Valuing Climate Damages: Updating Estimation of the Social Cost of Carbon Dioxide

To estimate the social cost of carbon dioxide for use in regulatory impact analyses, the federal government should use a new framework that would strengthen the scientific basis, provide greater transparency, and improve characterization of the uncertainties of the estimates, says a new report by the National Academies of Sciences, Engineering, and Medicine. The report also identifies a number of near- and longer-term improvements that should be made for calculating the social cost of carbon. The social cost of carbon (SC-CO₂) is an estimate, in dollars, of the net damages incurred by society from a 1 metric ton increase in carbon dioxide emissions in a given year. The SC-CO₂ is intended to be a comprehensive estimate of the net damages from carbon emissions—that is, the net costs and benefits associated with climate change impacts such as changes in net agricultural productivity, risks to human health, and damage from such events as floods. As required by executive orders and a court ruling, government agencies use the SC-CO₂ when analyzing the impacts of various regulations, including standards for vehicle emissions and fuel economy, regulation of emissions from power plants, and energy efficiency standards for appliances.