With gorgeous blue prairie skies all too often transformed into smoky shrouds, we have just experienced a summer that brought climate change home. We are aware of the fires, the floods, the storms, the droughts, the heat waves, the rising sea levels, the effects on our health, but what’s the monetary cost?
Aside from the potential for the collapse of civilization at some point in the possibly not so distant future, what is the cost in dollars and cents today? What does it all add up to? Skeptics and deniers will always be able to shrug off concern unless we offer numbers, not simply the cost of this or that disaster but of the total catastrophic package.
Relating how much of a disaster is due to global warming has presented scientists with a big challenge. They are now rising to the challenge and are increasingly able to link global warming to the various events. As a result, estimates of the cost of greenhouse gas emissions have grown more sophisticated.
Scientists in Washington began calculating the “social cost of carbon” during the Obama administration, arriving at a figure of $42 a ton globally. The estimate is based on how a variety of indicators such as health outcomes, agricultural production and property values are harmed by an additional ton of emissions.
The Trump administration, assuming as was its habit, that the U.S. exists in isolation, only included carbon emitted within the U.S. and reduced the cost to $5/ton. The Biden administration returned to reality and set it at $51/ton. But now, on the basis of the most recent research, the U.S. Environmental Protection Agency (EPA), has recommended the cost should be $185/ton.
This number is a major game-changer. The social cost of carbon is used to balance the economic benefits and costs of regulations applied to polluting industries. The federal government will now have legal authority to much more aggressively limit climate-warming pollution, and apparently it intends to waste no time in applying the new metric to emissions from cars, trucks and power plants. President Biden intends to impose new regulations on steel and cement plants, factories and oil refineries as well if he is re-elected in 2024.
According to Michael Greenstone, director of the Energy Policy Institute at the University of Chicago, “It brings the U.S. government to the frontier of climate science and economics, after we had fallen behind.” Many more climate change actions will pass the cost-benefit test.
There will be legal challenges, but the EPA is prepared. The new number is sufficiently supported by research and analysis that it would be difficult for a new administration to reduce it, although Republicans will no doubt try.
The Canadian government generally adopts the methods used by the EPA, so we will have more ammunition to support climate actions here as well. Cost-benefit analysis of reducing greenhouse gas emissions should be an integral part of all government planning, not just a tool for regulatory proposals.