Social Cost of Carbon Goes Shopping

by Jean Chemnick (Politico's Power Switch) ... That’s new territory for an old regulatory staple that has been in use since the George W. Bush administration, which started developing the social cost of carbon after a federal court ruled that the government had failed to adequately weigh climate impacts when crafting a fuel economy rule.

The social cost values are designed to turn the global harm done by a ton of carbon, methane or nitrous oxides into dollars and cents. That makes it easier for agencies to consider climate damage when conducting cost-benefit accounting as part of rulemakings.

The estimates have sometimes popped up in other areas, such as when agencies use them to write mineral lease plans or environmental impact assessments. But the Biden administration is the first to propose using the metric to guide how the federal government uses its massive spending power.

EPA’s new higher social cost estimates could also tip the scales even more strongly toward climate-friendly alternatives and vendors.

EPA now puts the social cost of carbon at $190 per ton, more than three times the $51-per-ton value the Biden administration has been using. READ MORE

Excerpt from E&E NEWS Climatewire: The White House told agencies in late December to use their own “professional judgement” in deciding which social cost metrics to deploy: placeholder figures from an interagency working group, or EPA’s new and stronger estimates. That opened the door for agencies to use EPA’s figures — which were finalized at the end of the year as part of a methane rule — in a broad set of federal actions.

The shift comes during a year when President Joe Biden plans to finalize most of his first-term regulatory agenda. That includes EPA rules to limit pollution from cars, trucks and power plants; new Transportation Department fuel economy standards; and Department of Energy regulations to increase the efficiency of gas stoves and other appliances.

As such rules become final, states and industry groups are likely to launch lawsuits that could target the role the social cost of greenhouse metrics played in supporting them.

EPA issued final social cost figures for carbon, methane and nitrous oxides in December as part of its final rules to curb oil and gas methane emissions. The estimates reflect the global economic and welfare costs stemming from 1 ton of heat-trapping pollution.

EPA’s process leapfrogged a White House-led effort that Biden launched in an executive order and which produced a set of interim social cost of greenhouse gas metrics in 2021.

Higher social cost values are likely to help the Biden administration make the case that stricter climate rules are justified, even if they come at some cost to regulated industry.

“Agencies often leave a more stringent option on the table, even if their own analysis finds that it would yield greater net benefits,” said Max Sarinsky, a senior attorney at the Institute for Policy Integrity at New York University School of Law.

Federal procurement agencies are also planning a slate of green purchasing rules, including one due out as soon as this month to curb the government’s “climate risk in acquisitions.” That draft is currently under White House review.

Red states have so far failed in their attempts to use the courts to keep the Biden administration from using its social cost metrics.

Last year, the Supreme Court declined to review lower courts’ decisions to reject challenges from Missouri and other red states; the courts had ruled that the challenges were premature because they came before rules were finalized that used the social cost of carbon figures.

More lawsuits are likely as EPA finalizes new rules that cite the social cost metrics, or as other agencies use them in regulations, procurement or other decisions. But experts say those lawsuits might be complicated by the fact that federal decisions usually don’t hinge on a single factor. READ MORE