White House’s Social Cost of Carbon Estimates Questioned

Published October 9, 2013

The Obama administration has quietly increased the federal government’s estimated social costs for carbon emissions, which are a major factor in federal government decisions regarding land development, business permits, energy production, carbon dioxide restrictions, and a host of other applications. But glaring flaws in the science and economic assumptions behind the new estimate suggest it is both dubious and wasteful.

The White House Interagency Working Group produced a technical document providing a new formula for how the federal government calculates the asserted social costs of carbon dioxide emissions. According to the document, the new formula will “allow agencies to incorporate the social benefits of reducing carbon dioxide (CO2) emissions in cost-benefit analyses of regulatory actions that impact cumulative global emissions.”

Flawed Climate Assumptions
The White House document makes many assertions that are contradicted by scientific evidence but allow the federal government to assign a high social cost to carbon dioxide emissions. For example, the document dubiously assumes higher atmospheric carbon dioxide concentrations harm agricultural production, even though such increases stimulate plant growth and crop production. Real-world crop data prove the beneficial impacts of higher atmospheric carbon dioxide concentrations, with U.S. crop production continuously setting new records for gross yields and yields per acre as atmospheric carbon dioxide levels rise. The same holds true on a global scale, with worldwide production of the most important food staples doubling and tripling during the past 40 years as atmospheric carbon dioxide levels rose.

The White House’s technical document also assumes rising sea levels will inundate coastal regions, resulting in substantial land loss. However, there was no such coastal inundation during the twentieth century, when sea level rose approximately seven inches, and there has been no acceleration of sea level rise during the current century.

Benefits Ignored
The document does not acknowledge any beneficial impacts of carbon dioxide emissions and their assumed climate impacts. However, National Oceanic and Atmospheric Administration data and other objective federal government weather data show a significant decline in harmful extreme weather events as atmospheric carbon dioxide levels rise and temperatures modestly warm. Hurricane frequency and severity have substantially declined, tornado frequency and severity have declined significantly, global and U.S. soil moisture have substantially improved, and foliage density—particularly in the western United States and arid regions throughout the world—has dramatically increased.

Meaningful Comparisons Absent
The technical document also fails to provide comparisons between the environmental effects of carbon dioxide emissions and the impacts of non-carbon fuel sources. For example, the U.S. Fish and Wildlife Service reports wind turbines kill 440,000 birds—including many endangered species—in the United States every year. Earlier this year a peer-reviewed study found U.S. wind turbines kill at least 1.4 million birds and bats every year. Also, wind industry numbers show it requires 300 to 600 square miles of wind turbines to replace a single conventional power plant.

Glaring Flaws in Economic Assumptions
Dr. Robert Murphy, an energy economist at the Institute for Energy Research, told the U.S. Senate in July testimony the federal government’s asserted social costs for carbon (SCC) estimates could have “profound impacts on both industry and consumers.”

SCC estimates are extremely malleable, Murphy testified, because they depend on highly subjective modeling assumptions which can allow government agencies to produce studies justifying whatever policy they desire. Policymakers and regulators should be aware of the SCC’s unreliability as a scientific measure and not use it to justify regulations.

“Perhaps more significant, when reporting various estimates of the SCC, the White House Working group explicitly disregarded two default guidelines provided by the Office of Management and Budget (OMB) for cost/benefit analysis. Had the Working Group heeded both guidelines, the officially reported SCC would be virtually $0 if not negative, meaning that there would be no justification for government restriction of carbon dioxide emissions,” Murphy testified.

“Clearly, the public and policymakers have not been fully informed on what the economics profession actually has to say about climate change. Before justifying economically damaging regulations by reference to the social cost of carbon, policymakers must realize the dubious nature of this concept,” Murphy explained.