The Senate’s climate-change deniers are trying a new gambit to block the president’s Climate Change Action Plan. At a time when the real costs of climate change are becoming clearer than ever, Republican Senators Barrasso, Blunt, and others are planning amendments to the Shaheen-Portman energy efficiency bill that would force all federal agencies to stick their heads in the sand.
It’s dangerous to stick your head in the sand when sea level is rising
Their amendment would require EPA, the Energy Department, and other agencies to ignore “the social cost of carbon” – economists’ estimate of the dollar value of the damage from carbon pollution – when setting clean air and energy efficiency standards.
If this amendment passed, it would roll back decades of existing laws and court decisions. EPA and other agencies would be forced to pretend that the benefits curbing carbon pollution are exactly “zero.” But in the words of one federal court, “the value of carbon emissions reduction is certainly not zero.”
What a stupendously irresponsible thing to do! It’s like making pilots fly planes blindfolded. But the Senate’s climate-change deniers and their fossil-fuel allies will do or say anything to stand in the way of the president’s plan to protect us, and our children and grandchildren, from the dangers of carbon pollution.
Here’s why the Senate must reject amendments to blind us to the real costs of carbon pollution. (You can find a more complete Q & A here.)
What is the “social cost of carbon”?
Carbon pollution drives climate changes that hurt public health, fuel extreme weather, punish agriculture, eat away our coastlines, and more.
The “social cost of carbon” is economists’ best estimate of how much it’s worth to reduce each ton of carbon dioxide emissions – of how much economic benefit society gains from preventing each ton of carbon pollution.
When EPA and other agencies set clean air standards or energy efficiency standards, it’s important to know how much benefit we’re getting, and how that compares to the cost of those standards.
In fact, every president since Richard Nixon has required agencies to consider the costs and benefits of federal standards and regulations. Executive Orders since 1981 have required that, where it’s allowed by law, each agency proposing a standard must estimate its costs and benefits – how much it will cost to comply with, and how much it will benefit the public.
Ok, what is the current estimate of the social cost of carbon?
In 2010, a panel of government economists from 12 federal agencies drew from the peer-reviewed economics studies and compiled the first official estimate of what it’s worth, in dollars and cents, to reduce carbon pollution. The panel’s updated estimate, published earlier this year, accounts for new scientific and economic studies.
The government’s updated estimate is that each ton of CO2 pollution avoided in 2010 brought us $33 in benefits – in health, environmental, and economic damages we’ll avoid.
And because climate change damages are getting worse, scientists and economists tell us the benefits of curbing carbon pollution go up over time. The government’s official estimate is that avoiding a ton of CO2 emissions in 2015 will be worth $38. In 2020, it’ll be worth $43. In 2025, $48. And so forth, so that in 2050, it’ll be worth $71.
Is the benefits estimate complete?
No. It covers only some of the impacts of climate change, and even for these the dollar values are incomplete.
It includes estimates of some impacts on human health, property damages from increased flood risk, net energy costs (e.g., higher air conditioning or lower heating bills), ecosystem services lost due to climate change, and net agricultural productivity. Many of these categories of damages are only partially represented.
It excludes broad categories of climate change impacts, e.g., forest fires, drought, effects of temperature extremes on crops, increasing food prices, effects of drought on energy and water supplies, the possibility of conflict (including war) over water shortages and food scarcity, the consequences of total ecosystem losses, the impacts of air pollution from enhanced smog, as well as catastrophic events (e.g. 20-foot sea level rise from a major ice sheet collapse). Economists may not yet have put dollar values on these categories of impacts, but that does not make them any less real.
As a result, these estimates of the benefits of curbing carbon pollution err substantially on the low side.
Economists will be the first to admit that they can’t quantify all the important impacts on health or the environment, and that they can’t put a dollar value on everything that’s important.
But even incomplete benefits assessments often show that health and environmental standards yield far more in benefits than they cost. Clean Air Act standards, for example, can yield benefit-cost ratios of up to 30-to-1.
So, what about the critics’ charges?
* Was the government’s estimate of carbon control benefits developed in secret?
Just the opposite. Let’s review how we got here.
In 2006, the Bush administration’s Transportation Department acknowledged that new fuel economy standards would cut millions of tons of CO2 and would reduce climate change impacts. But DOT said the economic benefits of those reductions were too uncertain to estimate. So the agency pegged the dollar value of these carbon reductions at zero.
A U.S. Court of Appeals reversed, saying “while the record shows that there is a range of values, the value of carbon emissions reduction is certainly not zero.” (Center for Biological Diversity v. NHTSA, 538 F.3d 1172, 1200 (9th Cir. 2008)).
When DOT and EPA set new fuel economy and clean car standards in 2010, the Obama administration put together a 12-agency task force to take a fresh look at the economic benefits of curbing carbon pollution.
The task force published its report in 2010, and put it into the public docket at DOT and EPA. The public had a full opportunity to comment on the methodology, the underlying studies, and the results. Many comments were filed and DOT and EPA responded to each one.
Though many parties challenged the vehicle standards in court, no one raised any question about the “social cost of carbon.” The court upheld the standards in 2012. (Coalition for Responsible Regulation v. EPA, 684 F.3d 102 (D.C. Cir. 2012).)
* What about the updated “social cost of carbon”? Wasn’t that done in secret?
The task force promised to update its analysis in response to new studies. In 2013, the task force published its first update, with the dollar values cited above. Based on new information – such as new data on damages to agriculture from droughts and floods, and to coastal regions from sea level rise – the task force raised its estimates of the benefits of curbing carbon pollution.
It’s these new estimates that have set off the howls of protest.
The public will have a full opportunity to comment whenever the updated estimate is used in setting future standards for carbon pollution and energy efficiency. In other words, everyone concerned will have a chance to pour over its methodology, its studies, and its results before the update makes a difference.
* What about the discount rate?
Some critics are complaining that the official benefit estimate is too high because the task force economists gave too much weight to future harms. The real problem is the other way around: the official estimate gives too little weight to the climate change impacts that will come down on our children and grandchildren.
Each ton of carbon pollution released into the air stays there for centuries. It traps heat and fuels climate change year after year, affecting not only our lives now, but also our children’s and grandchildren’s.
Economists have a tough time accounting for damages imposed on future generations. Normally they discount harms that take place in the future, because we all tend (at least in our own lives) to put greater weight on good things or bad things that occur today over the same good things or bad things taking place a few years from now. To reflect their preference for short-term returns, businesses typically use a high discount rate – often 7% or higher – for private investments.
But profound ethical problems arise when translating this private behavior into public policy – especially when dealing with harms from pollution that fall not on us, but on the next generations. Use a high discount rate, and carry the calculations far enough into the future, and huge harms occurring to our children or grandchildren look like they are worth next to nothing today.
That cannot be right. And it’s led some economists to argue against discounting the future benefits of curbing today’s carbon pollution – or at least for using a much smaller discount rate.
The values from the interagency panel report quoted above – e.g., $33/ton in 2010 – reflect discounting at 3 percent. But that may not be low enough. Discounted at 1 percent, that would jump to hundreds of dollars per ton, and call for even stronger action now.
In the end, the discounting question comes down to whether we really want to leave our children and grandchildren holding the bag? Or whether we are willing to curb carbon pollution now to protect them, as well as ourselves?
* Aren’t some economists calling these benefit estimates “close to useless?”
Some critics have seized on comments by MIT economist Robert Pindyck, who has written that the government’s models “have crucial flaws that make them close to useless as tools for policy analysis.”
Pindyck himself says he’s being misinterpreted by critics of the social cost of carbon. His concern is that the current benefit values – e.g., $33 per ton in 2010 – are underestimates. “If anything,” he told the Wall Street Journal, “the cost of carbon could be higher” than the administration’s estimates.
Why? Because they don’t take into account the possibility of very high damages from catastrophic climate changes.
Including the benefits of avoiding possible catastrophic outcomes – in other words, thinking about this like an insurance policy – would push the “social cost of carbon” estimates up a lot higher, and justify far stronger action against climate change.
* Why are economists looking at impacts and benefits abroad, not just in America?
They are following an economists’ version of the Golden Rule. Carbon pollution doesn’t stay within one country’s borders. It spreads around the world and hurts us all. We want to hold other countries – whether China, India, or Europe – accountable for the effects of their carbon pollution on us. So it is only right for us to consider the effects of our carbon pollution on others.
And many climate change impacts abroad have clear impacts on America. When millions of people are displaced by drought or storms, Americans shoulder greater costs for humanitarian assistance. Climate impacts can force millions of people to cross borders in search of safety. And our military recognizes that climate-driven water scarcity can trigger social unrest and war in places like the Middle East and Africa.
So it only makes sense to look at the costs of climate change, and the benefits of curbing carbon pollution, wherever they fall.
* Isn’t this a “back-door carbon tax”?
Some critics are calling the government’s benefit estimate a “carbon tax.” Supposedly, the hidden agenda is to charge Americans more money.
This is upside-down and backwards. Economists are estimating what carbon pollution is costing us and our children and grandchildren. And they are calculating what we and future generations will save – in better health, in lower food costs, in less storm damage, in less property lost to encroaching seas – if we have less carbon pollution.
The critics include some of the loudest advocates of cost-benefit analysis. But here they want to put their heads in the sand and ignore all the damages from carbon pollution, and all the benefits of curbing that pollution.
* * *
The President’s Climate Action Plan calls for using the laws on the books – laws Congress already enacted – to start cutting the dangerous carbon pollution that’s driving climate change. Climate-deniers will try anything to block it. The question, in the end, is simple: Will the Senate vote to leave our children and grandchildren holding the bag? Or will Senators stand up for action now to protect them, as well as ourselves?