SBC: Social Benefits of Carbon

Science Matters

Recently I posted on the Social Cost of Carbon: Origin and Prospects, which has become a focus for the Trump transition team. An article from Bloomberg provided a good historical context and overview of that policy instrument. The discussion noted major issues with how the damages are estimated and focused on how the calculation depends greatly upon the arbitrary choice of discount rate.

Several commenters raised a quite separate problem, namely that SCC is biased by addressing only estimated damages from CO2 and not the social benefits. That is not surprising since the entire purpose of the SCC is to get a large enough dollar figure to justify imposing expensive regulations, supposedly to avoid the damages by reductions in CO2 emissions. The framers had no interest or incentive to reduce damage estimates by considering benefits.

However a normal cost/benefit analysis would only project damages net of the expected benefits…

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