Social cost of carbon

The social cost of carbon (SCC) is the marginal cost of the impacts caused by emitting one extra tonne of carbon emissions at any point in time.^[1] The purpose of putting a price on a tonne of emitted CO₂ is to aid policymakers or other legislators in evaluating whether a policy designed to curb climate change is justified. The social cost of carbon is a calculation focused on taking corrective measures on climate change which can be deemed a form of market failure.^[2] The only governments which use the SCC are in North America.^[3] The Intergovernmental Panel on Climate Change suggested that a carbon price of $100 per tonne of CO₂ could reduce global GHG emissions by at least half the 2019 level by 2030.^[4]

Because of politics the SCC is different from a carbon price.^[5] According to economic theory, a carbon price should be set equal to the SCC. In reality, carbon tax and carbon emission trading only cover a limited number of countries and sectors, which is vastly below the optimal SCC. The social cost of carbon ranges from −$13 to $2387/tCO₂, while the carbon pricing at present only ranges from $0.50 to $137/tCO₂ in 2022.^[6] From a technological cost perspective, the 2018 IPCC report suggested that limiting global warming below 1.5 °C requires technology costs around $135 to $5500 in 2030 and $245 to $13000/tCO2 in 2050.^[7] This is more than three times higher than for a 2 °C limit.

In 2021, the study "The social cost of carbon dioxide under climate-economy feedbacks and temperature variability" estimated even costs of more than $300/tCO₂.^[8]^{[failed verification]} A study published in September 2022 in Nature estimated the social cost of carbon (SCC) to be $185 per tonne of CO₂—3.6 times higher than the U.S. government's then-current value of $51 per tonne.^[9]

^ Yohe, G.W.; et al. (2007). "20.6 Global and aggregate impacts; 20.6.1 History and present state of aggregate impact estimates". In M.L. Parry; et al. (eds.). Perspectives on climate change and sustainability. Climate Change 2007: Impacts, Adaptation and Vulnerability. Contribution of Working Group II to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge University Press. Archived from the original on 7 November 2011. Retrieved 12 October 2011.
^ "Social Cost of Carbon 101". Resources for the Future. Retrieved 25 August 2020.
^ "What is the social cost of carbon?". Brookings. Retrieved 15 December 2023.
^ IPCC (2022). "Summary for Policymakers". Climate Change 2022: Mitigation of Climate Change. Contribution of Working Group III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change (PDF). Cambridge, UK and New York, NY, US: Cambridge University Press. p. 37.
^ Cordeau, Hugo (6 June 2023). "The social cost of carbon". Canada's National Observer. Retrieved 15 December 2023.
^ Cite error: The named reference :3 was invoked but never defined (see the help page).
^ Cite error: The named reference IPCC SR15 Ch4 2018 374 was invoked but never defined (see the help page).
^ Kikstra, Jarmo S.; Waidelich, Paul; Rising, James; Yumashev, Dmitry; Hope, Chris; Brierley, Chris M. (6 September 2021). "The social cost of carbon dioxide under climate-economy feedbacks and temperature variability". Environmental Research Letters. 16 (9): 094037. Bibcode:2021ERL....16i4037K. doi:10.1088/1748-9326/ac1d0b. ISSN 1748-9326.
^ Cite error: The named reference Nature_20220901 was invoked but never defined (see the help page).

[1] Yohe, G.W.; et al. (2007). "20.6 Global and aggregate impacts; 20.6.1 History and present state of aggregate impact estimates". In M.L. Parry; et al. (eds.). Perspectives on climate change and sustainability. Climate Change 2007: Impacts, Adaptation and Vulnerability. Contribution of Working Group II to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge University Press. Archived from the original on 7 November 2011. Retrieved 12 October 2011.

[:2-2] "Social Cost of Carbon 101". Resources for the Future. Retrieved 25 August 2020.

[3] "What is the social cost of carbon?". Brookings. Retrieved 15 December 2023.

[4] IPCC (2022). "Summary for Policymakers". Climate Change 2022: Mitigation of Climate Change. Contribution of Working Group III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change (PDF). Cambridge, UK and New York, NY, US: Cambridge University Press. p. 37.

[5] Cordeau, Hugo (6 June 2023). "The social cost of carbon". Canada's National Observer. Retrieved 15 December 2023.

[:3-6] Cite error: The named reference :3 was invoked but never defined (see the help page).

[IPCC_SR15_Ch4_2018_374-7] Cite error: The named reference IPCC SR15 Ch4 2018 374 was invoked but never defined (see the help page).

[Kikstra-8] Kikstra, Jarmo S.; Waidelich, Paul; Rising, James; Yumashev, Dmitry; Hope, Chris; Brierley, Chris M. (6 September 2021). "The social cost of carbon dioxide under climate-economy feedbacks and temperature variability". Environmental Research Letters. 16 (9): 094037. Bibcode:2021ERL....16i4037K. doi:10.1088/1748-9326/ac1d0b. ISSN 1748-9326.

[Nature_20220901-9] Cite error: The named reference Nature_20220901 was invoked but never defined (see the help page).

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