What Business Stakeholders Need to Understand About the Social Cost of Carbon

The Biden-Harris Administration Day One Executive Order on Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis established an interagency working group to publish a revised interim Social Cost of Carbon (SCC) within 30 days and then to complete a final SCC by January 2022. On February 26, the workgroup relied on Obama-era methods to produce an interim SCC figure of $51 per ton, replacing the Trump-era estimate of between $1 and $6 per ton. Twelve states promptly challenged the new figure in federal district court in Missouri as unlawful and unconstitutional.¹ The SCC is a metric that seeks to capture all of the costs that emitting a ton of carbon dioxide (or equivalent amounts of other greenhouse gases such as methane) imposes on society by contributing to climate change over the hundreds of years it remains in the atmosphere. While the concept that the cost carbon emissions imposes on society is relevant in making decisions about what steps are worthwhile to prevent such emissions, the vast range in estimates underscores how complex such an assessment is. Indeed, some scientists opine that the social cost of carbon should actually start at about $100 to $200 per ton of carbon dioxide pollution, increasing to nearly $600 by 2100. As climate policymaking and litigation unfold, there are three main topics business stakeholders need to understand about the Social Cost of Carbon.

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