Guest essay by Eric Worrall
President Biden has raised the social cost of carbon from Trump’s $8 / ton to the Obama level of $51 / ton. But the real sting is the price tag to be applied to methane ($1500 / ton) and nitrous oxide from fertiliser ($18,000 / ton). And the price may rise – this price rise is seen as an interim measure.
Biden hikes cost of carbon, easing path for new climate rules
The social cost of carbon could have ripple effects throughout industry.
By LORRAINE WOELLERT and ZACK COLMAN
02/26/2021 04:57 PM EST
President Joe Biden on Friday restored an Obama-era calculation on the economic cost of greenhouse gases, a step that will make it easier for his agencies to approve aggressive actions to confront climate change.
The interim figure — $51 for every ton of carbon released into the atmosphere — is well above the $8 cost used under former President Donald Trump, who declined to factor the global impacts of climate pollution into his calculation. It’s on par with a price based on analyses undertaken between 2010 and 2016 under former President Barack Obama, whose administration was first to calculate the figure known as the social cost of carbon.
The price point is temporary. A new Interagency Working Group on the Social Cost of Greenhouse Gases is required to issue a final number by January.
The Interagency Working Group, led by the Council of Economic Advisers, Office of Management and Budget and Office of Science and Technology Policy, must issue recommendations on incorporating the cost into government decision-making and budgeting by September and deliver a final number by January.
The working group, in Friday’s notice, said it was “appropriate“ for federal agencies to revert to the Obama-era values, even though “new data and evidence strongly suggests that the discount rate regarded as appropriate for intergenerational analysis is lower.“
The group set a $1,500-per-ton cost for methane emissions and $18,000 for nitrous oxide.
Read more: https://www.politico.com/news/2021/02/26/biden-carbon-price-climate-change-471787
Full details of the new prices are available on the White House website.
The social cost of carbon is not a carbon tax, it is used as a reference number to inform regulatory decisions about new pipelines, and may in time be used to “justify” a new carbon tax.
The Methane emission cost of $1500 / ton potentially paves the way for enormous fines next time a pipeline blows out, but we already knew Biden wants to kill off domestic fossil fuel production.
The $18,000 / ton on nitrous oxide could be a significant new cost for farmers.
We live in an age of food abundance because farmers apply 10s of kilograms of nitrate fertiliser to every acre of their land, every year. If increased costs or regulation pressure farmers into cutting back on nitrate fertiliser application, the result could be less abundance.
No doubt any resulting food or energy shortages will be blamed on climate change.
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