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GAO finds Trump administration devalued carbon costs to roll back regulations

Highlights

Estimated damage caused by GHG 7 times lower

Group that estimated cost of carbon disbanded

New York — The U.S. Government Accountability Office has found that the Trump administration underestimated the economic damages caused by greenhouse gas emissions significantly, up to seven times lower than previous estimates, to justify easing or repealing environmental regulations.

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The July 14 GAO report recalled that President Donald Trump in March 2017 issued an executive order that disbanded an interagency working group charged with developing social cost of carbon estimates and discarded that group's guidance and cost estimates. As a result, federal agencies recalibrated and lowered their estimated social costs of carbon.

Doing so was significant because agencies use the social cost of carbon when developing new regulations to estimate the long-term net economic damages associated with an incremental increase in carbon dioxide or other greenhouse gas emissions, typically measured in dollars per metric ton.

The changes led seven Democratic U.S. Senators, including Sheldon Whitehouse of Rhode Island and Elizabeth Warren of Massachusetts, to ask the GAO in December 2017 to review how the federal government, U.S. states and foreign countries have developed and used estimates of the social cost of carbon.

As part of its review of the federal government's actions, GAO looked at the U.S. Environmental Protection Agency's Affordable Clean Energy rule that replaced the Obama-era Clean Power Plan, the Bureau of Land Management's overhaul of the Obama-era Methane and Waste Prevention Rule, and the EPA and National Highway Traffic Safety Administration's Safer Affordable Fuel-Efficient Vehicles rule that put the brakes on the Obama administration's plan to ramp up vehicle fuel efficiency standards.

Although both the prior and current estimates of the costs were calculated using the same economic models, the GAO reported that the agencies changed two key assumptions that resulted in a lower estimated social cost of carbon. The agencies considered damages on a domestic rather than global-scale and used higher discount rates than had the Obama administration, the GAO said. Those two changes mean that current federal estimates are about 7 times lower than prior federal estimates.

The GAO recalled that the Office of Management and Budget in 2017 directed federal agencies to use the guidance OMB has offered on how to estimate the social cost of carbon, which included the use of the best available science. The report also noted that the National Academies of Sciences, Engineering, and Medicine in 2017 made recommendations for updating the methodologies used to estimate the social cost of carbon to ensure federal estimates reflect the best available science.

However, the report said the OMB staff GAO interviewed said the agency has no specific plans for implementing the NAS recommendations and that no federal agency has responsibility for addressing them. Nevertheless, the report said OMB staff did acknowledge that non-federal entities "are leading research efforts that are responsive to the recommendations." But, "no federal entity has responsibility for monitoring developments in scientific research or ensuring updated federal estimates consider such developments."

"Without identifying a federal entity or entities to be responsible for addressing the National Academies' recommendations, including monitoring scientific research and ensuring that updates to the federal estimates consider such research, the federal government may not be well-positioned to ensure agencies' future regulatory analyses are using the best available science," GAO wrote.

The GAO therefore recommended that the OMB identify a federal entity responsible for addressing the National Academies' recommendations. The report said OMB has not commented on that recommendation nor the GAO's findings. The EPA and Departments of Interior and Transportation also declined to provide formal comments on the GAO's findings. For this article, the EPA did not immediately respond to requests for comment.

Richard Revesz, director of the Institute for Policy Integrity and professor of law and dean emeritus at NYU School of Law, in an emailed statement, suggested the GAO's findings provide "yet another example of how the administration is ignoring science and economics in its policy decisions."