Responses to Misguided Concerns

Why does EPA use a global estimate of climate damages instead of a national estimate?

Considering global damages is desirable for numerous reasons. For one, climate change is a global phenomenon and emissions that occur (or are avoided) in one region affect other regions. Simply put, if all countries set their greenhouse emission levels based on only domestic costs and benefits, ignoring the large global externalities, the result would be sub-optimal climate protections and economically inefficient policies. Valuing climate damages from a global perspective facilitates international reciprocity that will benefit the United States. For this reason—and because many climate damages that begin in other countries spill over into the United States through supply chains, disease vectors, and migration—available “domestic” climate estimates grossly understate the benefits to U.S. citizens and residents of emissions reductions.

Courts agree that it is appropriate to evaluate climate damages from a global perspective. First, in 2016, the U.S. Court of Appeals for the Seventh Circuit held that federal agencies may reasonably rely on global damage valuations. Then, in 2020, the U.S. District Court for the Northern District of California struck down an agency regulation that considered only climate impacts that occur within U.S. borders, holding that a global focus is critical to reliably assess climate costs.

Is there too much uncertainty in the SCC?

Hardly. As a legal matter, the presence of some uncertainty should not preclude agencies from using the damage estimates that are available. As a factual matter, EPA rigorously considered uncertainty and accounted for it in numerous ways. While no valuation is perfect, valuing climate impacts using the best available science is far superior to not valuing them at all. 

Experts also broadly agree that the presence of uncertainty counsels for more stringent climate regulation and higher climate-damage values. This is due to various factors including risk aversion, the informational value of delay, and the possibility of irreversible climate tipping points that cause catastrophic damage. Thus, uncertainty around the SCC counsels for caution rather than disregard.

Why did EPA project a large increase in the SCC from prior federal estimates?

EPA’s climate-damage valuations reflect the federal government’s first comprehensive SCC update since 2010. During that period, the science and economics around climate change have advanced, dozens of relevant new peer-reviewed studies have been published, and the scientific community has developed a more complete understanding of the economic cost of greenhouse gas emissions. EPA comprehensively incorporates this new research and updates the SCC consistent with the best available science and economics. 

EPA’s methodology is consistent with the 2017 recommendations of the National Academies of Sciences, Engineering, and Medicine. Its valuations are also consistent with independent values produced by numerous experts. If anything, therefore, EPA’s update means that prior federal climate-damage estimates from the Interagency Working Group greatly undervalued the true costs of climate pollution. 

It is also notable that EPA’s climate-damage estimates are not uniformly higher than prior estimates. While the damage estimates for carbon dioxide emissions increased over 3.5 times, the damage estimates for methane emissions barely increased.