WASHINGTON – After President Obama promised to move climate change to the front of his agenda, members of Congress have been tackling the same in both chambers with Republicans and Democrats trading barbs over the “theater” of global warming hearings.
A House Oversight and Government Reform subcommittee recently held a hearing to investigate the changes in the social cost of carbon (SCC) metric, a measurement of the harm caused by carbon dioxide (CO2) emissions used in the cost-benefit analysis of federal regulations.
The Obama administration increased this year the estimated monetary costs of carbon emissions, a change that could raise the projected benefits of regulations that curb emissions. Republicans have criticized the move for its lack of public scrutiny.
Howard Shelanski, head of the Office of Information and Regulatory Affairs, reassured lawmakers about the opportunity for public input on the change.
“The current estimates will be used in the economic analysis of rulemakings, and we fully expect comments on the SCC values in the context of future rules. We will consider those comments to ensure that we use the best available information to evaluate the costs and benefits of our regulation,” Shelanski stated.
Shelanski explained that the purpose of the SCC estimate is “to get a measure of what that harm to our society will be, what it will cost us going forward, to keep emitting CO2 into the atmosphere.”
“If there’s going to be harm to our environment and to our economy from carbon emission, many costs will go up. That’s why it is extremely important to have some kind of measure of the social costs of a ton of [CO2] emissions,” he said.
The cost estimate of $38 a metric ton in 2015, raised from $24, reset the calculation the government uses to weigh costs and benefits of proposed regulations. The SCC is meant to be an estimate of factors, such as changes in human health and agricultural productivity, property damage from greater flood risks, and several others. It rose because of changes in the independent models used by the government to estimate these costs.
Lawmakers questioned the magnitude of the changes and the way the analysis was released in May without seeking outside comment and review.
Rep. James Lankford (R-Okla.), chairman of the Oversight Subcommittee on Energy Policy, Health Care and Entitlements, expressed his frustration about the lack of transparency in the model’s development process.
“I am very concerned that the [SCC] regulations just increased 50 percent, and the American people have no information about who made this decision, why it was made and what the consequences will be in the future,” said Lankford. “What is worse, the administration made no promises that it would not increase the cost another 50 percent again in three years. This guideline, made in a bureaucratic black box, creates even more uncertainty in our fragile economy.”
Shelanski pointed out that SCC is not in itself a rule, but a component in the cost-benefit analysis to assess the cost of carbon emissions for society.
“Part of a disciplined rulemaking process is using the best information that is out there to come up with a rigorous cost-benefit analysis that is a limiting principle on, for example, ascribing endless benefits to carbon reduction,” Shelanski explained. “But also stops us from making a big mistake by saying that there are not costs to carbon reduction and creating real harm to our economy going forward from environmental damage.”
At another recent hearing, an economist at the Institute for Energy Research told the Senate Environment and Public Works Committee that the SCC was a highly subjective estimate.
“The administration’s calculation of the social cost of carbon is malleable and arbitrary and therefore not appropriate for the federal government to use to justify regulation,” said Robert P. Murphy.
“The [SCC] is not an objective feature of the world that is ‘out there’ waiting for economists to measure. Rather, it is generated within computer simulations that make projections centuries into the future. By tinkering with the discount rate and other parameters, the White House can justify about any estimate the administration wants,” Murphy said.
The Senate panel focused on the science behind man-made climate change, the committee’s first hearing on the issue this Congress.