Critics Push to Stall New Obama “Social Cost of Carbon” Calculations

By Carey L. Biron Reprint | | Print |

Advocates say the official social cost of carbon (SCC) has a significant impact on the cost-benefit rationale for strengthened carbon-related regulation. Credit: Bigstock

WASHINGTON, Aug 17 2013 (IPS) - The U.S. Department of Energy has announced it is accepting a petition from a conservative advocacy group critical of a recent substantial increase to official calculations of the so-called “social cost of carbon”.

Since 2010, Washington officials have estimated that the damages resulting from the release of carbon dioxide into the atmosphere could be quantified at around 22 dollars per tonne, representing the net impact of both pollution and climate change on human health and safety, agriculture, the environment, energy costs, etc.

But following on a little-publicised inter-agency review, in June the government began to use a new figure, 36 dollars per pound, an increase of some 60 percent.

According to government officials, that’s in line with similar figures being used by some European countries. Advocates say the official social cost of carbon (SCC) has a significant impact on the cost-benefit rationale for strengthened carbon-related regulation.

“The social cost of carbon is a powerful metric to help make the risks of climate change more tangible – it’s the difference between saying, ‘cigarettes are probably unhealthy for you’ and ‘cigarettes cause cancer’,” Jamie Henn, communications director for 350.org, an advocacy group, told IPS.

“As people start to make the direct link between carbon emissions and the problems in their communities, from high asthma rates to extreme weather, they’re going to start to demand more action.”

SCC figures can also be used to put a specific “social harm” price tag on the emissions of particular companies or facilities. Henn notes that the oil giant ExxonMobil, for instance, estimates that it put out around 125 million tons of carbon dioxide equivalent last year – potentially costing society some 4.5 billion dollars a year, according to the new SCC number.

Meanwhile, President Barack Obama has promised wide-ranging regulatory action during his second term in office to counter the ongoing lack of climate-related legislation coming from the U.S. Congress. That prospect has led to a significant ramping up in lobbying efforts in recent months by the oil-and-gas sector and powerful U.S. business interests.

A quiet revision

At the heart of the pushback against the SCC revision is the fact that, unusually, the change was made with almost no publicity. Instead, President Obama’s administration simply integrated the new number into an obscure report on new energy efficiency requirements for microwave ovens – requirements that were to go into effect on Friday.

Since June, however, critics of government action on carbon pollution and climate change have seized on the issue, attempting to force the administration to backtrack on the new rule. On Friday, the Energy Department accepted a petition filed by the Landmark Legal Foundation, a conservative legal advocacy group based, accusing the government of a lack of transparency in the process.

The Department of Energy’s “unannounced, dramatically increased, and improperly altered [SCC] valuation presented for the first time in this microwave oven regulation will certainly become the standard by which all other agencies will place a purportedly beneficial economic value on new carbon regulations,” the foundation states.

“Landmark objects to the Department’s … decision to utilize an ‘Interagency Update’ to justify increasing the ‘social cost’ of carbon dioxide without any opportunity for public comment.”

On Friday, the Department of Energy publicly announced that it would be opening Landmark’s petition to public comment for 30 days (the announcement also includes a copy of the petition). Neither the department nor Landmark responded to IPS’s request for comment.

“It’s no wonder that the fossil fuel industry and their allies are so worried about the calculations,” 350.org’s Henn says.

“The irony of their complaints is that the current figures for the social cost of carbon are likely far too low. Scientists are making it increasingly clear that we’re approaching dangerous climate tipping points, beyond which the damage to our planet and society are incalculable. In the end, it’s hard to put a price tag on a liveable planet.”

Indeed, some scientists have suggested far higher ranges for SCC figures, from 55 to as high as 900 dollars a ton. The U.S. government itself estimates that the official SCC figure will rise to more than 70 dollars a ton by 2050.

War on SCC

The new SCC figures have also caught the attention of lawmakers, bolstered by support from the U.S. Chamber of Commerce, the country’s largest business lobby group.

In mid-July, an Obama administration official was summoned to testify before a Congressional oversight committee on the issue. When lawmakers complained about the lack of legislative or public input, the official, Howard Shelanski, noted that the inter-agency revisions were based on three publicly created, peer-reviewed computer models.

“It is important to note that the only changes made in May 2013 to the SCC estimates reflect the refinements made to the underlying models,” Shelanski stated in testimony. “In other words, all of the changes to the social cost of carbon values were the result of updates to … models that were made by the model developers themselves.”

He also stated that the SCC has been referenced in all energy efficiency rulemaking in recent years, and hence has been open to public input since at least 2010. Indeed, the government has been trying to evaluate the financial impact of pollution for far longer, with little partisan pushback.

“We’ve actually been on the books using cost-benefit analysis, evaluating the costs of pollution, for a very long time – the [1963] Clean Air Act requires us to do that, but this analysis has become more robust since that time,” Elizabeth Perera, a senior Washington representative for the Sierra Club, an advocacy group, told IPS.

“And let’s remember, this is a very market-based approach, a very bipartisan approach to dealing with pollution.”

Republican lawmakers were dissatisfied with Shelanski’s rebuttal, however. In early August, the House of Representatives voted to disallow another key regulatory agency, the Environmental Protection Agency (EPA), from using any SCC value in its energy regulations without specific Congressional approval.

The bill has little chance of becoming law, but represents only one piece of a broader push by the right against SCC implementation. Some lawmakers worry that a currently pending EPA regulation could result in a significant scaling back of the use of coal in the United States.

“The EPA’s policies have real-world consequences,” the SCC amendment’s sponsor, Representative Tim Murphy, said following its passage. “We’ve already seen what the ‘social cost’ of the War on Coal is today – the cost is jobs.”