In an unheralded move earlier this year, an interagency group of technical experts coordinated by the Office of Management and Budget and the Council of Economic Advisors finalized a revised estimate of an important numerical value used in federal regulatory cost/benefit analyses to represent the cost to society of carbon-based greenhouse gas emissions. The new value increased the "social cost of carbon" from the previous level (established in 2010) of $23.80 to $38 per metric ton of carbon dioxide (CO2) emissions, in some cases doubling the estimated benefit of carbon reduction initiatives. The new factor appeared in the cost-benefit justification for a DOE energy efficiency rulemaking in May 2013 and immediately sparked controversy. Critics charged the new value had been adopted without the benefit of peer review or public comment and that it was too high, which would make it easier for the Administration to justify costly new climate change regulations. Opponents in Congress convened hearings and proposed legislation to compel a review.
After months of furor, the newly confirmed Administrator of the OMB Office of Information and Regulatory Affairs, Howard Shelanski, announced November 1 that the new value would be adjusted slightly downward to $37, due to technical corrections, and also solicited comments on the estimate. A Federal Register notice with a comment deadline is expected imminently. Technical information on the derivation of the new Social Cost of Carbon is available here.
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