Assessing the Social Costs and Benefits of Regulating Carbon Emissions
The government is required to quantify the costs and benefits of regulations they propose.
Policy Study #445
The government is required to quantify the costs and benefits of regulations they propose. In the context of regulations pertaining to carbon emissions, the various agencies had been using differing (often implicit) estimates of the net social cost of carbon. In response, an Interagency Working Group was created in order to establish a consistent and objective “social cost of carbon” (SCC). The range of estimates of the social cost of carbon produced by the Interagency Working Group is both too narrow and almost certainly biased upwards due to the use of a limited nubmer of simplistic models, all of which use inflated estimates of climate sensitivity.
Using better models and the most recent evidence on climate sensitivity, this study finds that the range of social cost of carbon should be revised downwards, concluding that, carbon emissions may have a net beneficial effect, though even at the high end of costs carbon emissions are very unlikely to be catastrophic.