Biden administration reverts to Obama-era social cost of carbon, plus inflation

The Biden administration has established an interim dollar figure agencies will use to estimate the costs of climate change associated with their decisions, a number that is significantly higher than the one the Trump administration established.

At the direction of President Joe Biden, the Interagency Working Group on Social Cost of Greenhouse Gases, also known as the IWG, recommended the administration adopt an interim social cost of carbon of $51 per metric ton of carbon dioxide with a 3% discount rate. That figure has been adjusted for inflation from a number the Obama administration established in 2010. In comparison, the Trump administration set a social cost of carbon that ranged from $1-$7 per ton in 2018 dollars.

Biden has also directed the IWG to conduct a more detailed analysis and report a final number in early 2022.

The social cost of carbon is a range of estimates, in dollars, of the long-term damage caused to society by adding a small amount of greenhouse gases, including carbon, into the atmosphere. The figures are effectively meant to represent impacts to agricultural productivity, human health, property damage from extreme weather events, disruption to energy systems, the risk of conflict, and the potential for environmentally prompted migration.

In a blog post on the White House website, Heather Boushey, who is a member of the Council of Economic Advisers that was part of the IWG, said "this interim step will enable federal agencies to immediately and more appropriately account for climate impacts in their decision-making while we continue the process of bringing the best, most up-to-date science and economics to the estimation of the social costs of greenhouse gases."

As the IWG had done during the Obama administration, the group decided to stick with the 3% discount rate, which ranges from $51 per ton in 2020 to $85 per ton by 2050. The interim social cost of methane will range from $1,500 per metric ton in 2020 to $3,100 per metric ton in 2050. And the interim social cost of nitrous oxide will range from $18,000 per metric ton in 2020 to $33,000 per metric ton in 2050.