Page:Technical Support Document - Social Cost of Carbon, Methane and Nitrous Oxide Interim Estimates under Executive Order 13990.pdf/10



The estimates of the social cost of carbon (SC-CO$2$), social cost of methane (SC-CH$4$), and social cost of nitrous oxide (SC-N$2$O) presented here allow agencies to incorporate the social benefits of reducing emissions of each of these greenhouse gases, or the social costs of increasing such emissions, in decision making. Collectively, these values are referenced as the “social cost of greenhouse gases” (SC-GHG) in this document. The SC-GHG is the monetary value of the net harm to society associated with adding a small amount of that GHG to the atmosphere in a given year. In principle, it includes the value of all climate change impacts, including (but not limited to) changes in net agricultural productivity, human health effects, property damage from increased flood risk natural disasters, disruption of energy systems, risk of conflict, environmental migration, and the value of ecosystem services. The SC-GHG, therefore, should reflect the societal value of reducing emissions of the gas in question by one ton. The marginal estimate of social costs will differ by the type of greenhouse gas (such as carbon dioxide, methane, and nitrous oxide) and by the year in which the emissions change occurs. The SC-GHGs are calculated along a baseline path and provide a measure of the marginal benefit of GHG abatement. Thus, they are the theoretically appropriate values to use when conducting benefit-cost analyses of policies that affect GHG emissions.

1.1Overview of U.S. Government SC-GHG Estimates to Date

Estimates of the social cost of carbon and other greenhouse gases have been published in the academic literature for many years. Meta-reviews of SC-CO$2$ estimates were available as early as 2002 (Clarkson and Deyes 2002). Federal agencies began regularly incorporating SC-CO$2$ estimates in regulatory impact analyses in 2008, following a court ruling in which an agency was ordered to consider the SC-CO$2$ in the rulemaking process. The U.S. Ninth Circuit Court of Appeals remanded a fuel economy rule to the Department of Transportation (DOT) for failing to consider the value of reducing CO$2$ emissions, stating that “while the record shows that there is a range of values, the value of carbon emissions reduction is certainly not zero.”

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