Eight priorities for calculating the social cost of carbon
by Gernot Wagner, David Anthoff, Maureen Cropper, Simon Dietz, Kenneth T. Gillingham, Ben Groom, J. Paul Kelleher, Frances C. Moore, and James H. Stock
One of the first executive orders US President Joe Biden signed in January began a process to revise the social cost of carbon (SCC). This metric is used in cost–benefit analyses to inform climate policy. It puts a monetary value on the harms of climate change, by tallying all future damages incurred globally from the emission of one tonne of carbon dioxide now.
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Here we set out eight steps so that the US SCC can pass muster legally, guide climate policy and win trust at home and abroad. It must reflect the latest and best science and economics. All assumptions — ethical and otherwise — must be made explicit.
The trend is clear. So are the challenges. One key task is to de-risk capital investments to lower costs. This is where public climate finance must play its most critical role – not as charity, but as leverage.
