In the recent State of the Union address, President Obama promised to act alone on his political agenda if Congress didn’t go along, and he is indeed relying on unilateral executive action as he focuses on carbon-based energy. A major weapon in this attack on the most affordable energy sources is something called the social cost of carbon (SCC).
The SCC supposedly quantifies the economic damages associated with carbon dioxide emissions—an aggregation of all damages from now to the year 2300 caused by emitting a ton of carbon today. These models are based on projections so far into the future that, by then, Captain Kirk and other members of the Enterprise will have died of old age.
Last spring, a rule that seemed designed to fly under the political radar introduced a new and much higher EPA-sanctioned estimate of the SCC. As it now stands, this estimate can be used to justify trillions of dollars of job-killing regulations.
At Heritage, we have carefully examined (some analysis below) two of the statistical models used to estimate the SCC and determined that the models produce results unsuited for use in regulations.
We found an error in one of these models. Afterward, the SCC was opened up for public comment. We found these models to be extremely sensitive to assumptions; at times, one of the models even produces negative estimates of the SCC (implying the government should pay to encourage CO2 emissions). Reasonable changes in assumptions whipsaw the models’ results, confirming that the models are an entirely unreliable base for policymaking.
As a result, we have consequently recommended that these models not be used in the regulatory process. Over the course of the past few weeks, we have sent two comments to the Office of Information and Regulatory Affairs regarding the social cost of carbon.
Read the full comments below.