The Trump administration cooks the climate change numbers once again

In its campaign against action on greenhouse gas emissions, one of the more subtle moves by the Trump administration is its manipulation of the Social Cost of Carbon (SCC). This number is used to represent the damage resulting from emitting an additional ton of carbon. Climate economists sometimes refer to it as the most important number you’ve never heard of. Undermine the SCC and you can discredit action to fight climate change, boost support for the fossil fuel industry, tip the scales away from renewable energy and counter other important policy initiatives. Fortunately, in a detailed report on the estimation of the SCC, the congressional watchdog General Accounting Office has called out this latest affront to reliable assessment of the science and risks of climate change.

The SCC is a key input to the benefit-cost analyses required of all federal regulatory actions, and thus is an important factor in their justification. The federal SCC estimate has also been adopted by several states. Examples of the SCC’s use are abundant, including the setting of reasonable federal standards for the performance of private automobiles and appliances.

Estimating the SCC requires joint consideration of natural and social science aspects of the climate change problem. A federal working group spent nearly a decade on this process. Recognizing that the underlying methodology needed rigorous and impartial review, the interagency group commissioned a comprehensive update by the U.S. National Academy of Sciences (NAS). The 2017 NAS report supported the previous approach to valuing the SCC, recommending a program of research and analysis to improve the estimate.

The Trump administration did not follow this recommendation. Instead, it imposed measures to hobble reliable estimation of the SCC. The earlier working group was disbanded, associated documents were withdrawn and the NAS study was ignored. Instead, changes were made to limit the SCC’s scope and the weight it gave to future generations. These changes cannot be justified by either the science or the standards deemed acceptable for benefit-cost studies.

As a result of the administration’s changes, the previous central value for the SCC – roughly $50 per ton of CO2 – was reduced by nearly 90 percent.  

These changes are misguided and pernicious. They limit damages to those occurring within U.S. borders, and thus reflect a tragic misunderstanding about climate change and the U.S. national interest. CO2 emissions, primarily from the burning of fossil fuels, impact every person on the planet, regardless of the geographical location of the source. To limit current and future climate change damages, it is in the U.S. national interest not only to reduce its own emissions, but also to encourage other countries to do the same. The administration’s near-zero SCC does just the opposite, offering other countries a pretense for adopting positions that mimic those of the world’s second-largest emitter. 

There are many other causes for concern. The impacts of our emissions will be felt most cruelly by the most vulnerable Americans, and by those countries least able to cope with the ensuing damages. Ignoring the needs of these individuals and countries threatens to exacerbate societal inequities at home and to create millions of environmental refugees abroad. Humanitarian crises that would burden rich and poor nations alike are the obvious consequences. Preventing these crises is both the right thing to do and in our own self-interest.

Another critical aspect of the SCC calculation is the value placed on future generations. Intergenerational equity is a contentious topic. There are reasonable debates among social scientists about what constitutes fairness in the treatment of unborn generations. Despite these disagreements, there is convergence among scholars as to what represents a plausible range of discount factors. The administration, ignoring the prudent advice of the NAS authors and other knowledgeable experts, provides no analysis of its own. It simply mandates a set of discount rates at the higher end of the spectrum, to the disadvantage of future generations. 

In its assessment of the administration’s SCC procedure, the GAO uses careful diplomatic language. It writes that, “. . . the federal government may not be well positioned to ensure agencies’ future regulatory analyses are using the best available science.” Our interpretation is more direct: Ignoring the science to cook the numbers discredits the federal process for public decision-making.

The GAO recommends that a federal agency should be made responsible for addressing the NAS report, and for ensuring that the best-available science is used in calculating the SCC. Sadly, there is little expectation that this recommendation will be heeded by an administration that denies the reality and seriousness of the climate threat.

Richard Richels directed climate change research at the Electric Power Research Institute (EPRI). He served on the National Assessment Synthesis Team for the first U.S. National Climate Assessment.

Henry D. Jacoby is the William F. Pounds Professor of Management, Emeritus in the M.I.T. Sloan School of Management and former co-director of the M.I.T. Joint Program on the Science and Policy of Global Change.

Gary Yohe is the Huffington Foundation Professor of Economics and Environmental Studies, Emeritus, at Wesleyan University in Connecticut. He served as convening lead author for multiple chapters and the Synthesis Report for the IPCC from 1990 through 2014 and was vice-chair of the Third US National Climate Assessment.

Ben Santer is a climate scientist and member of the U.S. National Academy of Sciences. He served as convening lead author of the climate change detection and attribution chapter of the IPCC’s Second Assessment Report and has contributed to all five IPCC assessments.