Reports

  • Opportunities for Valuing Climate Impacts in U.S. States

    With an absence of federal leadership on climate change, many states have worked to reduce greenhouse gas emissions on their own, often by incorporating a broader range of considerations into electricity policy. This Institute for Policy Integrity report assesses the potential to expand the valuation of climate damages in state electricity policy using Social Cost of Carbon metrics. We examine existing statutes and regulations in all 50 states to identify opportunities for valuing climate impacts around the country.

    State electricity regulators have a significant opportunity to use economic approaches like valuing climate impacts to better inform their decisionmaking. This approach can be used to account for the impacts associated with different types of proposed generation resources. Regulators in 10 states have already begun the process of using monetary estimates of climate damages in their electricity proceedings. In these jurisdictions, climate damages are taken into account in three main ways: utility resource planning, compensation for low or zero-emissions resources, and cost-benefit analysis frameworks.

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  • A Lower Bound: Why the Social Cost of Carbon Does Not Capture Critical Climate Damages

    The Social Cost of Carbon, developed by the Obama-era Interagency Working Group (IWG), is the best available tool for measuring the economic damages from greenhouse gas emissions. It has been used in analysis for over 100 federal regulations that affect greenhouse gas emissions, as well as by a number of states in electricity and climate policy. Still, many significant impacts identified by the Intergovernmental Panel on Climate Change are difficult to quantify and so have been omitted from the IWG SCC estimates. Impacts such as increased fire risk, slower economic growth, and large-scale migration are all unaccounted for, despite their potential to cause large economic losses. Our new issue brief discusses these omissions and other variables that will influence climate outcomes. We encourage policymakers to account for this likely underestimate by viewing the SCC as a lower bound for damages.

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  • How States Can Value Pollution Reductions from Distributed Energy Resources

    DERs are a growing part of the U.S. electric system and many state electric utility regulators are looking to more accurately compensate them by paying for a variety of the benefits that these resources provide. Most states are currently focusing on energy and distribution-level benefits, but this approach overlooks the environmental and public health impacts of DERs. Even though some states like California and New York have been working on analyses that include environmental attributes of DERs, few regulators have attempted a thorough evaluation of the environmental and public health benefits. Our report, Valuing Pollution Reduction, lays out a practical methodology for calculating the E value, the highlights of which are captured here. Specifically, this issue brief describes how to appropriately value environmental and public health benefits by monetizing the economic, health, and climate damages avoided emissions would have caused. State utility regulators can use the steps described here, weighing tradeoffs between accuracy and administrability, to implement their own program to holistically compensate DERs.

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  • How the Trump Administration Is Obscuring the Costs of Climate Change

    When federal and state policymakers account for the impacts of climate change, they regularly use a tool called the Social Cost of Carbon (SCC). The SCC puts a dollar value on the most significant, quantifiable damages caused by each additional ton of carbon dioxide emitted. The most recent estimate of the cost is at least $51 per ton and rising over time. But now, turning its back on years of work, the Trump administration has disbanded the federal group that developed the SCC, and produced a new “interim” estimate claiming that each ton of carbon dioxide causes as little as $1 in climate damages. This issue brief describes how the Trump Administration reached this misleading number by ignoring the interconnected, global nature of our climate-vulnerable economy and obscuring the devastating effects that climate change will have on younger and future generations. Though the administration has been proposing rollbacks of environmental rules using this problematic SCC estimate as justification, we explain why federal agencies and state governments should continue using the most recent estimate by the Interagency Working Group that developed the SCC.

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  • The Social Cost of Greenhouse Gases and State Policy: A Frequently Asked Questions Guide

    States can benefit from using the social cost of greenhouse gases to aid in making rational policy decisions in a transparent manner. Many states are already using these metrics in their decisionmaking. This report provides information on several issues related to the social cost of greenhouse gases, including discount rates, time horizons, and the global nature of the estimate.

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  • Social Costs of Greenhouse Gases

    Scientific studies show that climate change will have, and in some cases has already had, severe consequences for society, like the spread of disease, increased food insecurity, and coastal destruction. The social cost of carbon (SCC) is a metric designed to quantify climate damages, representing the net economic cost of carbon dioxide emissions. Our issue brief on the Social Cost of Carbon details how this metric was developed and how it applies to federal regulatory policy.

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  • Coal Royalties: Historical Uses and Justifications

    On January 15, 2016, the Department of the Interior (Interior) announced that it would begin a comprehensive review to identify and evaluate potential reforms to the federal coal program. The review will analyze issues including leasing of public lands for mining; how to account for the environmental and public health impacts of federal coal production; and how to ensure American taxpayers are earning a fair return for the private use of these public resources.

    Royalties have been used as a policy lever to influence behavior and meet national goals for centuries. For example, royalties have been set at specific rates in order to: encourage resource production; encourage westward expansion; maintain the incentive to create new inventions; and deter socially undesirable behavior, to name just a few. In line with this finding, this report concludes that it would be reasonable for Interior to adjust coal royalty rates to account for negative externalities that are not otherwise addressed by regulation. Historical uses, accepted economic justifications, legislative history, and examples of royalty use by private actors and in other industries discussed in the paper all support the determination that it would be reasonable for Interior to increase coal royalty rates to account for externality costs and to better align the federal coal program with national climate change priorities.

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  • Expert Consensus on the Economics of Climate Change

    We surveyed a large sample of economists — everyone who published an article related to climate change in a highly ranked economics journal since 1994. The survey focused on estimated economic impacts from climate change and appropriate policy responses. The results revealed consensus that climate change damages could be more severe and more immediate than previously estimated. Respondents also expressed support for aggressive policy responses to address climate change.

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  • Flammable Planet: Wildfires and the Social Cost of Carbon

    Climate change is expected to make wildfires more frequent and intense, with new areas facing wildfire risk. This could take a serious toll on the U.S. economy by expanding the area that wildfires burn 50 percent by 2050—and raising projected damages by tens of billions of dollars a year. This report surveys the scientific and economic literature on wildfires and climate change, and provides the first estimate of the future economic costs of wildfires that will be magnified by climate change. Currently these costs are omitted from the government’s social cost of carbon estimate. Flammable Planet lays the groundwork for the future inclusion of wildfire costs in the models that underlie the social cost of carbon.

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  • Omitted Damages: What’s Missing From the Social Cost of Carbon

    Fires, flooding, and infectious diseases are some of the risks of a warming climate, and they would cost trillions of dollars to deal with. When carbon-reducing regulations are considered, $37 per ton is used to account for the public costs of rising temperatures. But too many serious risks of climate change have not yet been included in the government’s estimate. Omitted Damages: What’s Missing from the Social Cost of Carbon reviews cutting edge scientific and economic research to determine which serious climate effects are not properly incorporated into the “social cost of carbon” estimates.

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