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CLIMATE CHANGE, CATASTROPHE, REGULATION AND THE SOCIAL COST OF CARBON

March 21, 2018

Problems plague the federal government's social cost of carbon calculation and it should not be used for federal rulemaking.

A number of factors undermine the integrated assessment models used to develop the social cost of carbon calculations used by federal agencies to shape climate related regulations. Among those weaknesses are:  “Future emissions of GHGs are unknown—and unknowable—but likely lower than assumed in most IAMs; the relationship between emissions and concentrations of greenhouse gases iscomplicated; the climate is likely much less sensitive to increased emissions of GHGs than has been presumed in most IAMs, including those used by the IWG; the effects of climate change are unknown—but the benefits may well be greater than the costs for the foreseeable future; and when combining benefits and costs, the IWG used inappropriately low discount rates, giving the false impression that the benefits of reducing emissions are greater than the costs. At discount rates that reflect the opportunity cost of capital, the current costs of taking action to reduce GHG emissions now and in the near future are almost certainly greater than the benefits.”

Author
Julian Morris is executive director of International Policy Network (www.policynetwork.net), a London-based think-tank, and a visiting professor at the University of Buckingham.
julian@policynetwork.net

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