An attempt to quantify the regulatory costs of increased carbon dioxide emissions is open for public comment after an outcry in the summer by some Republicans that the Obama administration was trying to push through new estimates for the social cost of carbon.
The Office of Management and Budget opened a 60-day comment period Tuesday for the methodology of the new estimates, which were originally tacked onto updated microwave efficiency standards in June.
The new estimates range from $12 to $128 per ton of additional carbon dioxide emissions. The prior version, from 2010, had a range between $7 and $81 per ton of carbon dioxide.
The social cost of carbon is supposed to estimate changes in agricultural production, human health, property damage of increased flood risk from melting ice and other risks from climate change. The estimates previously were used to measure the costs and benefits of regulations such as fuel-efficiency standards from the U.S. Department of Transportation and boiler-efficiency standards from the Department of Energy and the Environmental Protection Agency.
The Obama administration said it updated the 2010 estimates to reflect changes in three different economic models used to figure the social cost of carbon. The models were peer-reviewed and already in use by companies and other countries. The Office of Management and Budget concedes that the social cost of carbon is an imperfect estimate because it's based on long-term assumptions that may change with better data.
“We will continue to refine the SCC (social cost of carbon) estimates to ensure that agencies are appropriately measuring the social cost of carbon emissions as they evaluate the costs and benefits of rules,” said Tuesday's notice in the Federal Register.
In an August forum on federal environmental regulations in Oklahoma City, U.S. Rep. James Lankford, R-Oklahoma City, blasted the updated federal estimates for the social cost of carbon.
“The social cost of carbon may seem like a nebulous little piece, but it's incredibly significant to us,” Lankford said at the forum. “It is the amount that the administration says if a new ‘something' is done, you have to figure out how much carbon that will put into the environment and then determine what the total cost to the nation will be for that additional carbon.”
Lankford said the updated estimates are a backdoor way to push rules that limit carbon dioxide emissions by ascribing greater benefits than costs.
“This huge shift they made in regulation, they stuck into a rule on microwave ovens in the federal regulatory book in June, and nobody saw it,” said Lankford, who chairs a House subcommittee on energy oversight that held a hearing on the social cost of carbon in July.
OGE Energy Corp. CEO Pete Delaney also sounded the alarm on the social cost of carbon estimates before an Oklahoma City Rotary Club presentation in September, saying their inclusion on new microwave standards signified a lack of transparency. OGE's utility unit, Oklahoma Gas and Electric Co., will have to deal with planned EPA regulations on carbon dioxide emissions for new and existing power plants in the next few years.
“Nobody really knows what the true cost of CO2 is,” Delaney said. “The models are not precise and very complex. ... It shows where they're heading, obviously; they're really going to go after CO2 hard, and that could have a big impact on all of us.”
The new social cost of carbon estimates per ton of carbon dioxide emissions range from $12, $43, $64 and $128. The first three values come from different assumptions of the discount rate, or how money changes in value over time due to changes in interest rates and economic growth. The highest social cost of carbon value, $128, is included as an outlier to represent higher-than-expected effects of temperature change by 2050.
The social cost of carbon estimates are guidelines for federal agency use when they calculate the costs and benefits of new rules. Comments on the updated estimates are due by Jan. 27.