The Environmental Protection Agency's decision to raise the Social Cost of Carbon
- nearly fourfold increase in the government calculation of damages from carbon emissions
- has sent shockwaves through the energy industry and raised the stakes for ongoing litigation being brought by Republican attorneys general in states like Louisiana that are challenging the Biden administration rulemaking as unconstitutional.
Louisiana Solicitor General Liz Muiller:
- "If you think about the fact that they would impose this damage factor, let's say on farmers, because it applies to fertilizer..."
- Fertilizer emits nitrous oxide.
- If every family farmer now is going to have to pay more to obtain fertilizer to fertilize crops that feed us, well, what's that going to do to the price of food?
The next arguments in Louisiana's case occur Dec. 7 in the 5th U.S. Circuit Court of Appeals.
- The Social Cost of Carbon is a concept first embraced by the Obama administration in 2009, which set up an interagency working group that calculated the cost to be $51 per metric ton of greenhouse gas emissions
- While loathed by the energy industry and energy-producing states, the rule is championed by environmental groups
The EPA is the first agency to propose a massive adjustment upwards
- Using a statistical methodology it got from the National Academies of Science, EPA created three estimates of the Social Cost of Carbon at $120, $190 or $340 per metric ton
- The EPA settled on the middle case scenario as the best estimate right now, setting the price at $190
- At present, the interagency working group is still refining the pricing models, and the EPA memo will certainly have impact
- But at some point in the future, federal regulators plan to use the cost figures to determine the cost and benefit of tougher climate regulation
Bottom Line
- Fossil fuel policy change originates from a motivation to move away from fossil fuels.
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