The EPA is finalizing a very high value for carbon that the federal government can use whenever it leases land to oil drillers or buys new mail trucks.
However, the impact on actual policy decisions may be limited.
Experts say the agency’s stratospheric social carbon costs ($190 per ton) will make it difficult to tighten regulations or restrict fossil fuel production on federal lands, at least without further legislative or regulatory changes. We may not be able to reduce or make climate-friendly purchasing decisions.
“Some say the social cost of carbon is the most important number you’ve never heard of. Others say it’s the least important number you always hear,” New York University Policy Integrity Institute said Max Szalinski, the institute’s senior attorney. “I think both are probably true.”
Draft greenhouse gas social cost indicators for carbon, methane and nitrogen oxides are currently being considered by an external panel of experts. The proposed number is significantly higher than the number currently used by the Biden administration, at about $51 per ton of carbon. EPA’s draft metrics are intended to reflect 10 years of research on the cost of greenhouse gases to society. The last science-based update was in 2013.
It is unclear when the agency will announce the final figures. If that happens, this remarkable metric could be used across the federal government, including in future EPA regulations, the Department of Energy’s efficiency mandate, the Department of Transportation’s fuel efficiency regulations, and environmental reviews of major projects. .
Recent climate change guidance requires government agencies to monetize the climate impacts of projects using the “best available” social cost of greenhouse gases (climate wireJanuary 10).
But it may not live up to the expectations of supporters and critics alike. The idea that this metric could provide an internal carbon tax that drives all aspects of federal government decision-making may never materialize.
Lawmakers on both sides of the political divide have seized on the social costs of greenhouse gases as a powerful regulatory tool. Sen. Shelley Moore Capito (R-Va.) introduced a bill in the last Congress that would ban government agencies from using the fuel, fearing it would stifle fossil fuel development.
Sen. Sheldon Whitehouse (DR.I.) said the index would embed climate change considerations into all actions of the U.S. government.
“The hard social costs of carbon should be used throughout government decision-making, not just regulation,” Whitehouse told E&E News in an email this week. “Think of grants, permits, purchases, royalty rates, investment decisions, and trade agreements, just to name a few.”
However, the idea that metrics could provide an internal carbon tax that drives all aspects of federal government decision-making has faced numerous legal and procedural hurdles and has so far been limited to a footnote in regulatory documents. has been done. And while a higher number would change the calculations, whether it would change policy remains an open question.
“Adult way”
The social cost of carbon has been the subject of more than 100 federal lawsuits under four administrations since 2008, when a federal court ordered former President George W. Bush’s Department of Transportation to revise fuel economy standards that downplayed climate change. It appears in Not only have carbon metrics never entered the mainstream of federal policy, they have done little, if anything, to change the balance of costs and benefits in rulemaking.
A 2016 analysis by researchers at the Electric Power Research Institute found that the social cost of carbon was not a significant factor throughout the Obama administration. EPRI hasn’t released an update to the report, but Stephen Rose, EPRI’s chief research economist and one of the authors, said the benefits from climate change could be offset by other benefits, such as air quality and energy security benefits. It said the regulations published in the report continue to lag behind compared to the considerations. Federal Register.
The increasing social costs of greenhouse gases such as those that EPA intends to release are expected to change this situation.
But Rose said the effectiveness could be blunted by other issues with how federal regulatory analyzes are conducted, such as inconsistencies in how benefits and costs are compared and how emissions that occur outside the scope of the analysis are accounted for.
“It’s not just a matter of, ‘If you change your values, you change the whole story,'” he says. “These other issues also need to be addressed to ensure that the benefit and cost calculations themselves generate reliable insights.”
The Office of Information and Regulatory Affairs, part of the Office of Management and Budget, is expected to soon update its 20-year-old guidance on how agencies conduct cost-benefit analyzes (CBAs). Many laws, including parts of the Clean Air Act, require government agencies to weigh costs and benefits when setting rules and standards. However, these laws do not oblige a government agency to always choose the most profitable alternative by following his CBA.
As part of his Inauguration Day executive orders, President Joe Biden called for a revamp of Circular A-4, which has guided the CBA since 2003. Biden’s goal was to promote “policies that reflect new developments in scientific and economic understanding.” Experts expect the next framework, in conjunction with EPA’s higher greenhouse gas values, will strengthen consideration of climate and environmental justice in rulemaking.
However, the CBA does not decide policy. The government does that.
Noah Kaufman, who until last year worked on updating the metric as President Biden’s top climate change economist, said regulators are using the social costs of greenhouse gases as a basis for legal risks for tightening standards. He said that there is a tendency to regard it as such. He said the CBA as currently in place is nothing more than a “political exercise” to help government agencies sell their insurance, not to identify the best policy alternatives. .
In contrast, the European Union and the United Kingdom start with a policy goal of a carbon-neutral economy by 2050 and work backwards from there to arrive at carbon values ​​(climate wireMarch 9, 2021).
“I think that’s a grown-up way of dealing with this problem,” said Kaufman, who now works at Columbia University’s Center on Global Energy Policy.
Fossil fuel? “I’m going to approve it.”
The Bureau of Land Management began using the $51 social cost of greenhouse gas metric in its environmental analysis of land-based energy development in 2021. The Bureau of Ocean Energy Management has been using carbon values ​​in marine leases for many years. However, environmental reviews rely less on comparing costs and benefits than regulatory analysis, and high-emission projects are still given the green light.
This frustrated environmentalists.
Nicole Ghio, senior manager of fossil fuel programs at Friends of the Earth, said part of the reason is the continued use of low social cost figures for greenhouse gases.
“The government has done the math on this absurdly low social cost of carbon and is still going ahead with the project, even though it has indicated it should not go ahead,” she said.
Using the Willow oil project as an example, the BLM could make a decision at any time.
The agency released a supplemental environmental impact report last year estimating that the massive North Shore oil project would cause up to $19.8 billion in climate damage, using preliminary social costs of greenhouse gases. Friends of the Earth crunched the numbers on the EPA’s social cost index of $190 and found that the cost of climate change is $79 billion. US taxpayers are projected to receive $3.9 billion in new revenue.
Theoretically, it should be shown that the environmental costs of building the project far outweigh the benefits of approval.
But environmentalists are bracing for the Biden administration to approve Willow. Even if this were to happen, it is unclear what difference a higher social cost index would make.
“Theoretically — and this is what proponents have argued — authorities could do some sort of weighing of the costs and benefits,” said New York University’s Salinsky. “And that’s where the social cost of carbon could be a prominent consideration.”
“But at the moment, that’s not what they’re doing,” he added. “For the most part, that meant, ‘If you’re interested in fossil fuel development, we’ll approve of it.'”