Carbon pollution harms the economy much more than the federal government previously estimated, according to the Interagency Working Group on Social Cost of Carbon. While researchers continue to look for ways to reduce carbon emissions without harming the economy, the new guidance on the social cost of carbon strengthens the argument that not reducing carbon emissions hurts the economy, and will render more carbon reduction policies cost-effective than has previously been the case.
Federal agencies are required by executive orders to perform a cost-benefit analysis on any intended regulations. The EPA and other agencies incorporate the social cost of carbon (SCC) into the analysis to show the climate benefits of rulemaking; in other words, that the social benefits of reducing carbon dioxide outweigh the costs. The SCC is defined as the monetized estimate of damages for the incremental increase in carbon emissions each year. Monetary damages approximate the costs of climate change caused by carbon pollution, including but not limited to changes in human health, ecosystems, flood and property damages, and diminished crops. Also incorporated are sea level rise and heat-wave damages.