The U.S. National Academies of Science Press released an important report in January 2017, suggesting changes to the methodology of the Social Cost of Carbon (SCC), an economic metric used to measure the net costs and benefits associated with the effects of climate change- including changes in agricultural productivity, risks to human health, and damage from extreme weather events. U.S. government agencies such as the Environmental Protection Agency are required by law to estimate SCC when proposing regulations such for vehicle emission standards or energy efficiency standards for appliances. One of the most recent, thorough, and important applications of the U.S. Social Cost of Carbon appears in the 2015 Regulatory Impact Analysis Report for the Clean Power Plan Final Rule. The U.S. updated the SCC to $37 U.S. per tonne of carbon dioxide in September 2015, a value often criticized as too low, and economists continue to differ about the methodology. A study by researchers at Stanford University, published in Nature Climate Change (2015) estimated a more accurate SCC of $220 per tonne – six times higher.
The January report from the National Academy of Science, Valuing Climate Damages: Updating Estimation of the Social Cost of Carbon Dioxide , suggests restructuring the Integrated Assessment Models framework used to ensure greater transparency, and recognizes new research which should be incorporated into the models (e.g. the effect of heat waves on mortality) . It also recommends a regular 5-year updating schedule, “to ensure that the SC- CO2 estimates reflect the best available science.” For a summary of proposed changes and the political context, see “Scientists have a new way to calculate what global warming costs. Trump’s team isn’t going to like it” in the Washington Post . Noting that the new report has no legal force, The Post article quotes expert reviewer Richard Revesz, Dean emeritus of the New York University School of Law: “If the metric is revised, then the incoming administration would have an obligation to explain why it’s departing from the current approach… Any changes made without adequate scientific justification would likely be struck down in court.” But see also “How Climate Rules might Fade away” in Bloomberg Business Week.
What are the implications for Canada? Canada, like the U.K., Germany, France, and other countries, already uses its own Social Cost of Carbon, pegged at a $28 per tonne in 2012, according to Canada’s Regulatory Impact Analysis Statement issued with the vehicle emissions regulations for passenger cars and light trucks. The Leaders Statement from the North American Leadership Summit in Summer 2016 , ties Canada more closely to U.S. and Mexico, when it pledges to “ … align analytical methods for assessing and communicating the impact of direct and indirect greenhouse gas emission of major projects. Building on existing efforts, align approaches, reflecting the best available science for accounting for the broad costs to society of greenhouse gas emissions, including using similar methodologies to estimate the social cost of carbon and other greenhouse gases for assessing the benefits of policy measures that reduce those emissions.”
A White House Fact Sheet, released on January 14, announces a new goal to cut methane emissions from the oil and gas sector by 40 – 45% from 2012 levels by 2025. In general, reaction from environmental groups has been tepid, citing the need to address existing operations, and to rely more on regulation and less on voluntary industry action. Read “Climate Hawks aren’t impressed with Obama’s Methane Plan” in Mother Jones (Jan. 20) for a summary of reactions.
In the week of October 20, British Columbia introduced the Greenhouse Gas Industrial Reporting and Control Act and the Liquefied Natural Gas Income Tax Act. The former requires liquefied natural gas plants to purchase carbon offsets and punishes those who fail to limit their carbon emissions to 0.16 tonnes per tonne of LNG – the strictest standards in the world, according to B.C. Environment Minister Mary Polak.
The Carbon Disclosure Project surveyed 207 cities worldwide in its new report, Protecting Our Capital: How Climate Adaptation In Cities Creates a Resilient Place for Business. The survey included the following Canadian cities: Vancouver, Victoria, Calgary, Edmonton, Saskatoon, Brandon, Winnipeg, Burlington, Hamilton, London, Toronto, and Montreal. The report attempts to identify the alignment of how companies and the cities in which they operate perceive climate-related risks. It finds most commonality in recognizing risks from increased temperatures and heatwaves, which have immediate impacts across the public and private sectors. It is assumed that cities that develop reasonable risk assessment and reduction strategies will be better positioned to attract and retain business. See https://www.cdp.net/CDPResults/CDP-global-cities-report-2014.pdf.