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U.S. is seriously underestimating the consequences of CO2 - study

LONDON, Sept 1 (Reuters) - The U.S. government is drastically underestimating the social cost of carbon dioxide emissions, which is 3.6 times higher than the estimate currently used to inform many of Washington’s key climate policies, a study suggested on Thursday.

Carbon dioxide is the greenhouse gas chiefly responsible for global warming and therefore negatively affects human wellbeing. U.S. economists call this the “social cost” and they calculate it in dollars, considering repercussions such as changes in agricultural productivity, damages from sea level rise and worsening human health.

The U.S. currently puts that cost at around $51 per metric tonne — a figure which dates back to the Obama administration, adjusted for inflation. But in research here published Thursday in the journal Nature, a team of American scientists say the reality of such damages is likely far greater, at $185 per tonne.

That’s important because “higher estimates of the social cost motivate more ambitious mitigation of greenhouse gas emissions,” said co-author Brian Prest, an economist at the non-profit Resources for the Future.

The U.S. federal government relies on the social cost figure to inform standards for vehicle and power plant emissions and the energy efficiency of appliances. It is also used as a basis for federal tax credits on carbon capture and storage, zero emission credit payments for nuclear generators and in proposed federal carbon tax legislation.

But a 2017 report here by the U.S. National Academies of Sciences, Engineering and Medicine called out the federal government for using outdated research to calculate the consequences of greenhouse gas emissions.

The government’s social cost estimate relied on old climate models that generated global temperature changes inconsistent with those predicted by more sophisticated Earth systems models, the Nature study said. The estimate also did not incorporate a growing body of research on how climate change is expected to affect human wellbeing, it added.

FUTURE GENERATIONS

The Trump administration then slashed the social cost estimate to below $10 per metric tonne. This allowed federal agencies to roll back fuel economy standards.

Last year, U.S. President Joe Biden reinstated the Obama-era $51 social cost as a temporary measure and re-established the Interagency Working Group on the Social Costs of Greenhouse Gases.

Members of the working group did not respond to a request for comment. They are expected here to release an updated social cost estimate later this year.

Prest and his colleagues hope the government will consider their research, which relies on improved socioeconomic projections, climate models, climate impact assessments and economic discounting, or the value that researchers today put on costs incurred by future generations.

“The higher the social cost of carbon, the better off future generations will be,” said Jim Krane, an energy policy expert at Rice University in Texas.

Though other countries, including Germany, Canada and Mexico, also use a social cost of CO2 in policy decisions, “the U.S. is the biggest user of the social cost of CO2,” said Prest.

Canada currently prices CO2 emissions at $50 CAD here per metric tonne - below the United States. However, Canada's government acknowledges that is an underestimate and says it is "committed to revising the social cost of carbon".

“We’re certainly pushing and asking other countries to consider pollution-pricing systems,” Oliver Anderson, a spokesman for Canadian Environment Minister Steven Guilbeault, said.

Germany’s Environmental Agency lists the social cost of CO2 at 180 euros ($178.92) per metric tonne of emissions. ($1 = 1.0060 euros) (Reporting by Gloria Dickie and Simon Jessop in London; Additional reporting by Steve Scherer in Ottawa; Editing by Andrew Heavens)

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