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On Friday, February 26, the Biden Administration’s newly-resurrected Interagency Working Group on Social Cost of Greenhouse Gases (IWG) announced new values for three specific metrics that seek to monetize the environmental impacts of greenhouse gases: the Social Cost of Carbon, Social Cost of Nitrous Oxide, and Social Cost of Methane. Collectively these are known as the Social Costs of Greenhouse Gases, or SC-GHG.
Using 2020 as a baseline and a 3 percent average discount rate (explained further below), the IWG calculated the Social Cost of Carbon at US$51/metric ton (mt), the Social Cost of Methane at US$1,500/mt, and the Social Cost of Nitrous Oxide at US$18,000/mt. This represents a dramatic reversal in the federal government’s valuation of the impacts of climate change, as under the prior Administration these social costs were set at essentially insignificant levels.
[co-author: Shawn Whites]
Key Points
President Biden’s Day One Executive Order on climate action reconvenes an interagency working group to establish interim and final social costs of three GHGs: carbon dioxide, nitrous oxide and methane.
The social costs of these GHGs seek to quantify the negative externalities on an annual basis of a ton of these emissions.
The Biden administration will use the updated social cost figures to inform federal regulations and major agency actions and to justify aggressive climate action as the United States evolves toward a “100% clean energy” economy with net-zero GHG emissions.
President Biden’s resurrection of a relatively recondite cross-agency group charged with quantifying the nation’s contribution to climate change the Interagency Working Group on the Social Cost of Greenhouse Gases (GHG) (Working Group) ultimately may have the greatest impact across the federal government as the Biden administration pursues its climate goals. The
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