Social Cost of Climate Change 6X Greater Than Government Estimates

R&D Magazine reports that the government is underestimating the social cost of Climate Change by a factor of 6&times:: The economic damage caused by a ton of carbon dioxide emissions—often referred to as the "social cost" of carbon—could actually be six times higher than the value that the U.S. now uses to guide current energy regulations, and possibly future mitigation policies, Stanford Univ. scientists say. A recent U.S. government study concluded, based on the results of three widely used economic impact models, that an additional ton of carbon dioxide emitted in 2015 would cause $37 worth of economic damages. These damages are expected to take various forms, including decreased agricultural yields, harm to human health and lower worker productivity, all related to climate change. But according to a new study, published online in Nature Climate Change, the actual cost could be much higher. "We estimate that the social cost of carbon is not $37 per ton, as previously estimated, but $220 per ton," said study coauthor Frances Moore, a graduate candidate in the Emmett Interdisciplinary Program in Environment and Resources in Stanford's School of Earth Sciences. Based on the findings, countries may want to increase their efforts to curb greenhouse gas emissions, said study co-author Delavane Diaz, a graduate candidate in the Dept. of Management Science and Engineering at Stanford's School of Engineering. "If the social cost of carbon is higher, many more mitigation measures will pass a cost-benefit analysis," Diaz said. "Because carbon emissions are so harmful to society, even costly means of reducing emissions would be worthwhile." There's a lot of talk coming out of DC, mostly from Democrats, that new taxes are called for. This higher social cost of carbon is certain to amp up that talk. But, higher taxes are always and everywhere a bad idea. Some are worse than others, though. James Hansen has the best idea about carbon taxes: collect the taxes and distribute them directly to taxpayers via debit cards. This would help prevent the politicians from diverting those taxes and create a net positive monetary benefit for the average consumer. According to Hansen's formula, parents would receive full credit and children half credit for taxes paid by oil companies. Here's what he says in his latest blog : Current low oil and gas prices present a golden opportunity to solve the climate problem. Today we could jump-start a carbon fee at a large rate, say $100 per ton of CO₂, collected from fossil fuel companies on the first sale at domestic mines and ports-of-entry. This initial fee generates more than $600B per year in the U.S., which should be 100% distributed electronically (to bank accounts or debit cards) to all legal residents. With half a share for children up to two per family, a family of four or more would receive about $6000/year. Subsequent increase of the carbon fee would be slow, e.g., $10/ton per year, to allow people and entrepreneurs time to make changes and investments, as we move toward carbon-free energies and energy efficiency. $100/ton would increase the price of gasoline at the pump about $1/gallon. However, such a price rise will occur in the near future anyhow. It is only a matter of whose pocket the added money will go into: the fossil fuel industry's pocket or the public's pocket. The ultimate price at the pump will be similar in carbon-fee and no-carbon-fee cases. In the carbon-fee case, fuel demand falls over time as fuel use declines, in the U.S. by more than 30% in 10 years and 50% in 20 years. Thus conventional fossil fuels will suffice to carry us beyond fossil fuels. Expensive unconventional fossil fuels such as tar sands and deep Arctic oil would mostly be left in the ground, regardless of pipelines. Technology development is crucial to move us to a clean energy future, but it will be rapid only if there is a carbon fee that entrepreneurs and business people can count on to continue to rise. Government R&D was once a prime driver of technology progress, but not today. I speak from experience and understanding of how government bureaucracy has grown and now slows technical progress in even the most "can do" of agencies. Yes, it is worth reforming present agencies, but primarily so they can facilitate progress in private enterprise, rather than impede it. This is a good idea, but only if we can find a way to keep the crooked politicians' hands out of the cookie jar. Unfortunately, Hansen makes the common mistake environmentalists make in assuming that keeping the oil in the ground is a positive—it's not. Oil that is not burned makes a great feedstock for plastics, fertilizers and pesticides. There would need to be a mechanism for crediting oil companies for oil which is ultimately not burned. Otherwise, Hansen has a great idea for carbon taxes. Most folks would see a net credit under his scheme and that's something the consumer isn't going to complain about.

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