The Biden administration is expected to give even greater weight to the negative effects of greenhouse gas emissions as it works on developing new “social costs” of carbon, methane and nitrous oxide that will impact government regulations.
President Biden took the first step toward establishing a new formula when he revived an interagency group to work on calculating the costs of greenhouse gas emissions shortly after taking office.
The costs are used by federal agencies to determine the benefit of regulations that prevent the gases from being emitted into the atmosphere, or, conversely, how great the costs are for not limiting emissions. The calculations are in turn used in cost-benefit analyses that provide justification for agency rulemaking.
The interagency group’s findings aren’t expected until January 2022, but Biden recently announced that until then, his administration would return to the costs set during the Obama era.
While many experts say that’s an improvement from the Trump years, they’re hopeful the new figures will be considerably higher than the ones set by the Obama administration.
Economist and Nobel laureate Joseph Stiglitz told The Hill that returning to the Obama numbers was a “big step forward,” while adding that “it ought to be much higher.”
The Obama administration pegged the cost of carbon dioxide emissions at $50 per metric ton, while the Trump administration put it as low as $1. One reason the Trump figure was so much lower was because it purposely did not factor in carbon dioxide’s international impacts.
The Biden administration put the interim cost at $51 per metric ton, adjusting for inflation.
Stiglitz and economist Nicholas Stern, however, have argued that the cost associated with carbon should be closer to $100 per ton by 2030.
“It’s the number that you need in order to get to the commitments that we made and I believe that those commitments are totally reasonable given the risks that we face,” Stiglitz said, referring to the Biden administration rejoining the Paris Agreement and its goal of putting the U.S. on the path for carbon neutrality by 2050.
Under the Paris Agreement, countries agreed to attempt to limit the planet’s warming to less than 2 degrees Celsius above pre-industrial levels, with the further goal of limiting warming to 1.5 degrees, in an effort to limit the impacts of climate change.
“Most of the models say that if you use the social cost of carbon, the kind of number that they used in the interim, we’re going to…fry. We’re going to be substantially above 2 degrees,” Stiglitz said. “It just doesn’t seem to be an acceptable risk to take when at a relatively modest cost, we can limit carbon emissions to a level that makes it more likely that we’ll be 1 ½ to 2 degrees.”
In his January executive order, Biden reestablished the Interagency Working Group, made up of White House officials and Cabinet secretaries, to come up with the new social cost of greenhouse gas emissions. The order states that the administration will consider pertinent scientific literature in coming up with new numbers.
Michael Greenstone, who co-led the Obama administration’s social cost of carbon calculation, said that back then officials averaged out numbers from the three most heavily cited models.
But his advice to the Biden administration is to use new models instead of trying to update the Obama-era ones.
“Your natural inclination will be to try to update the existing models, but it’s kind of like trying to play a streaming service on a tape recorder,” said Greenstone, who is now a professor at the University of Chicago.
He stressed there have been advancements in economics and climate science that are likely to show the effects of climate change will be generally larger than previously thought.
“I think there’s pretty clear evidence that the impacts are going to be larger, and importantly, there’s an opportunity to take account of and value the uncertainty associated with climate change…and that’s also something that’s likely to lead to higher estimates.”
Starla Yeh, director of policy analysis at the Natural Resources Defense Council, said fixes need to be made to the formula since new research shows the Obama administration was “likely underestimating the long-term impacts” of climate change.
“We should be accounting for those so that we are appropriately estimating the impacts of climate change for future generations,” Yeh said.
The Biden administration’s moves are already sparking pushback from Republicans. A dozen states with Republican attorneys general recently sued the administration over the social costs.
They argued that the administration’s calculation “would justify imposing trillions of dollars in regulatory costs on the American economy.”
Some experts noted that another challenge with social costs is ensuring they last longer than one administration. Achieving that goal, they said, is best achieved by having a strong scientific basis for the final numbers.
“Courts do not look kindly on agencies that just swing dramatically back and forth on how they approach rulemaking,” said Hana Vizcarra, a staff attorney at Harvard Law School’s Environmental & Energy Law Program.
“What they’re looking for is a process that is backed up by objective facts and science.”