2023.08 EJ Carbon Cost

Transparency and justification are also issues. The EPA’s proposed new methodology does not include documentation of the parameters and equations used in the modeling or the detailed results necessary for understanding and evaluating the modeling. Given the potential implications of the social cost of carbon in the development of policy and regulations, full transparency, as well as justification for methodological choices, is necessary for proper assessment and public trust. “The public needs to have confidence that what is being produced is scientifically reliable and that robust numbers are being used to inform policy decisions,” Rose said.

transparency

Another deficiency that EPRI’s analysis highlights is that the EPA’s draft new methodology does not consider the full scientific factors associated with discounting future economic impacts from climate change. Discounting is necessary for computing the net present value of future estimated impacts from a unit of emissions today. Accounting for the scientific discounting factors, such as the very long duration of the climate investment associated with emitting carbon dioxide, would result in significantly different discount rates and lower social cost of carbon estimates.

DISCOUNTING

Among the many scientific issues EPRI’s analysis raised was that of plausibility. For example, some of the climate projections used in the draft new methodology envision global temperatures rising by a global average of 8°C; other projections have global emissions peaking and declining immediately. “Neither of these futures is going to happen,” Rose said. “If you eliminate the future scenarios that are implausible, the estimates will change.”

PLAUSIBILITY

EPRI’s analysis also pointed out that the draft methodology does not adequately represent current scientific knowledge. This affects, for example, how changes in the climate are translated into economic consequences. “There is significantly more information available in terms of estimating the potential global economic implications of a projected change in climate, both in aggregate in terms of total global impacts on society and for individual categories, like health-related impacts and impacts on agriculture,” Rose said. “All of that information needs to be considered. As is, it would be quite easy to insert alternative specifications into EPA’s draft new modeling that could change the numbers significantly. This is a serious problem because the administration and the public need robust and reliable estimates.”

ROBUSTNESS

TRANSPARENCY

DISCOUNTING

PLAUSIBILITY

ROBUSTNESS

DISCOUNTING

TRANSPARENCY

PLAUSIBILITY

ROBUSTNESS

PLAUSIBILITY

transparency

DISCOUNTING

ROBUSTNESS

transparency

DISCOUNTING

PLAUSIBILITY