Eight priorities for calculating the social cost of carbon

Eight priorities for calculating the social cost of carbon

Advice to the Biden administration as it seeks to account for mounting losses from storms, wildfires and other climate impacts. Advice to the Biden administration as it seeks to account for mounting losses from storms, wildfires and other climate impacts.

The time is ripe for this update. Climate science and economics have advanced since 2010, when a working group in the administration of former president Barack Obama first calculated the metric, and since its most recent update in 2016. That IWG did a careful job, but devastating storms and wildfires are now more common, and costs are mounting. Advances in attribution science mean that researchers can now link many more extreme weather events directly to climate change, and new econometric techniques help to quantify the dollar impacts. The monetary losses exceed the predictions of early models. The same goes for sea-level rise and many other types of damage.

Former president Donald Trump changed the terms for the SCC from 2017. He limited damages to those within the United States, omitting impacts that will be felt in other countries. And he gave an unrealistically low estimate of the costs of future damages as counted in today’s dollars. Together, these changes slashed the SCC to $1–7 per tonne: too low to influence policy. Climate economists viewed those steps as illegitimate.

Biden’s actions mark a return of science-based policy in the United States. An open, transparent and inclusive IWG process will help to re-establish the SCC as central to climate policy. Reversing Trump’s changes will be quick and pragmatic for the interim number. Other steps require much more deliberation. Plenty of scientific and economic judgements need to be made. These include how to deal with endemic uncertainties, including sudden and irreversible ‘tipping points’, such as ice-sheet collapses. Ethical questions must be considered, including the consequences for vulnerable communities and future generations.

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