Gauging Economic Consensus on Climate Change
Thousands of economists have spent years or decades studying the interaction between climate change and the economic systems that underlie modern life. The views of these experts can help clarify how climate change will likely affect our society and economy, and how policymakers should approach greenhouse gas emission reduction efforts.
We conducted a large-sample global survey on climate economics, which we sent to all economists who have published climate-related research in the field’s highest-ranked academic journals; 738 responded. To our knowledge, this is the largest-ever expert survey on the economics of climate change. The results show an overwhelming consensus that the costs of inaction on climate change are higher than the costs of action, and that immediate, aggressive emissions reductions are economically desirable.
Respondents expressed striking levels of concern about climate impacts; estimated major climate-related GDP losses and a reduction in long-term economic growth; and predicted that climate impacts will exacerbate economic inequality both between countries and within most countries. The economists surveyed also expressed optimism about the viability and affordability of many zero-emissions technologies. And they widely agreed that aggressive targets to reach net-zero emissions by midcentury were likely to be cost-benefit justified.
Technical Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide - Interim Estimates under Executive Order 13990
The Interagency Working Group (IWG) on the Social Cost of Greenhouse Gases, recently reconvened under the auspices of Executive Order 13990, released a new technical support document with interim estimates on the social costs of carbon, methane, and nitrous oxide. According to the new document, released on February 26, 2021, the IWG guides agencies to revert to the four sets of values based on three discount rates (2.5%, 3%, and 5%) as were used from 2010 through 2016, which had been subject to public comment. The IWG notes that new data and evidence strongly suggests that the appropriate discount rate for intergenerational considerations is lower.
The estimates in the new technical support document are reported in 2020 dollars, but are otherwise identical to those presented in the most recent previous version of the technical support document and its addendum. The ‘central’ 3% estimates for carbon dioxide emissions occurring in year 2025 is $56 per metric ton. The ‘central’ estimates for year 2025 methane and nitrous oxide emissions are $1700 and $21,000, respectively.
Benefit-Cost Analysis Guidance for Discretionary Grant Programs
This document is intended to provide applicants to USDOT’s discretionary grant programs with guidance on completing a benefit-cost analysis (BCA) for submittal as part of their application. A BCA provides estimates of the anticipated benefits that are expected to accrue from a project over a specified period and compares them to the anticipated costs of the project. While BCA is just one of many tools that can be used in making decisions about infrastructure investments, USDOT believes that it provides a useful benchmark from which to evaluate and compare potential transportation investments for their contribution to the economic vitality of the Nation.
This guidance: Describes an acceptable methodological framework for purposes of preparing BCAs for discretionary grant applications; Identifies common data sources, values of key parameters, and additional reference materials for various BCA inputs and assumptions; Provides sample calculations of some of the quantitative elements of a BCA.
Executive Order on Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis
On his first day in office, President Biden issued an executive order that would, among other things, reconvene the Interagency Working Group on the Social Cost of Greenhouse Gases. The new Working Group is initially tasked with: (1) publishing an interim Social Cost of Carbon, Social Cost of Methane, and Social Cost of Nitrous Oxide within 30 days, which agencies should use to monetize the value of changes in greenhouse gas emissions; (2) publishing final revised social cost values by January 2022; (3) providing recommendations for areas of decisionmaking, budgeting, and procurement by the Federal Government where the social cost estimates should be applied by September 2021; (4) providing recommendations by June 2022 for a review and update process for the social cost values, including to ensure these estimates are based on the best available science and economics, but also that they adequately take into account climate risk, environmental justice, and intergenerational equity.
Establishing a Value of Carbon: Guidelines for Use by State Agencies
New York’s Climate Leadership and Community Protection Act directs the Department of Environmental Conservation to establish a value of carbon for use by State agencies. This guidance document provides a recommended procedure for using a damages-based value of carbon along with a general review of the marginal abatement cost approach. The current guidance is focused on the damages-based value as a tool to aid state agencies as they begin to regularly consider greenhouse gas emissions and climate change in their decision-making. In some decision-making contexts, particularly those that have a history of valuing carbon, such as the New York electric industry, alternative approaches may be more appropriate for both resource valuation and benefit-cost analyses.
The Social Cost of Carbon Initative
Researchers in this initiative are leading a team of distinguished economists and scientists to improve the science behind estimates of the social cost of carbon—the means by which the US federal government, state governments, and foreign governments account for climate change in their actions—through a process that ensures the highest levels of scientific quality and transparency and builds the scientific foundation for future estimates.
Joint Comments to EPA on Climate Effects from Cross-State Air Pollution Rule
In its proposal, Revised Cross-State Air Pollution Rule Update for the 2008 Ozone NAAQS, the Environmental Protection Agency’s (EPA) unreasonably low valuation of climate effects contributes to its selection of an inefficient policy alternative. Policy Integrity submitted joint comments detailing how EPA’s flawed analysis harms public health and the environment.
Policy Integrity Comments to New York on the Value of Carbon
New York’s landmark climate bill, the Climate Leadership and Community Protection Act, requires the New York State Department of Conservation (DEC) to adopt a value of carbon. In October 2020, DEC published draft guidance for New York State agencies on what value of carbon to use, focusing on the IWG’s 2016 Social Cost of Carbon estimates. Policy Integrity submitted comments supporting DEC’s decision to use a damage-cost approach and demonstrating why a 2% discount rate is an appropriate central discount rate for New York’s value of carbon estimates. Policy Integrity’s comments also address how DEC should address co-benefits, unquantified benefits, and distribution effects of policies and programs with greenhouse gas effects. Finally, the comments discuss several considerations and guiding questions for DEC if it chooses to move forward with a marginal abatement cost approach.
Joint Comments to EPA on Airplane GHG Emissions Regulations
The Environmental Protection Agency (EPA) proposed airplane pollution standards that have no effect on emissions and require no technological improvements. EPA does analyze one scenario in the technical support for the proposal, however, that appears to have modest greenhouse gas emissions reduction effects. But the agency improperly monetizes and weighs those reductions. Policy Integrity submitted joint comments that detail flaws in EPA’s analysis and describe how the agency can correctly apply the social cost of carbon.
Policy Integrity Comments to Arizona on Integrated Resource Planning
The Arizona Corporation Commission regularly requires that load serving entities (LSEs), which supply electricity to ratepayers, file plans with a 15-year time horizon disclosing environmental impacts from different resource mixes and how they will address those impacts. Policy Integrity’s comments encourage the Commission to ask that LSEs provide monetized estimates of the damages they expect to result from greenhouse gas emissions using the social cost of carbon.