Technical Guidance

  • 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.

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  • 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.

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  • 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.

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  • 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.

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  • 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.

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  • Making the Most of Distributed Energy Resources: Subregional Estimates of the Environmental Value of Distributed Energy Resources in the United States

    Distributed Energy Resources (DERs), like rooftop solar and battery storage, have the potential to generate significant social benefits by displacing pollution-emitting electricity generators. Accurately compensating DERs for this environmental and public health value, which some regulators and experts call the “E-Value,” is imperative for making the most out of DERs’ potential.

    This report provides a new set of hourly E-Values for the whole United States, broken down into 19 subregions, using an open-source reduced-order dispatch model. The patterns uncovered by these estimates can help policymakers design economically efficient DER policies to reduce air pollution from electricity generators.

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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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  • Valuing Climate Damages: Updating Estimation of the Social Cost of Carbon Dioxide

    The social cost of carbon (SC-CO2) is an economic metric intended to provide a comprehensive estimate of the net damages – that is, the monetized value of the net impacts, both negative and positive – from the global climate change that results from a small (1-metric ton) increase in carbon-dioxide (CO2) emissions. Under Executive Orders regarding regulatory impact analysis and as required by a court ruling, the U.S. government has since 2008 used estimates of the SC-CO2 in federal rulemakings to value the costs and benefits associated with changes in CO2 emissions. In 2010, the Interagency Working Group on the Social Cost of Greenhouse Gases (IWG) developed a methodology for estimating the SC-CO2 across a range of assumptions about future socioeconomic and physical earth systems.

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  • Technical Support Document: Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866 (2010)

    This document presents a summary of the interagency process that developed these SCC estimates. Technical experts from numerous agencies met on a regular basis to consider public comments, explore the technical literature in relevant fields, and discuss key model inputs and assumptions.

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  • Revised: Technical Support Document: Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866 (2013)

    While acknowledging the continued limitations of the approach taken by the interagency group in 2010, this document provides an update of the SCC estimates based on new versions of each IAM (DICE, PAGE, and FUND).

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