The federal government’s Interagency Working Group on the Social Cost of Greenhouse Gases (IWG), which operated from 2009-2017 and was reconvened in 2021, first released its SC-GHG estimates in 2010 and updated them periodically. It last updated its estimates in 2016, although it updated those estimates for inflation in 2021.  

Table 1 is from the Interagency Working Group’s 2021 Technical Support Document and shows the social cost of carbon estimates, in 2020 dollars, at five-year intervals. 

Table 1: IWG’s Social Cost of CO2 (in 2020 dollars per metric ton of CO2) 

Table 2 is from EPA’s 2022 Draft Report and shows the social cost of carbon estimates, in 2020 dollars, at ten-year intervals. (Whereas the IWG’s estimates stop at 2050, EPA’s go out to 2080.)

Table 2: EPA’s 2022 Draft Social Cost of CO2 (in 2020 dollars per metric ton of CO2) 

The numbers in Table 1 reflect climate damages as estimated by combining three “Integrated Assessment Models”—specifically, DICE, FUND, and PAGE. These models translate carbon dioxide emissions into changes in atmospheric greenhouse concentrations, atmospheric concentrations into changes in temperature, and temperature changes into economic damages. 2

Quantified impacts represented in the models include: changes in energy (via cooling and heating) demand; changes in agricultural and forestry output from changes in average temperature and precipitation levels, and CO2 fertilization; property lost to sea level rise; coastal storms; heat-related illnesses; and some diseases (e.g. malaria and dengue fever); changes in fresh water availability; and some general measures of catastrophic and ecosystem impacts.

However, these models omit significant damages. For instance, the integrated assessment models do not capture the economic costs of additional wildfires. Nor do they capture the possibility for catastrophic climate tipping points. Therefore, the SCC values in Table 1 should be considered extreme lower-bound estimates of the actual costs of marginal carbon emissions. As noted above, EPA’s draft updated estimates reflect the latest available science and are significantly higher than the IWG estimates. (However, the EPA estimates in Table 2 also continue to omit many important climate damages, and thus should also be viewed as underestimates.)

Damages that are poorly quantified or omitted from the integrated assessment models are listed in Table 3.

Table 3 - Omitted Damages from the SCC 5

No, there is no SC-GHG estimate that only reflects climate damages to individual states. No models can accurately calculate a domestic-only, let alone a state-only SC-GHG (see more below). Furthermore, as detailed in the next section, it is in your state’s best interest to use an estimate that captures the global damages of a ton of CO2. Your state benefits tremendously from actions of other states and other countries to mitigate climate change, and for numerous reasons discussed below, the use of a global SC-GHG helps encourage reciprocal policy choices. Your state’s citizens and businesses also have financial and personal interests that extend far beyond your physical borders. If all states or countries used jurisdiction-specific numbers, the result would be significant under-regulation.

To avoid a global “tragedy of the commons” that could irreparably damage all countries, including the United States, every government worldwide should ideally set policy according to the global social cost of greenhouse gases. 7 

Because greenhouse pollution does not stay within geographic borders but rather mixes in the atmosphere and affects the climate worldwide, each ton emitted by the United States or a particular U.S. state not only creates domestic harms, but also imposes large externalities on the rest of the world. Conversely, each ton of greenhouse gases abated in another country benefits the United States along with the rest of the world. A Policy Integrity report, “Foreign Action, Domestic Windfall,” calculates that global actions on climate change—particularly by Europe, and including efforts of the United States and other countries—already benefited the United States by over $200 billion as of 2015. Furthermore, the report finds that, as of 2015, climate policies worldwide—including efforts by Europe, Canada, and many other countries, as well as U.S. policies from the time—could generate upwards of $2 trillion in direct benefits to the United States by 2030. 8

If all countries set their greenhouse emission levels based on only domestic costs and benefits, ignoring the large global externalities, the aggregate result would be substantially sub-optimal climate protections and significantly increased risks of severe harms to all nations, including the United States. The same concept would apply to state policies where global externalities are not taken into account. Thus, basic economic principles demonstrate that the United States stands to benefit greatly if all countries apply global SC-GHG values.

There are also significant, indirect costs to trade, human health, and security likely to “spill over” to the United States as other regions experience climate change damages. 13 Due to its unique place among countries—both as the largest economy with trade- and investment-dependent links throughout the world, and as a military superpower—the United States is particularly vulnerable to effects that will spill over from other regions of the world.  Spillover scenarios could entail a variety of serious costs to the United States as unchecked climate change devastates other countries.  Correspondingly, mitigation or adaptation efforts that avoid climate damages to foreign countries will radiate benefits back to the United States as well. 14

For more details on the justification for a global value of the social cost of greenhouse gases, see Peter Howard & Jason Schwartz, Think Global: International Reciprocity as Justification for a Global Social Cost of Carbon. 15  Another strong defense of the global valuation as consistent with best economic practices appears in a letter published in the March 2017 of The Review of Environmental Economics and Policy, co-authored by Nobel laureate Kenneth Arrow. 16

To avoid a global “tragedy of the commons” that could irreparably damage all countries, including the United States, every government worldwide should ideally set policy according to the global social cost of greenhouse gases. 7 

Because greenhouse pollution does not stay within geographic borders but rather mixes in the atmosphere and affects the climate worldwide, each ton emitted by the United States or a particular U.S. state not only creates domestic harms, but also imposes large externalities on the rest of the world. Conversely, each ton of greenhouse gases abated in another country benefits the United States along with the rest of the world. A Policy Integrity report, “Foreign Action, Domestic Windfall,” calculates that global actions on climate change—particularly by Europe, and including efforts of the United States and other countries—already benefited the United States by over $200 billion as of 2015. Furthermore, the report finds that, as of 2015, climate policies worldwide—including efforts by Europe, Canada, and many other countries, as well as U.S. policies from the time—could generate upwards of $2 trillion in direct benefits to the United States by 2030. 8

If all countries set their greenhouse emission levels based on only domestic costs and benefits, ignoring the large global externalities, the aggregate result would be substantially sub-optimal climate protections and significantly increased risks of severe harms to all nations, including the United States. The same concept would apply to state policies where global externalities are not taken into account. Thus, basic economic principles demonstrate that the United States stands to benefit greatly if all countries apply global SC-GHG values.

There are also significant, indirect costs to trade, human health, and security likely to “spill over” to the United States as other regions experience climate change damages. 13 Due to its unique place among countries—both as the largest economy with trade- and investment-dependent links throughout the world, and as a military superpower—the United States is particularly vulnerable to effects that will spill over from other regions of the world.  Spillover scenarios could entail a variety of serious costs to the United States as unchecked climate change devastates other countries.  Correspondingly, mitigation or adaptation efforts that avoid climate damages to foreign countries will radiate benefits back to the United States as well. 14

For more details on the justification for a global value of the social cost of greenhouse gases, see Peter Howard & Jason Schwartz, Think Global: International Reciprocity as Justification for a Global Social Cost of Carbon. 15  Another strong defense of the global valuation as consistent with best economic practices appears in a letter published in the March 2017 of The Review of Environmental Economics and Policy, co-authored by Nobel laureate Kenneth Arrow. 16