Ask Eartha: What’s the ‘social cost of carbon?’ |

Ask Eartha: What’s the ‘social cost of carbon?’

Eartha Steward
Ask Eartha
Dangerous toxic emissions in the atmosphere
Getty Images/iStockphoto | iStockphoto

Dear Eartha,

I’ve been hearing the term “social cost of carbon” in the news lately. Can you explain what this is?

— George, Frisco

Great question, George. Climate change has indeed been in the news, and not for good reason. The recent signing of the Presidential Executive Order on Promoting Energy Independence and Economic Growth set forth an extensive list of climate change-related rules and regulations to either “suspend, revise, or rescind.” Among the many items slated for review is the social cost of carbon, and the interagency working group convened by the Obama administration to calculate the figure was disbanded. But what does this all mean?

Social cost of carbon

When regulatory agencies, such as the Environmental Protection Agency, make rules, they must take into account the costs and benefits of the proposed regulations to society as a whole. These costs and benefits are typically presented in monetary terms — this way regulators can compare apples to apples. It’s important to complete a cost-benefit analysis, otherwise a policy might end up doing more harm than good.

With respect to climate change and environmental policies, the premise is simple. Excess carbon pollution from human activities is causing climate change, and the impacts of climate change are expensive. So, when federal agencies create policies that address greenhouse gases and climate change, they have to consider the social cost of carbon, which estimates economic impacts of climate change per metric ton of emitted carbon dioxide.

This metric allows regulators to weigh the costs of limiting carbon emissions against the benefits of restricting emissions. To arrive at the number, the interagency group considers factors like changes in agricultural productivity, impacts to human health, property damages from floods and other catastrophic events, as well as changes in energy costs.

Right now, the social cost of carbon is valued at $41, which means that for every one ton of carbon dioxide released into the atmosphere, society will pay about $41 in damages.

To give this a little perspective, in 2014 the U.S. emitted 6,870 million metric tons of carbon dioxide. Multiply 6,870 million by $41 and the negative economic impacts of carbon dioxide emissions add up to nearly $282 billion — and that’s just for 2014.

Costs of climate change

This is all very wonky, but some examples should help to make sense of it all:

• In 2016, there were 15 weather and climate events in the U.S. that caused more than $1 billion in damages each. The annual average for events like this from 1980 to 2016 is 5.5.

• In 2012, a warm winter in Michigan led to premature budding of cherry trees, resulting in $220 million in agricultural loses.

• In 2002, smog pollution nationwide resulted in 795 premature deaths, caused over 4,000 hospitalizations and 365,000 outpatient visits. The costs of treating these patients was $6.5 billion.

On the other hand, here are some of the benefits of taking action to limit climate change:

• Since 1975, U.S. drivers have saved over $4 trillion in gasoline costs because of federal emissions standards.

• The Clean Power Plan is estimated to provide $29 billion in health benefits alone due to reduced cardiovascular and respiratory illnesses caused by harmful emissions from power plants.

Moving forward

What does it mean that the social cost of carbon is now under review? Well, it’s too early to tell. The figure itself was developed through an academically rigorous, peer-reviewed process, and it was updated regularly. Policymaking will still require a cost-benefit analysis, but some analysts and environmental groups worry that the social cost of carbon will be undervalued. And now that the interagency working group has been disbanded, there’s no telling who will update the numbers — if anyone.

We need to make sure this number is accurately reflected in policymaking, otherwise the long-term costs of, say, rolling back federal fuel economy standards will far surpass the short-term benefits to car manufacturers and gas companies. Because the bottom line is that the social cost of carbon exists, and we — and our children and grandchildren — will all pay the price.

Ask Eartha Steward is written by the staff at the High Country Conservation Center, a nonprofit organization dedicated to waste reduction and resource conservation. Submit questions to Eartha at

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