Lower Cost of Carbon Emissions Destroys Rationale for Carbon Tax

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The “social cost of carbon” — a calculation of how much fiscal harm is currently foisted on society by emitting a ton of dreaded carbon dioxide — has just plummeted due to a recalculation by the Government Accountability Office.

It dropped a whopping 86 percent, from the Obama administration’s $50 per ton to the Trump administration’s $7. The much lower estimate destroys any rationale for a carbon tax.

How could such a disparity in cost estimates exist? For one thing, the Trump administration followed Office of Management and Budget rules while the previous administration did not.

OMB specifically says that calculations of the effects of regulations should “focus on benefits and costs that would accrue to citizens and residents of the United States.”

Trump’s GAO did exactly that, while the earlier calculations were based on global costs. That makes a big difference, because poorer nations are hit harder by the vagaries of climate and weather than are rich ones.

OMB also advised that the base case for regulation should use “a real discount rate of 7 percent” along with 3 percent. The first figure is very close to the average stock market annual growth for the past 120 years. The highest rate the Obama administration used was only 5 percent, which effectively magnifies the future cost of present-day emissions.

New research shows that the competing (cooling) effects of particulate emissions have been vastly overestimated. So my colleagues Ross McKitrick, Kevin Dayaratna, and I crunched the numbers, based on projections of less future warming, and found the “social cost of carbon” (SCC) may be even lower.

Also, there’s more plant matter in the world nowadays. The enhancement of global vegetation caused by carbon dioxide itself turns out to be much larger than in the previous SCC estimates. Both natural and agricultural vegetation is growing like topsy.

Read the full article at Inside Sources.