Extravagant claims about global warming would be relatively harmless if they were left to academics trying to gin up research grant dollars. But as the latest Bloomberg Businessweek reports, misuse of the science surrounding climate change can have a major negative impact on the economy.
Three years ago, federal agencies used their own formulas to calculate the social cost of carbon. The Department of Transportation pegged it at $7 per metric ton; the Environmental Protection Agency said $40. That obviously didn’t make sense, says Michael Greenstone, a Massachusetts Institute of Technology professor and former White House economist. In 2010 he and a group of federal officials came up with what they considered a more accurate number for the entire federal government to use: $23.80 per metric ton. “Everybody understands that there are things you can do to make the number larger and things you can do to make the number smaller,” Greenstone says. “This was the consensus judgment of a wide range of agencies with competing interests.”
The provision the administration has now slipped into the microwave regulations updates this carbon cost figure with a much higher one—$38 a ton, an increase of 60 percent. Assigning a higher social cost to carbon has the effect of making coal mining, oil drilling, and other heavy industry appear more environmentally costly to regulators than before. On the flip side, it lets the administration claim greater societal benefits from its efforts to improve efficiency standards on air conditioners, vending machines, lighting fixtures, and, yes, microwave ovens.
“To do this without any outside participation is bizarre,” says Jeff Holmstead, a lawyer at Bracewell & Giuliani who represents power producers that depend on coal. Holmstead’s clients likely have the most to fear from the change. The EPA will soon issue rules to cut power-plant emissions, which could force coal-fired plants to cut production or shut down. Because of the new social cost of carbon—which makes the plants appear to be taking a heavier toll on the environment—the rules will be easier for the administration to justify.
Yet even some liberal supporters of the administration question why it didn’t open up the process to public comments. “This is a very strange way to make policy about something this important,” says Frank Ackerman, an economist at Tufts University who published a book about the economics of global warming.
