The monetary value of the damage caused by one additional tonne of carbon dioxide, which decides what a public policy counts as worthwhile.
The social cost of carbon expresses in money the marginal damage caused by one additional tonne of carbon dioxide emitted today, over its whole residence in the atmosphere and across the planet. It is not a market price but a cost-benefit parameter, and it drives the conclusions directly: a regulation whose benefit is computed with a low social cost looks inefficient, the same regulation looks worthwhile with a high one. Its value depends on three assumptions that should always be asked for, the function linking warming to damages, the discount rate applied, which weighs the fate of future generations, and the treatment of non-market damages and tipping points. Recent revisions have raised it sharply, essentially because research lowered the discount rate judged appropriate and brought in damages previously omitted, notably heat-related mortality. For insurance the figure enters no rating structure, but it decides the adaptation policies on which the future insurability of territories depends.
The United States Environmental Protection Agency adopted in 2023, in its regulatory impact analysis, a value of about 190 dollars per tonne of carbon dioxide for 2020 emissions, against roughly 51 dollars in the previous official estimate.
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