Understanding the Social Cost of Carbon

Understanding the Social Cost of Carbon

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Smoke stacks emit pollution while trucks drive on highway
June 23, 2020

The social cost of carbon provides an estimate of the economic damage caused by carbon emissions. A climate economist tells how it’s calculated.

One of the most hotly debated issues in climate policy is the value of the social cost of carbon, which is an estimate of the damage that will come from releasing carbon dioxide into the atmosphere. The social cost of carbon is a useful measure to help us understand the price that should be placed on carbon today to limit carbon dioxide emissions, and minimize the climate-related damages that future generations will face.

Climate economist Gilbert Metcalf explains how the social cost of carbon is calculated, and looks at the factors that economists take into account in arriving at a value. He also discusses why the value of the social cost of carbon is so contentious, and why the cost estimates accepted by the Trump and Obama administrations diverge so widely.