July 14, 2020

GAO Finds Changes in Social Cost of Carbon Dramatically Lower Estimates of Climate Costs

Senators slam Trump changes that substantially understate the costs of climate change, putting America’s economic health at serious risk

WASHINGTON – President Trump’s changes to the federal government’s core measure of the costs of climate change, the social cost of carbon, mean “current federal estimates [of climate effects] . . . are about 7 times lower than the prior federal estimates,” the Government Accountability Office (GAO) finds in a report released today by Senator Ben Cardin (D-Md.) and six Senate colleagues.  Despite a recommendation from the National Academies of Science, the Trump Office of Management and Budget (OMB) – the agency responsible for overseeing the calculation of the social cost of carbon – has no plans for updating the key measure to reflect the best available science, GAO concludes. 

The findings stem from a December 2017 request by Senator Cardin and Senators Sheldon Whitehouse (D-R.I.), Michael Bennet (D-Colo.), Jeff Merkley (D-Ore.), Elizabeth Warren (D-Mass.), Kamala Harris (D-Calif.), and Dianne Feinstein (D-Calif.).  Congresswoman Carolyn Maloney (D-N.Y.) led House members in requesting the report.

“When we document the true cost of the climate crisis, it becomes apparent that investing in a comprehensive response is the best investment we can make,” said Cardin. “The State of Maryland has identified 33 bridges that are highly vulnerable to sea level change, 172 bridges highly vulnerable to storm surge, and 102 bridges highly vulnerable to precipitation change on Maryland’s highway network.  The costs of maintaining infrastructure is rising rapidly in Maryland and throughout the country.  We must have honest and accurate accounting to manage the risks and make the necessary investments in response to the climate crisis.”

“Climate change is a massive threat to our economy.  That threat will only grow in years to come, even if we take the action necessary to avoid the worst effects of climate change.  We need a social cost of carbon pegged to the best available science to plan and adapt,” said Whitehouse.  “Instead, the Trump administration undermined the social cost of carbon, and then stuck its head in the sand when the federal government’s top scientists recommended implementing important changes.  Shutting off the headlights of science and sound economics makes it more likely that we’ll drive straight off a climate cliff.”

“This GAO report is further proof of the Trump Administration’s failure to listen to experts and address the climate crisis,” said Bennet. “The report lays bare the White House’s continued refusal to accurately account for the cost of climate pollution in federal policy. By putting politics over science, this administration continues to imperil our future by downplaying the dangers of climate change to Americans’ health and safety.”

“As we work together to rebuild our economy after this catastrophic public health crisis, we have to focus on putting in place critical building blocks for a strong, prosperous future,” said Merkley. “If we don't include bold climate action guided by good science and data in our recovery, we will just be teeing up the next public health and economic catastrophe. People are looking back now wondering why we weren't better prepared for a pandemic experts told us was overdue. We can't afford to repeat these mistakes.”

“Climate change continues to hurt our communities and our economies, and the Trump administration’s efforts to understate the social cost of carbon are both dangerous and irresponsible,” said Warren. “We must listen to the scientists and experts and act now to tackle the climate crisis head-on.”

“President Trump and his administration are failing to take the threat of climate change seriously,” said Harris. “The administration’s decision to ignore our country’s top scientists threatens our economy and our ability to address the climate crisis.  We can’t take the bold action necessary to address the climate crisis if we are not adequately accounting for the cost of greenhouse gas pollution.  Yet again, this administration has put polluters over people.”

“We have to take the threat of climate change seriously,” said Feinstein.  “This GAO report makes it clear the administration’s formula for accounting for the cost of greenhouse gas emissions minimizes the risks.  Ignoring or distorting the true costs of climate change won’t make the problem go away, it will just make it harder to respond to the very real challenges we’re facing.”

In 2017, President Donald Trump issued an executive order disbanding an important interagency working group charged with formulating the social cost of carbon and withdrew the guidance working group had issued.  The Trump administration also directed agencies to use an outdated OMB policy to monetize the value of greenhouse gas emissions from changes in federal regulation.  The result has been a severe downtick in the value of the social cost of carbon.  The Environmental Protection Agency’s assessment of its proposed rule to repeal the Clean Power Plan, for example, dropped the social cost of carbon from $45 per ton to as low as $1 per ton for 2020.

The Trump administration changed two key assumptions when calculating the social cost of carbon.  First, it looked at only domestic economic effects of carbon pollution instead of global effects – ignoring the reality of our global economy.  Second, it increased the discount rate used in the social cost of carbon.  The discount rate discounts the present value of things that happen in the future based on a percentage; a higher discount rate means that future harms, injuries, and losses from climate change count for far less. 

According to the new GAO findings, Trump’s changes mean “the current federal estimates, based on domestic climate damages, are about 7 times lower than the prior federal estimates that were based on global damages (when both prior and current estimates are expressed in 2018 U.S. dollars and calculated using a 3 percent discount rate).”  The GAO also found that Trump’s OMB has no plans for updating the methodologies used to develop the federal estimates, nor does it plan to task anyone in the federal government with doing so.

gao carbon report

 

The Senators had asked the GAO to look at states and other countries’ social costs of carbon; the Trump administration’s justification for dramatically changing the way it discounts the costs or benefits of regulation change affecting carbon pollution; and the rationales that have been used to support various discount rates in assessing the social cost of carbon.

The GAO’s findings point to a lack of trust in the Trump administration’s tweaks to the social cost of carbon among other governments.  The report found no state that uses the Trump administration’s lowered social cost of carbon values, while nine states – including New York, California, Minnesota, and Nevada – have continued to use the values set by the Obama administration.   Of the countries the GAO studied, both Canada and Germany have developed their own values, which include global damages and lower discount rates akin to the Obama formulation.  In all, the states and countries evaluated showed that the Trump administration numbers are outdated and out of step with current science.   

Read the full report here.

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