States Sue to Block “Social Cost” of Carbon

Published March 16, 2021

Twelve states have asked a Federal Court to keep federal agencies from using the so-called Social Cost of Greenhouse Gases to calculate the benefits of emission reduction regulations.

The new cost estimates, ordered by President Biden on day one, claim enormous distant future damages from today’s emissions of carbon dioxide, methane and nitrous oxide. Preventing these supposed damages could justify massive new regulations, but the States say this is illegal because Congress never authorized it.

The Social Cost of Carbon (SCC) has been around for some time. Obama introduced it as a policy measure, which Trump then canceled. Now Biden has brought it back and made it worse.

In a way SCC personifies the craziness of the climate scare. The whole scare is based on outlandish doomsday computer models and SCC is arguably the most absurd of all.

The fundamental absurdity of the Social Cost of Carbon is that it goes out 300 years to get the supposed economic damages due to today’s minor emissions of carbon dioxide. That’s right, these computer models claim to know what the world’s economy will be for the next 300 years. The claim is absurd because technological and economic progress make the future world unknowable.

Consider what America was like 300 years ago. To begin with America did not yet exist. George Washington had yet to be born. European settlement of North America was confined almost entirely to a band a hundred miles or so along the east coast or up some big rivers.

Power was by hand, horse and waterwheel. Travel by horse and water. Yet to come were the steam engine, electricity, motors, cars, airplanes and a billion other inventions that changed the world in unimaginable ways.

The fact that today we have computers does not make our next 300 years any more predictable than their 300 was in 1720. Given that the pace of technological change has increased our future is probably even less knowable.

Since the 300 year prediction claims of SCC are absurd, why do the alarmists make them? It is the only way they can get serious future damages out of the computer models. Even in these hot models, the annual adverse impact of our emissions is very small. But according to the models this small impact goes on for hundreds of years so it adds up. This extreme assumption itself is unproven.

Even worse, the damage is estimated as a fixed fraction of economic activity, so it increases every year as the economy grows. In 300 years the global economy grows tremendously, just as it did in the last 300 years. The near term damages are negligible. In some models the CO2 increase is actually beneficial in the short run.

This economic growth factor is an important part of the SCC scam, because it negates what is called the “discount rate”. In cost benefit analysis, future costs are discounted back to present value, sort of like reverse compound interest. The further into the future a given amount of damage is, the less it is worth today. The amount of this discounting is the discount rate, which is typically around 3 to 5% per year.

Normally this discounting makes distant future costs negligible. But SCC computer modeling gets around it by having the global economy grow faster than the discount rate.

They even claim to know the cumulative 300 year economic damages due to our emissions to an exact dollar per ton amount. I am not making this up. Given the scam it is no surprise that this amount corresponds to the amount of proposed carbon taxes. Moreover, it increases every year, just like the proposed taxes and carbon control regulations.

Biden widened the scam by adding the Social Cost of Methane (and Nitrous Oxide). Natural gas is mostly methane so this is part of the new war on gas. But cows are also a major source so now we have a war on cows. The Agriculture Department, which regulates cows, is included in the Social Cost executive order, so they are being sued along with EPA and a bunch of other regulatory agencies.

Skeptics argue that methane is a trivial greenhouse gas, especially because it competes with water which is by far the dominant GHG. Alarmist want us to stop eating beef and dairy products, as well as killing natural gas, so methane gets a big Social Cost estimate.

In its way the State’s lawsuit extends well beyond the incredibly stupid Social Cost issue. Biden has issued a raft of potentially punitive climate EO’s. Executive orders are only supposed to affect internal Executive Branch operations. In fact every one contains language saying this, so they are supposedly not subject to judicial review the way public regulations are.

The States point out quite correctly that requiring rule making federal agencies to use Social Cost will have a tremendously adverse effect on the American people. They argue that under the Constitution only such actions specifically authorized by Congress can be ordered. Thus the suit is not against the EO or the supposed science but against the agencies acting on it without authorization.

Here is how the States put it in their Complaint to the Federal Court:

This quintessentially legislative policy has enormous consequences for Americas economy and people. In theory, the Biden Administrations calculation of social costs” would justify imposing trillions of dollars in regulatory costs on the American economy every year to offset these supposed costs. In practice, President Bidens order directs federal agencies to use this enormous figure to justify an equally enormous expansion of federal regulatory power that will intrude into every aspect of Americans‘ lives—from their cars, to their refrigerators and homes, to their grocery and electric bills. If the Executive Order stands, it will inflict hundreds of billions or trillions of dollars of damage to the U.S. economy for decades to come. It will destroy jobs, stifle energy production, strangle Americas energy independence, suppress agriculture, deter innovation, and impoverish working families. It undermines the sovereignty of the States and tears at the fabric of liberty.”

If the Court rules in favor of the States it might blunt Biden’s climate executive order onslaught. However, the absurd Social Cost calculations were done by an Interagency Working Group and the Court might be reluctant to rule that the agencies cannot implement their supposed science without legislative authorization. Agencies often do their own science on the way to rule making.

How this extremely important case will turn out is far from clear. Stay tuned!

[Originally posted on Committee For A Constructive Tomorrow (CFACT)]