RFF Initiative

RFF's Social Cost of Carbon Initiative

Work by RFF experts will update and improve estimates of the social cost of carbon and inform its use in benefit-cost analyses of policy options and other actions that affect greenhouse gas emissions.

The social cost of carbon is an economic tool used to quantify the societal benefits of reducing —or conversely the damages of emitting—one ton of carbon dioxide emissions in the atmosphere. The estimate informs billions of dollars of policy and investment decisions by federal and state governments, as well as businesses, so it is critical to use the most current and informed value possible.

The US federal government, for example, has used the social cost of carbon to account for the effects of its actions on climate change in over 150 proposed and final regulatory measures, including land use decisions and standards for vehicle fuel efficiency, power plant emissions, and appliances. The estimates and methodology used by the United States have been adopted in full by the Canadian government. In New York and Illinois, the social cost of carbon serves as the basis for the value of “zero emission credits” paid to utilities under state clean energy legislation. In Colorado, utilities are now required to use the federal social cost of carbon in their resource planning. The estimation methodology is also being considered for adoption by the Mexican government and by regulatory agencies in California and Minnesota.

At the request of the US ­federal government, in January 2017 the National Academies of Sciences, Engineering, and Medicine (NAS) released a comprehensive review of options for updating the methodology for estimating the social cost of carbon. The report made a number of key recommendations to ensure that the estimates reflect the best available science and to enhance their transparency. RFF is leading a multi-year, multidisciplinary research initiative that will advance the NAS recommendations and lead to a comprehensive update of the social cost of carbon estimates, as well as enhance the capabilities of decisionmakers and analysts worldwide who use the social cost of carbon to measure the benefits of emissions reductions.

Key Elements of the Initiative

  • Transitioning the current estimation process to an integrated framework, built on an open source, computationally efficient, publicly accessible, and clearly documented computational platform
  • Revising the socioeconomic projections of population growth, economic activity, and emissions to better reflect key uncertainties
  • Adopting an updated climate model that passes well-defined performance tests of its representation of current climate science
  • Updating the climate damage functions that translate climate impacts into monetary values to reflect the current state of the peer-reviewed literature
  • Incorporating a discounting procedure that integrates socioeconomic projections and explicitly recognizes the uncertainty surrounding discount rates as well as the interrelationship of uncertainty in discounting and economic growth—and, in turn, societal damages from carbon dioxide emissions
  • Convening domestic and international government entities and businesses and conducting educational outreach on using estimates of the social cost of carbon in order to facilitate more informed policymaking worldwide

Scientific Advisory Board

In addition to ongoing consultation and collaboration with academics and decision makers around the world, RFF has established a formal Scientific Advisory Board, comprised of top academics and practitioners in fields relevant to SCC estimation. The Scientific Advisory board will provide ongoing advice and feedback on activities carried out by the initiative and ensure continuing research excellence and transparency in RFF’s work under the initiative.

Scientific Advisory Board Members:

  • Max Auffhammer, George Pardee Professor of International Sustainable Development and Associate Dean of Interdisciplinary Studies, Department of Agricultural and Resource Economics, International and Area Studies, University of California Berkeley;
  • Maureen Cropper, Distinguished University Professor; Chair, University of Maryland;
  • Kenneth Gillingham, Associate Professor of Economics; Yale University
  • Robert Kopp, Associate Professor, Rutgers University;
  • Billy Pizer, Professor, Sanford School of Public Policy, Duke University; and
  • James Stock, Harold Hitchings Burbank Professor of Political Economy, Faculty of Arts and Sciences, Harvard Kennedy School.