NS4960 Summer Term 2019 Social Cost of Carbon Umair Irfan, climate change is a global injustice https://www.vox.com/2018/9/26/17897614/climate-change-social-cost-carbon

Overview All efforts to fight climate change face money test Are the benefits of stopping global warming and avoiding Sea level rise Heat waves and Wildfires Greater than the costs? Dollar value should be one of biggest factors in deciding what we are willing to do to tackle the problem

Social Cost of Carbon (SCC) New estimates on how much humanity would save by becoming more sustainable In 2018 Global Commission on the Economy and Climate came up with $26 trillion savings by 2030 Question – which countries stand to lose the most as climate changes Idea of the social cost of carbon A policy tool that attaches a price tag to the long-term economic damage caused by one ton of carbon dioxide – hence the cost to society Serves as a way to distill vast consequences of climate change down to a practical metric.

SCC Use in Policy Making Critically also the foundation of US climate policies under the Clean Power Plan Revising number downward has been a key part of Trump administration’s strategy to roll back environmental rules Under Obama the social cost of carbon was set at $45 per ton Under Trump it is as little as $1 dollar New study calculates social cost of carbon down to individual countries Clear pattern of costing some countries more than others Finds that the U.S. stands to pay one of the highest prices in the world for its emissions

SCC Calculations I Calculating the social cost of carbon requires coordinating several variables Need to make assumptions about Socioeconomic progress and Changes in the world that are going to happen out a century into the future Uncertainty as to how climate change is going to look Social cost of carbon an imperfect measure Focuses on broad changes in economy rather than abrupt shifts from extreme weather or disasters Requires making many arguable assumptions Still a useful tool in estimating costs and benefits of different ways to fight climate change.

SCC Calculations II Need to look at A range of greenhouse gas scenarios Different economic damage models Effects of multiple discount rates Apparently world has been drastically undervaluing the potential economic damages from climate change Global social cost of carbon is $417 per ton

Country Disparity I Great country disparity in economic consequences of climate change Countries at northern latitudes like Russia face negative social cost of carbon Implies warming up will help their economies Improve agriculture or reduce heating demands in far north However estimates based on macroeconomic factors within countries do not account for Declining international trade Sea level rise Thawing permafrost causing roads to buckle

Country Disparity II

Tragedy of Commons Problem Findings alarming for India Highest social cost of carbon at $86 a ton Second is US at $48 a ton Problem even if every country in world decides to implement a carbon tax at level of social costs to that country – won’t solve climate change Need to also include the damages to other countries – a “tragedy of the commons” problem Ton of CO2 contributed equally to climate change regardless where it comes from Total is grater than the sum of its parts.

Problem of Equity I U.S. almost balance – high social cost of carbon roughly proportional to how much carbon dioxide it emits India pumps out just 6% of global green house gases and will bare more than 20% of the global economic burden from climate change Many of the wealthiest countries in world stand to bear lowest costs of climate change Social costs of carbon show why climate change really has to be tackled as a global problem rather than by individual nations As long as countries like Russia, UK and Germany face little financial fallout, that policy case becomes much harder to make

Problem of Equity