Understanding the Social Cost of Carbon—A Technical Assessment
The social cost of carbon (SCC) is a monetary estimate of the climate change damages to society from an additional unit of carbon dioxide (CO2) emitted to the earth’s atmosphere. In 2010, the United States Government (USG) developed SCC estimates to value the benefits of CO2 emissions reductions in federal rulemakings; and in 2013, the USG revised their estimates, and the SCCs notably increased. Despite their use, the USG SCC estimates are difficult to interpret and evaluate. What does the central value of $37 per metric ton of CO2 represent? What sorts of damages to society, and what drives estimated damages? The USG SCC estimates are the result of significant aggregation across many dimensions: time, socioeconomic scenarios, uncertain parameters, world regions, damage categories, and models. This study presents an in-depth examination of the three models underlying the current USG SCC estimates (DICE, FUND, and PAGE) as well as the overall USG approach. Our assessment reveals significant variation across models in their structure, behavior, and results and identifies fundamental issues and opportunities for improvements. The objective of this work is to improve understanding of SCC modeling and estimates in order to inform and facilitate public discussion, future SCC modeling and use, and future climate research broadly.