Abby L. Harvey
GHG Monitor
7/24/2015
Flaws in the models employed to calculate the “social cost of carbon,” a measure used by regulatory agencies in investigating the environmental costs and benefits of regulations, have inflated the perceived benefits of various costly rules, panelists said this week at a hearing of the House Committee on Natural Resources. “The models are iffy, they can be changed dramatically depending on what kind of criteria you use, the assumptions you use. In essence, what we have is a process that’s being proposed for the government to select winners and losers in the future based on political considerations, which is why in my humble opinion it makes this a really dumb rule,” committee Chairman Rob Bishop (R-Utah) said during the hearing.
Controversy over the social cost of carbon has grown as the administration rolls out more regulations intended to curb carbon emissions, including the Environmental Protection Agency’s proposed carbon emissions standards for existing coal-fired power plants, dubbed the Clean Power Plan. The proposed rule, which is due to be finalized next month, requires states to develop action plans to meet federally set emission reduction goals. “EPA’s power plant rules relied on [the social cost of carbon] for as much as 65 percent of their alleged benefits. As the president’s Climate Action Plan comes further into focus, more and more regulations claiming to reduce carbon emissions will use social cost to appear cost-beneficial when the truth might be otherwise,” Scott Segal, founding partner of the Policy Resolution Group, said at the hearing.
The problem with the social cost of carbon measure, according to Kevin Dayaratna, a senior statistician with conservative think tank the Heritage Foundation, is that the three models used to develop the sum are extremely easy to manipulate. “They’re basically nothing but garbage in and garbage out,” he said. “You can essentially manipulate these models to achieve any estimate of the social cost of carbon that you would like. Basically, you can achieve a negative social cost of carbon; you can achieve a positive social cost of carbon.” Dayaratna also noted that one of the three models used to determine the social cost of carbon can actually result in a high-cost benefit of carbon if factors such as crop fertilization are taken into account. The other two models used do not allow for benefits of this type to be calculated.
Lawmaker: Climate Effects Must be Calculated in Cost/Benefit Analyses
Regardless of flaws in the current modeling for the social cost of carbon, which can be updated as more information becomes available, the cost of carbon emissions must be figured into regulatory cost/benefit analyses, committee Democrats countered. “If we’re already paying for these costs, all we’re doing with the Social Cost of Carbon is really acknowledging the existence of these costs,” Rep. Norma Torres (D-Calif.) said during the hearing, noting various climate change-related costs are already accruing, such as increased expenses due to flood damage, health-care costs related to air quality, and the cost of relocating communities in Alaska due to rising sea levels.