regulatory impact analysis of its proposed repeal of the Clean Power Plan includes new estimates of the social cost of carbon that are dramatically smaller than those used by the Obama administration. As RFF President Richard Newell (who co-chaired a National Academies of Sciences, Engineering, and Medicine committee on the social cost of carbon) noted in a blog post yesterday, the reductions arise from two factors: the use of different discount rates, and the decision to account for benefits from reducing CO2 emissions that would accrue to the United States only rather than global benefits. Using a domestic-only number reduces the social cost of carbon by as much as 86 percent.
RFF Fellow Casey Wichman has written on the topic of US versus global estimates of the social cost of carbon in the most recent issue of Resources magazine. After discussing the various arguments for and against using a global number, he concludes:
Overall, there is inconsistency between the conceptually correct social cost of carbon—that is, the global external damages from carbon emissions—and the guidance put forth for regulatory impact analysis by the US government. Reconciling these two concepts will be a necessary challenge to construct effective climate policy, especially to the extent that other countries look to the United States for climate leadership.