCC estimates using a 7% discount rate.
Report domestic as well as global SCC estimates.
Limit SCC estimates to more plausible timeframes (30, 50, or at most 75 years instead of nearly 300 years).
Include discussion of the social benefits of carbon energy and the social costs of carbon mitigation.
II. Assumption-Driven Hocus Pocus
The social cost of carbon is a guesstimate of the damage to society from an incremental ton of carbon dioxide-equivalent (CO
-e) greenhouse gas (GHG) emissions in a given year. Policymakers, pundits, and activists increasingly invoke SCC estimates to justify the imposition of carbon taxes, fuel economy mandates, Soviet-style production quota for renewable energy, and other interventions to rig the marketplace against fossil fuels.
They speak as if
carbon’s social cost is an objective magnitude like
the price of wheat futures at the end of a trading day. In fact, the SCC is an unknown quantity.
Climate Progress, for example, applauds the 2013 TSD’s higher SCC estimates, claiming the updated numbers not
only support tougher climate regulations, energy-efficiency standards, and clean-
energy mandates, but also “
make clear that projects like Keystone will emit too much carbon dioxide to allow it to pass a true cost-benefit analysis.
See Ryan Koronowsky
, “The ‘Social Cost of Carbon’ Is Almost Double What the Government Previously Thought,”
June 5, 2013,