It's the most important number you've never heard of, and President Joe Biden is about to change it as he resets U.S. environmental policy.
It's the social cost of carbon, a figure that helps determine the stringency of federal regulations governing cars, trucks, power plants, refrigerators, microwave ovens, washing machines, vending machines and much more.
The social cost of carbon is a monetary figure that is meant to capture the damage done by a ton of carbon emissions to health, property and agricultural productivity, among other things. (It has two siblings, the social cost of nitrous oxide and that of methane.) Because federal agencies often base their decisions on cost-benefit analysis, a high social cost of carbon means aggressive regulation of greenhouse gas emissions and a low one will produce modest regulation.
Under President Barack Obama, the social cost of a ton of carbon was set at about $50 by a technical working group. In 2016, the analysis of the working group was upheld in court. But in one of his first actions, President Donald Trump disbanded the working group and essentially sliced the social cost of carbon to a range of $2 to $7. That low number played a large role in justifying significantly weaker regulation of emissions from cars, power plants and more.
How did Trump come up with that number? He ordered federal agencies to consider only the damage done in the U.S., and to ignore the damage done to the rest of the world. If greenhouse gas emissions from power plants in the U.S. harmed people in Canada, France and South America, that harm would be ignored.
In contrast, a Biden executive order on public health and climate change, issued last week, directs agencies to "capture the full costs of greenhouse gas emissions as accurately as possible, including by taking global damages into account." It emphasizes that doing so "supports the international leadership of the United States on climate issues."
That can be taken to reflect two points. The first is that if every nation used the domestic cost of carbon, the U.S. would be a big loser, because China, India, Germany, Canada and others would not consider the harm they do to U.S. citizens. What Americans need is an international agreement to use the global figure — and if the U.S. does that on its own, it is a lot more likely to spur such an agreement.
The second is that for moral reasons, as well as for reasons of international diplomacy, the U.S. should not ignore the damage that its companies inflict on others. If greenhouse gas emissions from New York, Ohio or California hurt people elsewhere, the nation's regulators ought to take that into account.
