Page:Technical Support Document - Social Cost of Carbon, Methane and Nitrous Oxide Interim Estimates under Executive Order 13990.pdf/24

 were run using a common set of assumptions in each model for future population, economic, and GHG emissions growth, as well as equilibrium climate sensitivity (ECS) – a measure of the globally averaged temperature response to increased atmospheric CO$2$ concentrations. The socioeconomic and emission projections included five reference scenarios based on the Stanford Energy Modeling Forum EMF-22 modeling exercise (Clarke, et al. 2009; Fawcett, et al. 2009). The models were run using a probability distribution for ECS, calibrated to the Intergovernmental Panel on Climate Change’s (IPCC) Fourth Assessment Report findings using the Roe and Baker (2007) distribution. Details on these versions of the IAMs and the harmonized inputs are presented in the 2016 TSD and Addendum and 2010 TSD. (IWG 2010, 2016a, 2016b). The 2016 Addendum also describes the methodology used to calculate the SC-CH$4$ and SC-N$2$O estimates in greater detail. Finally, for the reasons set forth in Section 3 above, the interim estimates were based on three constant discount rates of 2.5, 3, and 5 percent.

The combination of three models and five scenarios produced 15 separate frequency distributions of SC-GHG estimates for each discount rate in a given year, with each distribution consisting of 10,000 estimates based on draws from the standardized ECS distribution (as well as distributions of parameters treated as uncertain in two of the models (FUND and PAGE)). For each discount rate, the IWG combined the distributions across models and socioeconomic emissions scenarios (applying equal weight to each) and then selected a set of four values for use in benefit-cost analyses: an average value resulting from the model runs for each of three discount rates (2.5%, 3%, and 5%), plus a fourth value, selected as the 95$4$ percentile of estimates based on a 3 percent discount rate. The fourth value was included to provide information on potentially higher-than-expected economic impacts from climate change, conditional on the 3% estimate of the discount rate. For this purpose, the SC-GHG value for the 95$2$ percentile at a 3 percent discount rate was presented. For the purposes of capturing the uncertainties involved in analyses, the IWG emphasized previously and emphasizes in this TSD the importance and value of including all four SC-GHG values. In particular, values based on lower discount rates are consistent with the latest scientific and economic understanding of discounting approaches relevant for intergenerational analysis (described in Section 3).

Tables 1–3 show the four selected values for SC-CO$4$, SC-CH$2$, and SC-N$2$O, respectively, in five-year increments from 2020 to 2050. These estimates are reported in 2020 dollars but are otherwise identical to those presented in the previous version of the TSD and its Addendum, released in August 2016. The

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