Mere mention of the term ‘social cost of carbon’ (SCC) invites both superlatives as to its importance as the ‘holy grail’ of climate economics and strong counteractions, including calls to have it scrapped altogether. In some sense, the SCC is simply an attempt to answer the question of how bad climate change truly is, typically in US dollars.
To some, meanwhile, the SCC is a lagging indicator of the severity of climate change, perennially behind the latest science. Reliance on the SCC as a guide for policy is, thus, a chief culprit as to why the world is hurling toward the precipice of unmitigated climate change. It is partly against this backdrop that Nicholas Stern and Joseph Stiglitz’s recent working paper, describing an ‘alternative approach’ to the SCC, has found such resonance.
