... with climate legislation stalled in Congress, the EPA regulatory actions could be the only U.S. climate policy that we see for a long time. So it’s worth a little of our time and brain cells to figure out just what the [Social Cost of Carbon] means and why we should care.
The dollar figure put on the SCC will determine just how much regulation actually takes place. The EPA will look, in traditional cost-benefit-analysis style, at the cost of complying with a regulation in comparison to the SCC. If complying with the regulation costs more per ton than the SCC, the EPA won’t require it. If it costs less, it will. A high SCC means lots of regulations to reduce carbon dioxide emissions (think: higher fuel-efficiency requirements on cars, tighter emissions requirements for power plants). A low SCC means little or no regulation.
The EPA’s method of calculating the SCC is troubling and, perhaps, the subject of another blog posting. Suffice it to say, the figure is fairly arbitrary, based on a bunch of value judgments that need a lot closer examination by a wider public.
I have my own blog post brewing on the SCC. Beware.
