EME 444
Global Energy Enterprise

Social Cost of Carbon

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In policy making, we must consider the cost of a proposed policy against the benefits of the proposed policy. How much would it cost taxpayers? How much would it benefit tax payers?

In the case of policies designed to address climate change, how does government put a value on the benefits of reducing emissions? What is saving a ton of CO2 emissions worth to tax payers? A mechanism used to give a value to emission reductions is called the Social Cost of Carbon (SCC). It puts a dollar value of the costs to society caused by a single ton of carbon dioxide (CO2) emissions. In  other words, the SCC is the cost, in dollars, of the externalities of carbon emissions.

The SCC is set by the federal government (note that this is an archived link due to changes from the Trump Administration) and is used to determine the value to tax payers of proposed policies designed to reduce CO2 emissions. As such, it is a matter of public politics with a wide range of highly motivated and engaged stakeholders.

To Read Now

More than Meets the Eye, The Social Cost of Carbon in U.S. Climate Policy, in Plain English (July 2011, World Resources Institute, Environmental Law Institute). Read Summary through section 4a How do the SCC Models Work?

Developing a Social Cost of Carbon for US Regulatory Analysis: A Methodology and Interpretation (2013, Review of Environmental Economics and Policy). Read Abstract, Introduction and Conclusions

To Read Now

Calculating and utilizing the SCC is a complicated and controversial topic. The following articles are not meant to be comprehensive, but to provide a snapshot of the science behind, and some competing views of SCC.