Cutting the social cost of carbon to $1/ton reveals the charade that’s supported a quarter of a century of inaction on climate change.
This is piece written at the request of the New Scientist following the Trump administration signalling its intention to reduce the ‘social cost of carbon’ from around $50 to $1/ton. This is a pre-edit (and longer) version of that published by the New Scientist and available at: Putting a price on CO2 is a smokescreen that hides its human cost
To an economist, Judas simply underestimated Christ’s marginal value – he got the price wrong. Rather than settling for thirty pieces of silver, he should have held out for sixty, or perhaps even ninety pieces. But to a philosopher, and probably most non-economists, putting a price on your best friend, your child, husband or mother is a ‘category mistake’. The rich, contextual and heterogeneous world in which we live can never be adequately reduced to a single homogeneous index, a Dollar, Euro or Yuan. But that is exactly what the ‘social cost of carbon’ claims to do!
Cut away the economic niceties and the social cost of carbon is little more than an attempt by a particular hue of economists to put a price on the global scale impacts of climate change, from now, throughout this century, and on across centuries to come. Such hubris is the preserve of a select group of typically wealthy, white and high-emitting men in the Northern hemisphere. Sat behind computers in highly industrialised countries, they price the impact of their and our carbon-profligacy on poor, low-emitting, climate-vulnerable, and geographically distant communities. A dollar value is put on the devastation a strengthened tornado wreaks on small coastal towns, financially valuing the people killed, the destroyed homes and destitute neighbourhoods.
Add to this, a guess of the cost to our children of their climate changing too rapidly for them to adapt their physical, social and institutional infrastructures; exacerbated floods, droughts, extreme weather and human migration. Then price in still further warming later in the century, loss of pollinating insects, destruction of virtually all coral reefs, major die back of tropical forests, sea level rises and acidifying oceans.
It doesn’t end there. An emergent property of the ‘social cost of carbon’ is that it can never be too high to raise fundamental questions of today’s dominant economic model. This massaging of costs is achieved by two principal ruses. First, the impact on the poor arising from the emissions of the wealthy is underplayed by valuing such impacts against the low economic ‘worth’ of those suffering them. In economic terms, the models assume the marginal value of money is reasonably constant; the value of $1 to a wealthy high emitter is not too dissimilar to that of a poor Bangladeshi shrimp farmer. Second, the impacts on future generations arising from our emissions are ‘discounted’. Certainly discounting is a live debate between the market evangelists arguing for high levels of discounting (~7%) and the green-growthers suggesting something a bit lower (3%). A child conceived now, and suffering ¥10M (~€1.3M) of impacts caused by emissions from their parent’s generation, would, when aged 50, see those very real impacts wiped off today’s balance sheet at 7% and all but ignored at 3%. Discounting the future by an individual can perhaps be understood as a natural consequence of their certain mortality. But, in many respects mortality is an irrelevant concept for a community that, by definition, is inter-generational and hence “quasi-immortal”.
Could Trump’s effective rejection of the ‘social cost of carbon’ catalyse our awakening from the economist’s morphine? Despite political rhetoric, techno-utopian claims and financial valuations of climate change, emissions in 2018 are almost 65% higher than in 1990, and look set to have risen by almost 3% across this year. So what’s the alternative?
Climate change is a deeply political issue – not one amenable to ‘expert’ takeover. But here, we’re in reasonably good shape. The rightly messy and international political process has already judged the thresholds and time-dependency of impacts collectively deemed appropriate to accept and avoid. This has been informed, but not determined, by science. The 1.5 to 2°C commitments enshrined in the Paris Agreement capture these impact thresholds and, combined with climate science, provide a quantitative carbon budget range adequate for evaluating the appropriateness of different mitigation options.
What we lack is not spurious financialisation of deeply human and ecological values, but the courage and integrity to put in place the suites of measures necessary to deliver on our commitments. This is, and will not, be easy – all the more because cost-optimisation models have reinforced the fondness of us high-emitters for delay over action. Certainly, a price on carbon may be one of many tools employed to bring about rapid decarbonisation. But here price is solely an instrumental mechanism to help initiate change, and in no way reflects a unified metric of value.
Within the political process of responding to climate change, the ‘social cost of carbon’ and the cost-optimisation models reliant on it, are part of the problem, not the solution.
 Professor of Energy and Climate Change; University of Manchester (UK)
Professor of Climate Change Leadership; Uppsala University (Sweden)
 I am often asked, usually privately, why I note the race and gender element in addressing climate change. I admit to finding it personally uncomfortable bringing it to the fore, particularly as I am a white man who is not well versed on issues of race and gender. But this is really the point. Well-meaning people who look like me dominate formal assessments of climate change. And whilst I’m sure ‘we’ endeavour to be ‘neutral’ in framing our analysis, and certainly our backgrounds differ, we inevitably are highly influenced by how white men living in wealthy nations are typically treated. Consequently, when our analysis relates to deeply social and cultural issues, such as the impacts of climate change, we need to openly acknowledge how our analysis is inevitably coloured by who we are. I am not suggesting that those of us working on formal assessments of climate change are all the same, but it would be churlish not to recognise that, even in 2018, race and gender are important factors in our evolving make-up.
(I do not want this endnote to expand beyond its current length, but this is a sensitive issue that whilst I am ill-equipped to address properly nevertheless cannot continue to be ignored. Consequently, if anyone more au fait with these issues thinks I have wildly misread or misunderstood the situation, I would be happy to consider rewording this note.)