EPA Finds Higher Benefits from Curbing Climate Change
The EPA's updated analysis indicates a high social cost of greenhouse gases.
A recent analysis by the Environmental Protection Agency (EPA) proposes that it’s worth around $190 to curb each ton of carbon dioxide emissions – almost four times more than prior estimates. That’s the central conclusion of EPA’s updated methodology for calculating the economic damage done by greenhouse gas pollution.
The agency released that updated analysis to determine what’s called the “social cost of greenhouse gases” (SC-GHG) last December for public comment and scientific peer review. The SC-GHG is the best available tool for governments and industries alike to determine the benefits to society from acting to curb heat-trapping pollution.
The new SC-GHG values, around $190 per ton of carbon dioxide, are almost four times the previous estimate of approximately $50 per ton. This isn’t surprising. It reflects extraordinary technical improvements and advances by scientists and economists, summarized here by the National Academy of Sciences, to quantify future economic damage due to climate change. A recent peer reviewed study by Resources for the Future also came up with a similar SC-GHG value, corroborating the EPA’s update.
You can read comments to the EPA by NRDC and other groups here and here.
The imperative of counting the costs of climate pollution
Greenhouse gas emissions cause irreversible environmental impacts such as extreme heat and rising sea levels. Extreme heat negatively impacts human health, reduces worker productivity, and impacts agricultural yield (to list a few). Sea level rise damages coastlines and requires expensive adaptation measures to protect coastal communities. The social cost of greenhouse gases (SC-GHG) represents the value of these global economic damage that each additional ton of GHG emissions causes. Correspondingly, the SC-GHG also reflects the benefits to society of reducing emissions of the greenhouse gas by a metric ton.
When EPA or other agencies consider pollution control regulations, industries understandably draw attention to what those standards may cost them. The other side of the equation – what benefits those standards beget society at large – is equally critical. The EPA applies the estimated social cost value when conducting benefit cost analysis to evaluate regulations. A higher estimate of the benefits of curbing emissions warrants stronger GHG regulations.
For example, if the EPA uses this new SC-GHG value when it updates the car emissions standards, it will find that more stringent emissions standards are justified by the benefits they bring. As cars become cleaner to comply with these standards, Americans will benefit in three ways: they will spend less on gasoline; local pollution decreases will improve public health in communities; and lower GHG emissions will reduce future climate disasters.
Higher SC-GHG values are justified
EPA makes analytical updates throughout the model to better represent the latest science on environmental impacts due to increased emissions; and the latest economic research to estimate the economic damage due to these climatic changes. Many of these damages occur decades or more in the future. The current value of future damages is affected by a key input called the discount rate. A Trump-era version of the methodology used high discount rates that trivialized how much climate change will harm our children and grandchildren. The updated methodology uses relatively lower discount rates that both better reflect recent economic conditions; a lower discount rate is also more considerate of the impacts our actions today have on future generations.
The updated methodology also correctly considers the economic damages U.S. emissions cause worldwide, not just the damages caused within our borders. This reverses a Trump-era decision to ignore global impacts. Our comments explain why this is the right approach to both solving global climate change, and for protecting American interests.
These higher values are still conservative
The EPA’s updated SC-GHG value is still conservative because it only includes a narrow band of future climate damages – the ones that scientists and economists feel confident quantifying. The EPA’s report shows that the updated SC-GHG still does not put dollar values on a majority of future climate damages (see Table 3.2 of the Draft Report for a neat summary).
To correct this, the EPA should conduct regular updates to the SC-GHG methodology as researchers improve their ability to quantify and monetize the full suite of damages from climate change. NRDC’s comments urge EPA to start by developing estimates of the increased impacts of wildfires due to climate change. Wildfires are increasing in North America and on other continents as climate change induced higher temperatures and droughts leave forests in greater jeopardy.
Comprehensively valuing the human health and ecological impacts of climate extremes are another priority update. For now, it’s critical to acknowledge that economic damage estimates do not cover the vast ecosystem and biodiversity losses that climate change will cause.
EPA should adopt the updated SC-GHG values
EPA’s SC-GHG represents experts’ current best assessment of the true cost of climate damage. EPA should adopt these new values for setting upcoming climate-protection regulations. And the agency should commit to regularly update the methodology as climate science advances and as economists get better at assessing the economic costs of future climate damages—and the benefits of curbing the pollution that’s driving those damages.