A federal judge in Louisiana dealt a blow to President Joe Biden’s climate policies when he issued an injunction Feb. 11 prohibiting federal agencies from using a controversial “social cost of carbon” measurement that Biden reinstated after it was overturned earlier by former President Donald Trump.
The injunction came in response to a complaint filed last February by Republican attorneys general from 13 energy-producing states. Wyoming filed its own separate lawsuit. If upheld, the ruling could strike a serious blow at Biden’s efforts to make the U.S. “carbon net zero” by 2050, including initiatives by the United States Department of Agriculture that depend on having a reliable measure of carbon impacts.
One of these was recently announced by Secretary of Agriculture Tom Vilsack: a plan to use $1 billion from the Commodity Credit Corporation to encourage “climate smart” ag practices, which would presumably require an agreed-upon measurement of carbon impacts to calculate incentives.
Judge David Cain Jr.’s injunction enjoins federal agencies, including the U.S. Environmental Protection Agency, U.S. Department of Energy, U.S. Department of Transportation, USDA, U.S. Department of Interior, National Highway Traffic Safety Administration, and the Interagency Working Group on Social Cost of Greenhouse Gases itself, from using estimates of the “social cost” of carbon emissions prepared by the IWG.
Social cost of carbon
A social cost of carbon metric uses mathematical models to estimate various damages and costs of emissions of carbon dioxide, methane and nitrous oxide. The models can include a wide variety of posited environmental and health effects. According to a White House statement, “One specific tool–called the ‘social cost of greenhouse gases’–combines climate science and economics to help federal agencies and the public understand the benefits of reducing greenhouse gas emissions. The metric is a range of estimates, in dollars, of the long-term damage done by one ton of greenhouse gas emissions.”
To arrive at the cost figure, the IWG uses integrated assessment models, which use “highly aggregated representations of climate processes and the global economy combined into a single modeling framework.” Federal agencies began using carbon cost metrics in 2008 after a judge in the Ninth Circuit Court of Appeals ordered the DOT to estimate the social cost of emissions when setting fuel economy standards for cars. Climate activists had already been saying that “pricing carbon” was necessary to fight climate change.
Setting the figure
In a March 2021 article, the Sierra Club called the social cost of carbon metric “super wonky” but also “the most important climate policy lever you’ve never heard about.” Climate activists believe setting a price on carbon is essential to any strategy for reducing fossil fuels, since the market price of fossil fuels remains lower than that of renewable energy unless social costs—what economists call “externalities”—are added in. Reliable, consistent carbon pricing is necessary if private and public carbon markets are ever going to be able to consistently incentivize and reward carbon reduction. Even energy companies say they support carbon reduction goals. On its website, BP proclaims, “We’re aiming to be a net zero company by 2050 or sooner and to help the world get there too.”
“Since its release in 2010, the SCC has played a central role in climate policy both domestically and internationally,” according to a working paper published in January 2021 by Tamma Carleton, an environmental science and management professor at the University of California at Santa Barbara, and Michael Greenstone, an economist at the University of Chicago.
Under former President Barack Obama, the carbon cost figure was set by the IWG at $51 a ton. Trump disbanded the IWG and reduced that estimate to $7 a ton. For Carleton and Greenstone, the Obama figure was too low; they believe a “more realistic” SCC could be as much as $125 per ton.
Global effects
A key point in the complaint by the attorneys general was that the Biden carbon cost estimate, which restored the Obama carbon price of $51 a ton, considered global effects of carbon emissions instead of just effects within the United States. In hearings leading up to his ruling, Cain said applying the carbon metric was too much like a tax and only Congress had the authority to levy taxes. He also said he “had a problem” with the global estimates, according to a Dec. 8 article in Climatewire. Cain’s ruling prevents the federal agencies from taking global effects into account in calculating carbon costs, as Trump’s policies did.
Climate groups, which have been following the case closely, were swift to respond. “This opinion is bizarre, profoundly flawed and runs roughshod over American law,” said Vickie Patton, general counsel for Environmental Defense Fund. “It attempts to block federal agencies from using the best available information in safeguarding the American people from climate pollution.”
David Murray can be reached at [email protected].
