Market Forces

More confirmation that the Trump administration has been disregarding the true costs of climate pollution

By / Bio / Published: July 22, 2020

This post originally appeared on Climate 411

A new report highlights the Trump administration’s dangerous efforts to obscure the real costs of climate change, while a major court decision firmly rejects the administration’s approach.

Costly flooding in Houston after Hurricane Harvey

A new report from the Government Accountability Office (GAO), an independent agency tasked with providing objective nonpartisan information to policymakers, confirms what we’ve known for years: that the Trump administration has been ignoring the enormous costs of climate change. By ignoring these damages, the administration is turning its back on communities across the nation who are footing the bill for those impacts today.

In addition, a federal court recently issued a clear-cut rejection of the administration’s deceptive math on the cost of methane pollution, another greenhouse gas that is 84 times more potent than carbon dioxide over a 20 year time period. This ruling reinforces the fact that the administration has been blatantly disregarding widely accepted science and economics when it comes to the costs of climate change.

All of this comes amid a raging and widespread pandemic that underscores the absolute necessity of relying on experts and scientific data when crafting policy. With unchecked climate change fueling more devastating storms, droughts, and other public health impacts — all of which hit vulnerable communities the hardest — incorporating accurate costs of climate change in policy decision-making matters now more than ever.

Here is what this new report and court decision reveal about the administration’s backwards and harmful approach to decisions on climate change — and how experts and the courts are wholly rejecting it.

Why undervaluing the cost of climate change is dangerous

To justify its own political agenda, the Trump administration has manipulated the calculations behind the estimated impact of emissions to allow for more climate pollution from major sources like power plants and cars. The new GAO report outlines the steps the administration has taken to drastically underestimate the “Social Cost of Carbon” — a measure of the economic harm from climate impacts that is used to inform policy and government decision-making. These impacts include extreme weather events like flooding and deadly storms, the spread of disease, and sea level rise, increased food insecurity, and more.

After a 2008 court decision requiring the federal government to account for the economic effects of climate change in regulatory benefit-cost analysis, an Interagency Working Group (IWG) comprised of experts across a dozen federal agencies began in 2009 to develop robust estimates of the social costs of carbon that could be used consistently by agencies across the government. These estimates were developed through a transparent and rigorous process based on peer-reviewed science and economics that included input from the National Academy of Sciences and the public — and were periodically updated over time to account for the latest science. More recently, the NAS conducted a thorough assessment to provide guidance on updating the social cost of carbon estimates and suggestions for continuing to build on and strengthen it.

The GAO report underscores the importance of implementing those recommendations, while pointing to the fact that the federal government has done absolutely nothing to follow through. In fact, in 2017 the Trump administration recklessly disbanded the IWG — the very federal entity that already had the mandate to take on this task.

Since then, federal agencies like the EPA have been relying on an “interim cost” to inform important regulatory decisions that is seven times lower than the IWG’s estimate — a move that dramatically underestimates the profound impacts climate change has on families, businesses, taxpayers and local governments. To make matters worse, the administration is dramatically reducing the IWG figure even though it is widely recognized to be an underestimate of the true costs. There is wide consensus that the true costs are much likely significantly higher.

The Trump administration substantially reduces estimates through two key flaws in its calculations, both of which fly in the face of established science and economic principles. First, the reduced estimates ignore that carbon emissions are a global pollutant, omitting important categories of climate change impacts on the United States. Second, they undervalue the harm to our children and future generations by significantly over-discounting future climate impacts.

By vastly undervaluing the costs of climate change — and thus, the benefits of acting on climate — the administration has been able to justify rolling back critical protections such as the landmark federal Clean Car Standards. These important rules offer critical public health benefits and fuel savings for consumers.

A court ruling refutes the administration’s deceptive math on pollution costs

In encouraging news, a recent court decision outright rejected the administration’s deceptive math on a similar metric, the ‘Social Cost of Methane,’ used to estimate the impacts of methane pollution. The Bureau of Land Management, under former Department of Interior Secretary Ryan Zinke, has been using an interim social cost of methane that is more than 25 times less than the estimate from the IWG. The U.S. District Court for the Northern District of California recently overturned the BLM’s attempt to ease protections from dangerous methane leaking, venting and discharging from oil and gas activities on public and tribal lands, where it used a distorted social cost of methane as justification. EDF joined the states of California and New Mexico and a broad coalition of health, environmental, tribal citizen and Western groups to challenge in court the rescission of these vital safeguards.

In the opinion, the judge ruled that the BLM’s decision to rely on a lower interim estimate for the social cost of methane was “arbitrary” and “capricious,” and therefore, “failed to quantify accurately the forgone methane emissions and the resulting environmental impacts.” In addition, the court underscored that “the President did not alter by fiat what constitutes the best available science” on the social cost of greenhouse gas emissions. This is a major win for not only the broad coalition involved in the case, but for the basic principle of science-based decision-making on climate change. The court’s meticulous critique of the flaws in the interim social cost of methane — and the process used to develop it — could be influential in future cases involving the social cost of greenhouse gas emissions. Such a critical ruling like this opens the possibility that the Trump administration and future administrations could be required to properly account for the costs of climate change.

The Trump administration’s unwavering, politically motivated attempts at twisting facts and discrediting experts is putting Americans’ lives, health and financial well-being at risk. Unfortunately, its effort to skew the costs of climate change is far more than a political game. It is already causing real harm to communities across the country suffering from climate impacts — and it will only add to the mounting costs our children and grandchildren will pay. That is why ongoing efforts to uncover and overturn unjust climate decisions are all the more essential.

Posted in Economics, emissions, Social Cost of Carbon / Leave a comment

Accelerating clean energy innovation is key to solving the climate crisis

By / Bio / Published: March 19, 2019

This post originally appeared on Climate 411 and was co-authored by Elgie Holstein

Our nation has a history of tackling big challenges and leveraging the ingenuity of American entrepreneurs to develop solutions that have changed the world – from curing diseases to exploring space to launching the internet. Today, climate change is one of our most urgent global challenges, for which there is little time left to prevent the most destructive impacts. To combat it, we must bring every bit of our nation’s entrepreneurial creativity and scientific excellence to bear. That means accelerating the deployment of existing low-carbon technologies as well as investing in new and emerging innovations that can transform our economy to 100% clean energy. And we have to do it quickly.

Fortunately, there are recent indications that a clean energy innovation agenda can attract bipartisan support in Congress, even as the debate over broader climate policy remains gridlocked. Recently, in the Republican-controlled Senate, the Environment and Public Works Committee held a hearing focused on a bipartisan bill that would invest in research on cutting- edge approaches such as direct air capture (DAC), a “negative emissions technology” (NET) that might someday be able to suck carbon pollution directly out of the air and store it or recycle it into fuel, fertilizer, and concrete.

A complement to conventional approaches to climate mitigation that reduce emissions, NETs remove carbon dioxide that’s already in the atmosphere. They range from technological options like DAC to natural sequestration techniques such as replanting and vitalizing forests and adopting sustainable farming practices that put more carbon into the soil. The Committee also looked at the state of carbon capture and storage (CCS) technology, which can capture carbon pollution from industrial smokestacks, including at power plants, and store it underground.

In the House, the Committee on Science, Space, and Technology held a hearing highlighting the contributions of one of America’s most successful energy research and development organizations, ARPA-E, the Advanced Research Projects Agency–Energy. Its special mission is to move high-impact energy technologies from the research workbench to the market. Its successes have earned the agency support from a wide array of groups on both sides of the aisle, even as President Trump has proposed ending this popular bipartisan initiative.

Together, these hearings illustrate a growing understanding that investing in emerging technologies that slash carbon pollution is good for the environment and the economy, as well as for maintaining America’s competitive edge in the global clean energy revolution.

Unlocking innovation

In order to avoid the worst effects of climate change, the world must reach net-zero emissions – taking as much carbon out of the atmosphere as we put into it – by mid-century. In its recent report on limiting temperature increases to 1.5 degrees Celsius, the Intergovernmental Panel on Climate Change (IPCC) emphasizes that cutting carbon pollution at the pace and scale required to avoid the worst effects of climate change will require rapid development and deployment of an expanded portfolio of low- and zero-carbon options.

In the U.S., we must take advantage of every cost-effective opportunity to cut climate pollution now, while investing in the innovations that will put us on course for net-zero emissions as soon as possible. Doing so will position us to lead the world in new clean-energy technologies, creating millions of new jobs for Americans.

Potential breakthrough technologies are on the horizon, from utility-scale energy storage, which can enable us to use lots more renewable power, to new means of capturing and storing carbon. But innovation and adoption are not happening fast enough, and many of the technologies that can make a difference are not currently cost-effective.

Accordingly, we must put in place the policies and incentives that will drive massive expansion and deployment of existing clean energy technologies such as solar and wind, backed by enforceable declining limits and a price on carbon pollution. At the same time, we must multiply investment in nascent, or even not-yet-dreamed-of, technologies, so that a new supply of clean solutions can be made market-ready, in order to close the emissions gap ahead.

Moreover, we need the pairing of policy frameworks — such as imposing carbon emissions limits and requiring companies to pay when they pollute — with investment in innovative solutions, such as NETs. That will produce a multiplier effect, allowing for greater ambition in curbing greenhouse gas pollution on a faster timeline. Requiring companies to face the true costs of their pollution will lead them to seek out cleaner sources of energy, not just as customers for new technologies, but as production and process innovators. Meanwhile, government investment in critical research will spark the development of new solutions that will be ready for deployment when the market demands them, lowering compliance costs and driving transformative change across the economy.

The case for Congress

While it is encouraging to see Congress engaging in conversations on innovation as a means of addressing climate change, much more work is needed.

Policymakers from both sides of the aisle must commit to investing in the development of clean energy solutions while creating the market conditions necessary to make significant cuts in climate pollution, starting now. They must articulate and act on a vision of achieving net-zero greenhouse gas pollution by mid-century.

Investing in innovation is a key piece of the puzzle. So, too, are policies that protect American families and communities while boosting our economy and cleaning our air.

The challenge is significant. Fortunately, America has shown that it is up to the job.

Posted in Energy efficiency, Technology / Leave a comment

A growing call for environmental integrity

By / Bio / Published: December 18, 2018

The recent introduction of bipartisan carbon fee legislation is demonstrating an important pattern taking hold as policymakers focus on climate change solutions. The Energy Innovation and Carbon Dividend Act, like the MARKET CHOICE Act introduced earlier this year by Republican Rep. Curbelo, recognizes that any carbon fee aimed at meeting the challenge of climate change must be designed with environmental performance in mind.

The new legislation is the first time in a decade that lawmakers from both sides of the aisle have come together to put forth serious climate policy. And like the MARKET CHOICE Act, it uses a fee to reduce pollution across the economy and includes “environmental integrity mechanisms” (EIMs) — provisions that tie a carbon fee to clear, measurable pollution reduction goals and keep us on track to meet those goals. EIMs are still a relatively new concept on the climate policy scene, but leading thinkers have begun to pay them significantly more attention, and it is clear they are emerging as a critical component of any serious carbon fee proposal: and with good reason.

A carbon fee – which sets a price per unit of pollution – prompts the economy to respond by providing powerful incentives to reduce that pollution, but it cannot guarantee the environmental result. While energy and economic modeling tools can provide critical insight into possible or likely outcomes, they cannot provide certainty over the magnitude of the impact. That’s why it is critical to include EIMs designed to provide greater assurances that a fee will deliver on its pollution reduction potential.

Momentum is building for urgent action on climate change. Last week, hundreds of protestors flooded into the Capitol calling for lawmakers to act. The recent Intergovernmental Panel on Climate Change report on the climate impacts of 1.5 degrees of warming and the U.S. National Climate Assessment paint a stark picture: the effects of warming are already here and there is no room for more delay if we are to avert disastrous impacts on human health and our economy. As this demand for action has gotten louder, so has the call for solutions that guarantee the results we need.

There is growing recognition that we need serious solutions to these pressing problems – and that means performance-based policy designed to ensure pollution reductions occur at the pace and scale the science demands. EIMs play the role of an insurance mechanism – they may never be triggered if a fee performs as expected, but provide critical safeguards in case it does not. As Rep. Ted Deutch, the author of the new bill, recognized, a price on pollution can harness the power of the market and provide a flexible cost-effective means of achieving results. But Rep. Deutch and the bill’s co-sponsors also realized that it is no longer acceptable to simply set a price and walk away, hoping the fee does the job. We also need limits on pollution, and effective mechanisms to ensure we meet our critical emissions reduction goals.

Indeed, the most straightforward way to cut pollution is to place enforceable declining limits on pollution, guaranteeing the environmental outcome, while giving businesses flexibility to determine the best way to meet it. We already have proof that those kinds of policies can help meet environmental goals faster and more cheaply than expected while growing the economy.

Regardless of the approach we take, the cornerstones of good policy design are the same: clear and measurable emission reduction goals, effective provisions to ensure they are met, and flexibility in how to meet them coupled with strong incentives to do it cheaply and efficiently. In the context of a carbon fee, that means including an EIM.

Ultimately, in order to achieve the dramatic transformational change needed to reach a 100% clean energy economy and the pollution reductions that science demands: net-zero emissions as soon as possible, a portfolio of policy approaches is needed (as others have pointed out). This means not only a limit and a price on pollution, but also investing in innovation and development of promising emerging clean energy technologies. It also means putting in place other programs that accelerate deployment of clean transportation infrastructure and promote electrification of cars and buildings. And it means encouraging states and cities to continue to lead and take action to cut pollution, pushing beyond federal requirements.

The seeds of future progress in Congress are being planted and demand is growing for durable and effective solutions that ensure environmental goals will be met. The key metric for any climate policy is environmental performance – lawmakers on both sides of the aisle are demonstrating they recognize this fundamental principle.

Posted in Economics, Uncategorized / Leave a comment

New analyses agree carbon pricing is a powerful solution

By / Bio / Published: August 23, 2018

This post is co-authored with Steve Koller

To tackle dangerous climate change at the pace and scale the science demands, we must take advantage of every cost-effective opportunity to cut pollution now. Several recent analyses from leading experts on the impacts of carbon pricing demonstrate once again why flexible, market-based policy is the most effective and efficient tool we have to address dangerous climate change.

These studies reaffirm that penalizing pollution and requiring companies to pay for their contribution to climate change can help the United States achieve needed reductions while generating substantial revenue. What’s more, none of these studies even account for the enormous benefits of averting climate change impacts.

While these studies examine carbon taxes (which place a price on pollution and allow the economy to respond), approaches that establish overall declining pollution limits and allow the market to determine the price can achieve similar pollution reductions and economic outcomes. But since uncertainty about market factors and technological trends prevent even the most robust economic modeling from providing guarantees, it is crucial that any carbon tax policy be linked to clear, concrete pollution reduction goals and include transparent provisions to help ensure those goals are met. A policy where the price is derived from overall enforceable pollution limits already includes those assurances.

The analyses by the Stanford Energy Modeling Forum (EMF 32, comprising 11 leading modeling teams), Columbia University’s Center on Global Energy Policy (CGEP) and the U.S. Energy Information Administration (EIA) examine a range of scenarios with price paths from $15  to $50 per ton and annual price escalators from 1 to 5 percent, along with various ways of distributing the revenue. In addition, Resources for the Future and Columbia modeled the carbon tax bill recently introduced in the House by Representative Curbelo and co-sponsors, which includes a starting price of $24 per ton and rising 2 percent annually.

Let’s take a look at four key takeaways across analyses:

1. National policy that puts a price on carbon could significantly reduce climate pollution

In all scenarios that examine a price across the economy, pollution reductions are achieved consistent with meeting or exceeding the U.S. Paris Agreement climate commitment by 2025 of 26 to 28 percent reductions below 2005 levels. On our current path, we will almost certainly fall short of meeting those goals, according to recent analysis from the Rhodium Group.

However, the analyses also show that to achieve deeper reductions aligned with long-term, science-based targets (for example, net-zero emissions by mid-century), we will likely need pricing paths at the more ambitious end of the spectrum—as well as companion policies to help the most difficult sectors decarbonize.

Of course, a key advantage of pricing pollution is that it will spur innovation—encouraging new technologies and approaches to slashing emissions that today’s models cannot foresee. These advances could allow us to meet our goals at lower costs than anticipated—exactly what’s happened with the well-designed, market-based U.S. acid rain program.

The EMF 32 results also underscore that the starting price matters for reductions in the short term, while the rate of increase over time is important for bending the emissions curve down in the long term. For example, in the first decade, the $50 plus 1 percent price achieves roughly 40 percent more cumulative emissions reductions than the $25 plus 5 percent scenario. However, by 2038 cumulative reductions in the $25 plus 5 percent price exceeds the $50 plus 1 percent price, and cumulative emissions through 2050 are similar. This dynamic is important since cutting pollution now is good for the climate, but we also need to sustain the pollution decline over the long term. Ultimately, the total cumulative climate pollution in the atmosphere is what matters.

2. Carbon pricing has extremely minor impacts on the economy—without accounting for the economic benefits of avoided climate change

Both EMF 32 and CGEP’s results suggest that GDP would continue to grow at historical or near-historical rates across scenarios—and could be net positive, depending on how revenue is used. Additionally, despite misleading rhetoric from opponents of climate action, a carbon price would have an extremely small net effect on employment. A recent analysis from Resources for the Future suggests that the net impact of a $40 tax would be less than half of one percent or even lower. And while many other studies confirm that net impacts on employment are likely to be small, they note that even mainstream modeling efforts tend to overestimate the impacts by a factor of 2.5 or more. Meanwhile, national climate policy would mean investing in the clean energy revolution: the economic engine of the future.

None of these analyses even consider the economic benefits associated with slashing climate pollution. Citibank estimates that climate change will cause tens of trillions of dollars in damages if left unchecked. These analyses also do not account for the additional associated benefits such as improvements in air quality. Taken together, these benefits make an overwhelming economic case for reducing pollution as soon as possible.

3. The lion’s share of reductions occur in the power sector, underscoring the importance of companion policies in other sectors

All analyses of an economy-wide price find that the vast majority of reductions occur in the power sector, driven primarily by declines in coal consumption. In the analyses examining $50 per ton scenarios, Columbia shows that approximately 80 percent of economy-wide emissions reductions occur in the power sector with a significant shift towards renewable energy, and EMF 32 results predict that coal demand reaches near-zero by 2030. This is consistent with modeling analysis conducted by the United States Mid-Century Strategy for Deep Decarbonization in 2016.

Some other sectors, notably transportation, tend to be less responsive to carbon pricing in the models—at least in the short term. Both Columbia and EMF 32 find that transportation sector emissions only drop a few percentage points relative to 2005 levels by 2030 even in the higher pricing scenarios. These results underscore the importance of policies that put a firm limit on pollution across the economy as well as companion policies that can help address specific barriers to change in sectors that will be more difficult to decarbonize.

4. How revenue is used matters

Carbon pricing has the potential to raise significant revenue—for example, just under a trillion dollars over the first 5 years with a $40 price, rising at 5 percent. How revenue is used plays a significant role in overall economic impacts as well as the distribution of those impacts across regions and populations.

For example, CGEP’s analysis finds that certain revenue recycling approaches—including the use of revenues to reduce payroll taxes or the national debt—result in larger long-run economic growth than scenarios without a carbon price. EMF results find that using revenues to reduce capital income taxes generally achieve the highest GDP growth of the scenarios they considered, but these gains are disproportionately captured by the wealthy.

Alternatively, revenue can be directed to not only avoid this sort of inequitable distribution of benefits, but also protect low-income families and disadvantaged communities who already bear a disproportionate share of the burden of climate change and air pollution, and are more sensitive to changes in energy costs. For example, Columbia’s analysis shows that approaches putting even a small portion of revenue back into the pockets of American households can compensate those in the lowest income quintile from potential increases in energy costs. The Center on Budget and Policy Priorities has also demonstrated how carbon pricing can be designed to fully offset impacts of the policy on the most vulnerable households and provide considerable support for others while leaving significant revenue to spare.

While assumptions and model structures may differ, bottom line findings all point in the same direction: well-designed, national carbon pricing policy can spark deep reductions in climate pollution alongside economic growth, while spurring technological innovation and protecting vulnerable populations.

The “price” itself is only one part of effective climate policy. We need firm declining limits on pollution to accompany a price and ensure environmental outcomes, as well as a portfolio of approaches working together to ensure that investment and innovation are happening where it matters. A pricing program can be a catalyst for driving additional climate solutions at the federal, state, and local level, while other policies can share the burden and tackle the problem from multiple angles. This model has already proven itself in California, where the state has hit pollution reduction targets even earlier and at lower cost than anticipated.

To be successful, we need bipartisan leadership and a serious discussion about meaningful solutions. The United States can and must address the challenge by working together in the best interest of all Americans to put in place ambitious, effective, and fair climate policy.

Posted in Uncategorized / Leave a comment

Trump Administration misleads Americans about the cost of climate pollution

By / Bio / Published: October 25, 2017

This blog post originally appeared on Climate 411.

The Trump Administration is attempting to justify the rollback of crucial environmental and health protections by vastly undervaluing the costs of climate change.

The latest safeguards under attack are the Clean Power Plan, the nation’s first-ever limits on carbon pollution from existing power plants, and the Bureau of Land Management’s vital standards to reduce wasted natural gas from oil and gas facilities on public and tribal lands. They would have health, environmental, and economic benefits worth an estimated billions of dollars annually. But you wouldn’t know it from reading the Administration’s recently revised documents – because of a series of deceptive accounting tricks, including efforts aimed at obscuring the benefits of reducing carbon pollution.

The Trump Administration has used discredited methods to eviscerate the social cost of carbon — an estimate of the costs that carbon pollution inflicts on the public, represented as the dollar value of the total damages from emitting one ton of carbon dioxide into the earth’s atmosphere.

The social cost of carbon is a tool that helps ensure that policymakers consider the health, environmental and economic benefits of avoiding extreme weather, rising temperatures and intensifying smog when they make decisions that affect climate pollution.

Climate change harms businesses, families, governments and taxpayers through rising health care costs, destruction of property, increased food prices and more — so it’s common sense that we should properly account for the value of avoiding these harmful outcomes. But the Trump Administration has systematically undermined and attacked the well-established science of climate change – including the social cost of carbon, which has had a target on its back for a while now.

The most up-to-date estimates of the social costs of carbon were developed by an Interagency Working Group (IWG) of experts from a dozen federal agencies. They were developed through a transparent and rigorous process based on the latest peer-reviewed science and economics, and with input from the public and the National Academy of Sciences.

But in March, President Trump cast aside the results of this thorough and consultative process. He issued an executive order aimed at discrediting the IWG estimates, withdrawing them as government policy, and directing federal agencies to pick their own metric.

The executive order leaves federal agencies to fend for themselves without specific guidance, opens the door to extensive legal challenges, and effectively sets up agencies to cook the books to serve the Administration’s goals.

That’s exactly what EPA Administrator Scott Pruitt and Department of the Interior Secretary Ryan Zinke just did – releasing benefit-cost analyses that massively undervalue the costs of carbon pollution, radically reducing the estimates by up to 97 percent.

The Trump Administration would have us believe that the costs of carbon pollution are near zero. The Administration’s new estimates are only a couple dollars per ton of carbon dioxide – about as much as a cup of coffee or a bus ticket.

Sadly, communities around the country are already seeing just how wrong that is. From longer wildfire seasons to more intense hurricanes, the American public is already bearing the enormous costs of climate change.

Even the IWG estimates – roughly $50 per ton of carbon dioxide based on year 2020 emissions – are almost certainly a conservative lower bound since they do not yet reflect many different types of climate impacts.

A closer look at the Administration’s deceptive math 

There are two major flaws in the Administration’s drastically reduced estimates, both of which fly in the face of established science and economic principles in service of obscuring the very real benefits of climate action.

First, the reduced estimates ignore that carbon emissions are a global pollutant, so they omit important categories of climate change impacts on the United States.

Second, they shortchange the harm to our children and future generations from climate change.

The so-called “domestic-only” estimate

Since the impacts of carbon pollution are felt globally regardless of where the emissions come from, leading researchers and the IWG have appropriately focused on accounting for that full global impact.

In contrast, the Administration’s revised estimates claim to consider “domestic-only” impacts to the United States. But that title is a misnomer – the Administration’s flawed approach ignores important categories of impacts that affect the American public. Climate impacts beyond our borders have costly repercussions for U.S. citizens in the form of changing global migration patterns, economic and political destabilization, and other “spillover” effects.

The National Academy of Sciences specifically rejected the approach the Administration is taking in a report released earlier this year, concluding that:

[C]limate damages to the United States cannot be accurately characterized without accounting for consequences outside U.S. borders.

Economist Richard Newell – president of the think tank Resources for the Future, which is leading an effort to implement the Nation Academy of Sciences’ recommendations to update the social cost of carbon estimates – has criticized the Administration’s approach, saying that considering only direct domestic impacts is:

[U]nnecessarily constrained and unwise for addressing inherently global pollutants like greenhouse gases.

The use of a “domestic-only” number also harms Americans because it undervalues the cost of climate pollution and encourages other countries to similarly undervalue – and over-emit – this pollution.

More than half a dozen leading experts argue:

[The] United States benefits tremendously if other countries set policy based on global rather than local effects.

They also point out that the use of a global estimate can encourage reciprocal climate action elsewhere. For instance, the Canadian government incorporated the U.S. IWG value in its own policy analysis.

Undervaluing the impacts on children and future generations

The Administration’s estimates also use a sharply lower value for the benefits that today’s carbon reductions provide to children and future generations. Again, this is in direct conflict with the weight of expert opinion that supports valuing these impacts even more than we did before the Trump Administration.

The Administration’s estimates “discount” future impacts at 7 percent – a rate significantly higher than the 3 percent central rate of the IWG, and one that is wholly unsupported by the economics literature when it comes to the long-lived intergenerational effects of carbon pollution.

A growing consensus among leading economists supports lower or declining discount rates, as does the Council of Economic Advisors.

As Richard Newell of Resources for the Future points out:

Practically speaking, the use of such a high discount rate means that the effects of our actions on future generations are largely unaccounted for in the new analysis.

In other words, the Administration’s estimates reveal just how little they value protecting American children and generations to come.

The social cost of carbon has profound influence on our policy process and embodies the very real costs of climate change that communities around the country are already feeling.

The Administration’s distortion of these values is illustrative of a frequent strategy of theirs – twisting the facts to validate their desired outcome, and in the process sowing doubt around the overwhelming scientific consensus on climate change.

Unfortunately, while the math the Administration is using is warped, the costs of climate change are still very real – and the American public is footing the bill.

Posted in Clean Power Plan, Economics, Social Cost of Carbon / Leave a comment

What’s behind President Trump’s mystery math?

By / Bio / Published: June 9, 2017

This post originally appeared on EDF’s Climate 411

By this time, your eyes may have glazed over from reading the myriad of fact checks and rebuttals of President Trump’s speech announcing the United States’ withdrawal from the Paris climate agreement. There were so many dizzying falsehoods in his comments that it is nearly impossible to find any truth in the rhetorical fog.

Of all the falsehoods, President Trump’s insistence that compliance with the Paris accord would cost Americans millions of lost jobs and trillions in lowered Gross Domestic Product was particularly brazen, deceptive, and absurd. These statements are part of a disturbing pattern, the latest in a calculated campaign to deceive the public about the economics of reducing climate pollution.

Based on a study funded by industry trade groups

Let’s be clear: the National Economic Research Associates (NERA) study underpinning these misleading claims was paid for by the U.S. Chamber of Commerce and the American Council for Capital Formation (ACCF) – two lobbying organizations backed by fossil fuel industry funding that have a history of commissioning exaggerated cost estimates of climate change solutions. When you pay for bad assumptions, you ensure exaggerated and unrealistic results.

In the past five years alone, NERA has released a number of dubious studies funded by fossil fuel interests about a range of environmental safeguards that protect the public from dangerous pollution like mercury, smog, and particulate matter – all of which cause serious health impacts, especially in the elderly, children, and the most vulnerable. NERA’s work has been debunked over and over. Experts from MIT and NYU said NERA’s cost estimates from a 2014 study on EPA’s ozone standards were “fraudulent” and calculated in “an insane way.” NERA’s 2015 estimates of the impacts of the Clean Power Plan, which are frequently quoted by President Trump’s EPA Administrator Scott Pruitt and others, have also been rebutted due to unrealistic and pessimistic assumptions.

The study does not account for the enormous costs of climate pollution

In his speech about the Paris agreement, President Trump crossed a line that made even NERA so uncomfortable that it released a statement emphasizing that its results were mischaracterized and that the study “was not a cost-benefit analysis of the Paris agreement, nor does it purport to be one.”

The most important point embedded in this statement is that the study does not account for the enormous benefits of reducing the carbon pollution causing climate change. Climate change causes devastating impacts including extreme weather events like flooding and deadly storms, the spread of disease, sea level rise, increased food insecurity, and other disasters. These impacts can cost businesses, families, governments and taxpayers hundreds of billions of dollars through rising health care costs, destruction of property, increased food prices, and more. The costs of this pollution are massive, and communities all around the U.S. are already feeling the impacts – yet the President and his Administration continue to disregard this reality as well as basic scientific and economic facts.

Cherry-picking an impractical and imaginary pathway to emission reductions

The statistics the President used were picked from a specific scenario in the study that outlined an impractical and imaginary pathway to meet our 2025 targets designed to be needlessly expensive, as experts at the World Resources Institute and the Natural Resources Defense Council have noted. The study’s “core” scenario assumes sector by sector emission reduction targets (which do not exist as part of the Paris accord) that result in the most aggressive level of mitigation being required from the sectors where it is most expensive. This includes an almost 40 percent reduction in industrial sector emissions – a disproportionate level not envisioned in any current policy proposal – which results in heavily exaggerated costs.

An expert at the independent think tank Resources for the Future, Marc Hafstead, pointed out:

The NERA study grossly overstates the changes in output and jobs in heavy industry.

Yale economist Kenneth Gillingham said of these numbers:

It’s not something you can cite in a presidential speech with a straight face … It’s being used as a talking point taken out of context.

The NERA analysis also includes a scenario that illustrates what experts have known for decades – that a smarter and more cost-effective route to achieving deep emission reductions is a flexible, economy-wide program that prices carbon and allows the market to take advantage of the most cost-effective reductions across sectors. Even NERA’s analysis shows that this type of program would result in significantly lower costs than their “core” scenario. Not surprisingly, that analysis is buried in the depths of the report, and has been entirely ignored by the Chamber of Commerce and ACCF as well as President Trump.

Study ignores potential innovation and declining costs of low carbon energy

Finally, the NERA study assumes that businesses would not innovate to keep costs down in the face of new regulations – employing pessimistic assumptions that ignore the transformational changes already moving us towards the expansion of lower carbon energy. Those assumptions rely on overly-conservative projections for renewable energy costs, which have been rapidly declining. They also underestimate the potential for reductions from low-cost efficiency improvements, and assume only minimal technological improvements in the coming years.

In reality, clean energy is outpacing previous forecasts and clean energy jobs are booming. There are more jobs in solar energy than in oil and natural gas extraction in the U.S. right now, and more jobs in wind than in coal mining.

The truth is that the clean energy revolution is the economic engine of the future. President Trump’s announcement that he will withdraw the U.S. from the Paris accord cedes leadership and enormous investment opportunities to Europe, China, and the rest of the world. His faulty math will not change these facts.

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