I recently attended a briefing on the Social Cost of Carbon (SCC) sponsored by the Ayres Law Group and it set my wonky heart ablaze. It featured panelists from advocacy, policy, economic, and legal backgrounds who vividly discussed the future of this calculation which is intended to bring environmental damages or externalities back into the conversation on federal enterprise regulation. While eating up the jargon and enjoying the jockeying between doctorates, I thought that it might be fun to write a blog post and make it plain since, numbers aside, it’s actively being used to help humans calculate damages to the environment over large expanses of time, when they make stuff.
The Environmental Protection Agency (EPA) defines the SCC as the economic damages assessed per metric ton of carbon dioxide emissions. Plainly put, it is the dollar figure attached to a specific amount of global carbon pollution. In the real world, this figure is used to develop a cost/benefit analysis that helps a project manager, developer or government define the savings realized by avoiding an action that puts carbon dioxide into the air we breathe. Assigning costs and liabilities helps businesses make decisions about where and whether to set up shop. The SCC is intended to make it easier to capture the full picture/bottom line on climate impacts by attaching that impact to dollars spent now and in the future. Government uses this calculation to define the present benefit of rules it makes to stem the negative effects of activity on the environment later.
President Obama has been an increasingly vocal advocate for an aggressive response to the impending reality that American style energy use has a negative global impact that contributes to climate change through increased greenhouse gas emissions. Cap and trade was originally proposed as a means to limit these impacts by creating a controlled system (delineated by a reduced impact target) for a steadily decreasing number of permits (i.e. rights) to pollute. It failed to get through the Senate and the President responded with a series of executive actions, including mandates, regulations, measurements, and fees to allow federal agencies like the EPA and the Department of Energy (DOE) to do what Congress could not, i.e. something.
The SCC monetizes the cost of doing business so that policies directed at big picture mitigation of climate change can fight static cost estimates with dynamic cost estimates. It also provides a neat and tidy-ish calculus as the reason to take or not take an action in the business world, making it a business decision regardless of whether it is a moral one. It is a heck of a conversion that transforms trees, air, and life itself into figures, regression charts, and tables. In doing so, it engages large scale undertakings in their own language of profits and losses.
There is some controversy about how the SCC is formulated. In fact, there are varying opinions on whether and how to fix that cost, what numbers accurately make up an appropriate period of time to measure impacts, and items such as what amount is an accurate reflection of the feasibility of an air conditioner or heat pump regulation, or whether a community building project gets beyond the environmental impact assessments required under the National Environmental Policy Act.
Beyond fixing the issues of how much time captures the complete damage of carbon and whose dollar amount best represents that loss, SCC is important because it helps decision makers know what science to apply, how dangerous an activity will be, and what species, environments, and ecosystems will be affected by the increase in carbon represented by an activity. So why care? Because we should all know how far into the future our infrastructure decisions affect warming seas, mass migration, species extinction, and ecosystem failure. And that information isn’t just for wonks.
Tamara is an environmental advocate focused on social and environmental justice issues. She holds degrees from The City College, City University of New York and Vermont Law School. Tamara has been a DC EcoWomen Board Member on the Professional Development Team since August 2014. Her hobbies include reading boring books about politics and neuroscience, writing diatribes about what she reads, travel, and yoga.