The social cost of carbon under President Trump

The Social Cost of Carbon (SCC) has been one of the main pillars of the EPA’s strategy to tackle the US’s contribution to climate change. According to a letter leaked this week, that looks set to change. Tom Pyle, the man leading Trump’s transition team of the US Dept of Energy apparently believes that ‘if the SCC were subjected to the latest science it would certainly be lower than what the Obama administration has been using.’

Let’s examine this claim for a moment. The EPA’s central estimate of the SCC is $37 per tonne of CO2 in 2015, rising to $43 in 2020 (all in $2007 using a 3% discount rate).

It is not entirely clear what Pyle means by the ‘latest science’, but let’s assume he is talking about the lower estimates of transient climate response (TCR) that Otto et al and Lewis produced by considering actual global temperature changes up to 2009 and 2013 respectively.

As it happens, I have run the PAGE09 model with both these TCR ranges. Using the range from Otto et al gives a mean SCC of about $80 per tonne of CO2, while using the range from Lewis gives a mean SCC of about $65 per tonne of CO2 (in the year 2010 in $2005). Updating them to the year 2015 in $2007 gives mean values of about $95 and $75 respectively. Not only are these not ‘certainly lower’ than the EPA’s central value of $37, they are actually significantly higher.

How can this be? It is because the default PAGE09 model has a wider range of discount rates than the EPA used, and because the EPA includes estimates from the FUND model, which gives significantly lower estimates of the SCC than the other two integrated assessment models, PAGE and DICE.

Now I’m not claiming that the SCC is ‘certainly higher’ than the value calculated by the EPA. Any estimate of the SCC has a wide range of uncertainty, as the EPA explicitly recognizes. But it is hard to see how the numbers here prove it to be ‘certainly lower’ than the EPA’s numbers.

Of course, the only way to investigate this issue thoroughly is to use an integrated assessment model to make the calculations. Pyle himself seems to accept this as he apparently stated that ‘During the Trump Administration the SCC will likely be reviewed and the latest science brought to bear’. If he is serious about this, we may see some interesting new results from the PAGE model in the months ahead.

 

 

 

 

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