Highlighted Article: The Social Cost of Carbon

By: Reason Foundation - Julian Morris

CLIMATE CHANGE, CATASTROPHE, REGULATION AND THE SOCIAL COST OF CARBON

Executive Summary:

Federal agencies are required to calculate the costs and benefits of new regulations that have significant economic effects. Since a court ruling in 2008, agencies have included a measure of the cost of greenhouse gas emissions when evaluating regulations that affect such emissions. This measure is known as the “social cost of carbon” (SCC). Initially, different agencies applied different SCCs. To address this problem, the Office of Management and Budget and Council of Economic Advisors organized an Interagency Working Group (IWG) to develop a range of estimates of the SCC for use by all agencies. However, the IWG’s estimates were deeply flawed. In April 2017, President Trump issued an executive order rescinding the IWG’s estimates and disbanded the IWG. The question now is what value regulatory agencies should use for the SCC—if any—when evaluating rules that affect greenhouse gas emissions.

CLIMATE CHANGE, CATASTROPHE, REGULATION AND THE SOCIAL COST OF CARBON