Social cost of carbon
The monetary value of the damage caused by one additional tonne of carbon dioxide, which decides what a public policy counts as worthwhile.
U.S. Environmental Protection Agency, 2023: in its regulatory impact analysis, it adopts about $190 per ton of carbon dioxide for 2020 emissions, where the previous official estimate stood at roughly $51. The social cost of carbon prices the marginal damage of one ton emitted today, over its whole residence time in the atmosphere and across the planet. No market sets it. It is a cost-benefit parameter, and it drives the conclusion: the same regulation looks inefficient with a low social cost and worthwhile with a high one. Its value rests on the function linking warming to damages, and on the discount rate, which weighs the fate of future generations. It also depends on how non-market damages and tipping points are counted. An informed reader always asks for all three. The 2023 jump comes mainly from a lower discount rate and from damages previously left out, heat-related mortality first among them. No insurance rating plan uses the figure. It still weighs on adaptation policy, and therefore on what will remain insurable in a given river basin or along a given coastline.
In 2023, in its regulatory impact analysis, the U.S. Environmental Protection Agency adopted about $190 per metric ton of carbon dioxide for 2020 emissions. The previous official estimate stood at roughly $51.
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