Comprehensive Evidence Implies a Higher Social Cost of CO₂

A multi-year study of the social cost of carbon, a critical input for climate policy analysis, finds that every additional ton of carbon dioxide emitted into the atmosphere costs society $185—far higher than the current federal estimate of $51 per ton.

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Date

Sept. 1, 2022

Authors

Kevin Rennert, Frank Errickson, Brian Prest, Lisa Rennels, Richard G. Newell, William Pizer, Cora Kingdon, Jordan Wingenroth, Roger Cooke, Bryan Parthum, David Smith, Kevin Cromar, Delavane Diaz, Frances C. Moore, Ulrich K. Müller, Richard J. Plevin, Adrian E. Raftery, Hana Ševčíková, Hannah Sheets, James Stock, Tammy Tan, Mark Watson, Tony E. Wong, and David Anthoff

Publication

Journal Article in Nature

Reading time

1 minute

Abstract

The social cost of carbon dioxide (SC-CO₂) measures the monetized value of the damages to society caused by an incremental metric tonne of CO₂ emissions and is a key metric informing climate policy. Used by governments and other decision-makers in benefit-cost analysis for over a decade, SC-CO₂ estimates draw on climate science, economics, demography, and other disciplines. However, a 2017 report by the US National Academies of Sciences, Engineering, and Medicine1(NASEM) highlighted that current SC-CO₂ estimates no longer reflect the latest research. The report provided a series of recommendations for improving the scientific basis, transparency, and uncertainty characterization of SC-CO₂ estimates. Here we show that improved probabilistic socioeconomic projections, climate models, damage functions, and discounting methods that collectively reflect theoretically consistent valuation of risk, substantially increase estimates of the SC-CO₂. Our preferred mean SC-CO₂ estimate is $185 per tonne of CO₂ ($44-413/t-CO2: 5-95% range, 2020 US dollars) at a near-term risk-free discount rate of 2 percent, a value 3.6-times higher than the US government’s current value of $51/t-CO₂. Our estimates incorporate updated scientific understanding throughout all components of SC-CO₂ estimation in the new open-source GIVE model, in a manner fully responsive to the near-term NASEM recommendations. Our higher SC-CO₂ values, compared to estimates currently used in policy evaluation, substantially increase the estimated benefits of greenhouse gas mitigation and thereby increase the expected net benefits of more stringent climate policies.

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Authors

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Frank Errickson

Princeton University

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Lisa Rennels

University of California, Berkeley

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Cora Kingdon

University of California, Berkeley

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Bryan Parthum

US Environmental Protection Agency

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David Smith

US Environmental Protection Agency

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Kevin Cromar

New York University

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Delavane Diaz

EPRI

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Frances C. Moore

University of California, Davis

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Ulrich K. Müller

Princeton University

Rich Plevins.jpg

Richard J. Plevin

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Adrian E. Raftery

University of Washington

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Hana Ševčíková

University of Washington

Hannah Sheets.jpg

Hannah Sheets

Rochester Institute of Technology

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Tammy Tan

US Environmental Protection Agency

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Mark Watson

Princeton University

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Tony E. Wong

Rochester Institute of Technology

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David Anthoff

University of California, Berkeley

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