Last week, the Department of Energy announced a little-noticed update to its energy-efficiency standards for microwaves, requiring newer models to use less power in stand-by mode.
But there was a surprise buried in the fine print: The agency is now using a higher figure for the “social cost of carbon” in calculating the benefits of the rule. Instead of assuming that the harm caused by carbon-dioxide emissions comes to $22 per ton in 2013, regulators are now using a figure of about $36 per ton....
This was a scheduled update, and you can read the reasoning in this newly released memo (pdf) from the Office of Management and Budget, dated May 2013. And essentially, the government is now incorporating newer climate models that capture the future damage from sea-level rise more explicitly. Those models also project that agriculture will suffer more heavily in a hotter world.
So, in its central estimate, the federal government now assumes a ton of carbon-dioxide emitted in 2013 does roughly $36 in damage, rather than its previous estimate of $22, with the value rising each year:
Again, as the chart shows, a lot depends on what “social discount rate” you use to value future generations — the central value is considered to be 3 percent. ...
A larger value for the social cost of carbon basically means that any efficiency standard or air-pollution regulation that reduces carbon-dioxide emissions will have higher benefits assigned to it. That could, in theory, make it easier for stricter standards to pass a cost-benefit analysis test....
We got an early glimpse of this with the Energy Department’s microwave rule. Under the old social cost of carbon, the microwave standards had an estimated $4.2 billion in benefits over the next 30 years. Under the new carbon numbers, the microwave rule has an estimated $4.6 billion in benefits.
Other stuff will cost you more too, but the benefits will outweigh the costs.
Hat tip: Common Resources
