The Social Cost of Greenhouse Gases: Legal, Economic, and Institutional Perspective

Abstract

The social cost of greenhouse gases provides the best available method to quantify and monetize the climate damages attributable to the emission of an incremental unit of heat-trapping pollution. Accordingly, the metric can be highly useful for crafting policies that will reduce the nation’s greenhouse gas footprint, with potential usages including weighing the impacts of proposed fossil-fuel projects, assessing grant applications and procurement decisions that have climate impacts, and crafting fee schedules for monetary rates that will internalize the cost of climate damages onto polluters. To date, however, the use of the social cost of greenhouse gases for such determinations and processes has been sporadic and fairly limited. It is time for this practice to change, as broad application of the social cost of greenhouse gases will enable agencies and departments to identify programs or policies that cost-effectively reduce greenhouse gas emissions and thus enable a speedy and efficient transition to a greener economy. Because widespread use of the social cost of greenhouse gases would lend support to many decisions to transition away from fossil fuels, the methodology has become subject to criticism from opponents of climate reforms. While critics attempt to discredit the federal government’s social cost of greenhouse gases valuations—arguing that these values overestimate climate costs, disregard best practices, and even usurp the legislative function from Congress—such criticisms lack merit and should not deter agencies from broadly applying the social cost of greenhouse gases. This Article evaluates the various legal, economic, and institutional controversies surrounding the social cost of greenhouse gases and explains why this metric should play a critical role in guiding agency policymaking and decision-making related to climate change.