Comprehensive Evidence Implies a Higher Social Cost of CO₂
A multi-year study of the social cost of carbon, a critical input for climate policy analysis, finds that every additional ton of carbon dioxide emitted into the atmosphere costs society $185—far higher than the current federal estimate of $51 per ton.
Abstract
The social cost of carbon dioxide (SC-CO₂) measures the monetized value of the damages to society caused by an incremental metric tonne of CO₂ emissions and is a key metric informing climate policy. Used by governments and other decision-makers in benefit-cost analysis for over a decade, SC-CO₂ estimates draw on climate science, economics, demography, and other disciplines. However, a 2017 report by the US National Academies of Sciences, Engineering, and Medicine (NASEM) highlighted that current SC-CO₂ estimates no longer reflect the latest research. The report provided a series of recommendations for improving the scientific basis, transparency, and uncertainty characterization of SC-CO₂ estimates. Here we show that improved probabilistic socioeconomic projections, climate models, damage functions, and discounting methods that collectively reflect theoretically consistent valuation of risk, substantially increase estimates of the SC-CO₂. Our preferred mean SC-CO₂ estimate is $185 per tonne of CO₂ ($44-413/t-CO2: 5-95% range, 2020 US dollars) at a near-term risk-free discount rate of 2 percent, a value 3.6-times higher than the US government’s current value of $51/t-CO₂. Our estimates incorporate updated scientific understanding throughout all components of SC-CO₂ estimation in the new open-source GIVE model, in a manner fully responsive to the near-term NASEM recommendations. Our higher SC-CO₂ values, compared to estimates currently used in policy evaluation, substantially increase the estimated benefits of greenhouse gas mitigation and thereby increase the expected net benefits of more stringent climate policies.
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Authors
Frank Errickson
Princeton University
Lisa Rennels
University of California, Berkeley
Cora Kingdon
University of California, Berkeley
Bryan Parthum
US Environmental Protection Agency
David Smith
US Environmental Protection Agency
Kevin Cromar
New York University
Delavane Diaz
EPRI
Frances C. Moore
University of California, Davis
Ulrich K. Müller
Princeton University
Richard J. Plevin
Adrian E. Raftery
University of Washington
Hana Ševčíková
University of Washington
Hannah Sheets
Rochester Institute of Technology
Tammy Tan
US Environmental Protection Agency
Mark Watson
Princeton University
Tony E. Wong
Rochester Institute of Technology
David Anthoff
University of California, Berkeley
