The social cost of carbon is a flawed metric for policy decisions

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🗞️ Driving the news: The U.S. Department of Energy (DOE) is revising the Social Cost of Carbon (SCC) as part of new energy standards for commercial refrigerators
• This move highlights broader concerns about how the SCC is used in policy decisions, with critics arguing that it is based on subjective welfare measures, not clear economic costs

🔭 The context: The SCC attempts to quantify the future impacts of CO2 emissions, but its reliance on welfare-based calculations, rather than dollar-based economic measures, introduces confusion
• Critics argue that the methodology distorts the results by focusing on theoretical benefits across generations

🌍 Why it matters for the planet: The SCC’s flaws can lead to misguided climate policies, which may overestimate or underestimate the actual economic impact of carbon emissions and hinder effective long-term climate action

⏭️ What's next: Economists suggest shifting to a more transparent metric, such as GDP impact, to better align policy with measurable economic outcomes, avoiding subjective welfare estimates

💬 One quote: "The SCC calculations... would seem to violate [the] principle" of rational relationship to real-world impacts, argues James Broughel

📈 One stat: The current U.S. government estimate for the social cost of carbon is approximately $51 per metric ton of CO2, though some suggest raising it to as high as $190 to reflect more recent climate impact data

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