A new report released by an independent group of climate economists claims that flawed economic models could nullify the very purpose of establishing the United States’ social cost of carbon.

The Economics for Equity and the Environment Network, or E3, said that the United States Interagency Working Group on Social Cost of Carbon is using a climate model that could actually hinder the country’s drive to overcome its emission problems.

The social cost of carbon is the corresponding damage inflicted by the emission of each unit of carbon into the atmosphere above acceptable levels. It is typically expressed in dollars per metric ton of carbon dioxide.

The carbon cost figure is a critical component for federal agencies which seek to integrate climate change issues in their rules and regulations. Higher carbon costs would result in more stringent regulatory standards and, correspondingly, lower costs would result in more flexible limitations.

Carbon cost is determined by weighing the cost of mitigating emissions against the expected backlash of spewing tons of carbon dioxide into the atmosphere.

Put simply, the social cost of carbon is a measure of the gravity of the occurrence of climate change.

But according to the network, the carbon cost value in the United States is considerably low because it was based on problematic climate change models such as the climate framework for uncertainty, negotiation and distribution (FUND) and the dynamic integrated model of climate and the economy (DICE). The models are the primary tools that the interagency uses in conducting its work.

The economics network said that the FUND model makes the “morally offensive” deduction that leads to favoring human lives in richer countries compared with those in poor countries.

On the other hand, the network said that the DICE model mistakenly presumes that majority of the people in the world would prefer a warmer climate, based on relatively insufficient evidence. With this assumption, the model pushes for a very slow “climate policy ramp.”

$21 per ton

The Interagency Working Group on Social Cost of Carbon proposed that the United States’ social carbon cost should be at $21 per ton, which translates to an equivalent value of 20 cents per gallon of gasoline. This figure is significantly lower compared with the social carbon cost of Britain, which ranges from $41 to $124 for each ton of carbon dioxide.

The network believes that imposing a light social cost of carbon would not help the country reduce its carbon footprint.

For example, if the social cost of carbon only stands at $5, then regulations that would cost less than the carbon cost would be deemed sensible. On the other hand, if the carbon cost is stated at $500, then the demands enforced on emitters could cost 100 times more.

“The danger is that this will lead to ineffectual regulations that don’t make a dent in the climate problem,” claimed Dr. Frank Ackerman, the lead author of the report, a senior economist at the Stockholm Environment Institute’s United States center and a co-founder of the network.

Among the agencies which consider the cost of carbon in their regulatory measures are the Environmental Protection Agency and the Department of Energy.

The agency is authorized by the Supreme Court to regulate greenhouse gas emissions such as carbon dioxide. Meanwhile, the department is bent on setting energy efficiency standards for home appliances and commercial equipment, based partly on the level of their contribution to climate change.

The report recommends that prices comparable with those of Britain should be explored and considered to more accurately estimate the price of carbon emissions.

“We know that the higher the carbon price, the more it will reduce carbon emissions; that’s the whole point of a market incentive. If it’s this low, it will have hardly any effect,” said Dr. Ackerman.