New Metrics
Study Finds Social Cost of Carbon More Than Triple the Current Federal Estimate

After years of robust modeling and analysis, a multi-institutional team led by researchers from Resources for the Future (RFF) and the University of California Berkeley (UC Berkeley) has released an updated estimate for the social cost of carbon that reflects new methodologies and key scientific advancements. The study, published in the journal Nature, finds that each additional ton of carbon dioxide emitted into the atmosphere costs society $185 per ton — 3.6 times the current US federal estimate of $51 per ton.

The social cost of carbon is a critical metric that measures the economic damages, in dollars, that result from the emission of one additional ton of carbon dioxide into the atmosphere. A high social cost of carbon can motivate more stringent climate policies, as it increases the estimated benefits of reducing greenhouse gases.

“Our estimate, which draws on recent advances in the scientific and economic literature, shows that we are vastly underestimating the harm of each additional ton of carbon dioxide that we release into the atmosphere,” said RFF President and CEO Richard G. Newell, who coauthored the peer-reviewed paper. “The implication is that the benefits of government policies and other actions that reduce global warming pollution are greater than has been assumed.”

Aside from the estimate itself, a major output of the study is the Greenhouse Gas Impact Value Estimator (GIVE) model — an open-source software platform that allows users to replicate the team’s methodology or compute their own social cost of carbon estimates. The GIVE model estimates the social cost of carbon as an aggregate of impacts calculated in four modules:

• Socioeconomic — which determines future projections of GDP, population and emissions.

• Climate — which transates emissions projections into changes in the climate system.

• Damages — which translates changes in the climate system into economic damages.

• Discounting — which translates future economic damages into present-day dollars.

As the RFF team explained in a blog post, “Since 2017, RFF has been working toward updating the scientific basis that underlies the social cost of carbon (SCC). Our new paper delivers an updated SCC that is fully responsive to the National Academies of Sciences, Engineering and Medicine (NASEM) near-term recommendations for improving the scientific basis of the SCC. The key takeaway is that our comprehensive update delivers a central estimate of the SCC of $185 per ton of CO₂, which is 3.6 times larger than the US government’s current interim estimate of $51 per ton. This updated estimate implies that the benefits of climate policies are much larger than what the US government historically has concluded.”

The team’s latest research completes its work on the last part, the Damages module, which translates changes in global temperatures to dollar-value impacts for specific concerns: including human health (which a 2021 NRDC report estimated was impacted by climate change and fossil fuel pollution to the tune of $820 billion a year in the US alone) — specifically, temperature-related mortality; agricultural productivity; energy expenditures related to heating and cooling buildings; and the coastal impacts of sea level rise. This last step completes the scientific updates to these four elements of SCC estimation as recommended by NASEM — the final component needed to complete the GIVE model.

“Our hope is that the freely available, open-source GIVE model we’re introducing forms the foundation for continuous improvement of the estimates by an expanded community of scientists worldwide,” said RFF Felow Kevin Rennert. “A completely transparent methodology has been a guiding principle for our work — which is also directly relevant to other greenhouse gases, such as methane and nitrous oxides.”

The study, led by Rennert and UC Berkeley Associate Professor David Anthoff, brought together a multidisciplinary team of leading researchers from institutions across the United States to develop important updates to social cost of carbon modeling. The study has also yielded a new data tool, the Social Cost of Carbon Explorer, which demonstrates the working mechanics of the GIVE model and allows users to explore the data in detail.

Notably, the new Nature study is fully responsive to the methodological recommendations of a seminal 2017 National Academies report co-chaired by Newell and RFF’s Maureen Cropper. A federal interagency working group on the social costs of greenhouse gases, disbanded during the previous administration but reestablished by an executive order from President Biden, is also updating its social cost of carbon estimate using the 2017 recommendations.

“We hope that our research helps inform the anticipated updated social cost of carbon from the government’s interagency working group,” said Brian C. Prest, coauthor and director of RFF’s Social Cost of Carbon Initiative. “Decisions are only as strong as the science behind them. And our study finds that carbon dioxide emissions are more costly to society than many people likely realize.”

Anthoff emphasized that the diverse expertise of the paper’s authors stems from the multi-faceted nature of the research.

“Estimating the social cost of carbon requires inputs from many academic disciplines,” he said. “When we started this project, we knew that we would only succeed by assembling a team of leading researchers in each discipline to contribute their expertise. I am especially proud of the all-star group of researchers across so many leading institutions that jointly worked on this paper.”

By quantifying the increased estimated benefits of reducing greenhouse gases, the exponentially higher SCC estimate not only has striking implications for the evolution of more effective government climate policies; the data can hopefully help foster more cohesion and higher standards in science-based carbon-reduction targets and the rapidly growing voluntary carbon market — a linchpin in many a corporate climate action plan which, as John Oliver recently pointed out, is deeply flawed and potentially even counterproductive in its current form.