What happened: According to a report by the Government Accountability Office (GAO), the Trump administration failed to incorporate the best available science into how they calculate the social cost of carbon (SCC). The metric is used to quantify the economic costs associated with the release of carbon dioxide, the main driver of climate change.
Why it matters: One of the primary ways that federal agencies assess the climate benefits of a proposed rule is by applying the social cost of carbon. However, under the Trump administration, the value of the SCC was deliberately slashed, using a deeply flawed method for calculating the SCC that falls out of line with the economic and scientific consensus. By deliberately lowering the SCC, the Trump administration failed to ensure cost-effective carbon emission reductions and allowed polluters to emit more of the heat-trapping emissions which fuel climate change.
The Government Accountability Office (GAO), Congress’ non-partisan watchdog agency, released a report in June 2020 detailing how the Trump administration’s method for calculating the social cost of carbon (SCC) failed to incorporate the best available science. The Trump administration’s methodology set an artificially low SCC that is in contradiction with the guidance issued by the 2009 Interagency Working Group on Social Cost of Carbon. During the Trump presidency, federal government agencies used this inaccurately low SCC in rulemakings, a step that Union of Concerned Scientists (UCS) and other groups have repeatedly challenged in our public comments filed in various regulatory dockets (see here, here, and here).
The SCC provides an estimate of the costs of climate change in terms of dollars of damage per metric ton of carbon dioxide (CO2) emitted. It can also be used to quantify the benefits of reducing carbon emissions. The SCC is used routinely in rulemaking processes by the Environmental Protection Agency (EPA), the Department of Energy (DOE), the Department of Transportation (DOT), and other federal government agencies, as part of a cost-benefit analysis used to quantify the benefits of a regulatory action that helps cut carbon emissions.
The GAO report showed that the Trump administration failed to follow the recommendations listed in a January 2017 report by the National Academies of Sciences, Engineering, and Medicine (NASEM). NASEM, a non-governmental agency made up of some of the nation’s top scientific experts, was tasked with providing recommendations to help improve the way the federal government calculates the SCC in order to reflect the best available science. According to the GAO report, both NASEM and the White House’s Office of Management and Budget (OMB) state that NASEM’s 2017 recommendations remain relevant.
In 2009, the White House’s OMB and the Council of Economic Advisers convened the Interagency Working Group on Social Cost of Carbon for the explicit purpose of developing a government-wide estimate of the SCC based on the best available science. The working group finalized its estimate of the metric in 2010, with some updates and minor revisions to their guidance in 2013, 2015, and 2016. Federal agencies used this new way of estimating the SCC when analyzing dozens of proposed and final regulations. NASEM’s 2017 report was developed at the request of the working group and funded by the DOE.
In March 2017, President Trump issued Executive Order 13783 to promote energy independence and economic growth. Among other things, the executive order disbanded the working group and their guidance on estimating the SCC. However, the executive order still required that environmental regulations be “developed through transparent processes that employ the best available peer-reviewed science and economics.” Furthermore, the executive order directed agencies to follow the OMB’s 2003 Circular A-4 guidance, which states that regulatory analyses are “based on best reasonably obtainable scientific, technical, and economic information available.”
According to the GAO report, the Trump administration’s way of calculating the SCC is about seven times lower than the prior federal estimate. The decreased estimate for the SCC was the result of two changes implemented under the Trump administration. First, agencies swapped global damages associated with CO2 emissions with only domestic damages. Second, agencies lowered discount rates, such that benefit of reducing carbon emissions for future generations was lessened.
In the GAO report, NASEM criticized the way the EPA under Trump administration calculated this metric. NASEM stated that the EPA’s method of calculating domestic climate damages was flawed since the integrated assessment models that the EPA used were not premised or calibrated to provide estimates of the SCC based on domestic damages. Furthermore, NASEM stated that a global pollutant like carbon dioxide could have international implications that affect the domestic impacts in the US, which was not reflected in EPA’s calculation of this metric.
Federal agencies like the EPA, the Bureau of Land Management (BLM), and National Highway Traffic Safety Administration (NHTSA) are regularly analyzing proposed rules that could result in vast amounts of greenhouse gas emissions. It is imperative that these agencies have the proper tools to fully assess if proposed rules could lead to devastating climate impacts.
By failing to use the best available science to measure climate damages from carbon emissions, the Trump administration’s actions had devalued the benefits of lowering those emissions. This in turn resulted in weaker regulations that contributed to exacerbating the risks and harms of climate change to people in the US and around the world.