Four witnesses testified on “the Obama administration’s Social Cost of Carbon” at a House Resources Committee hearing last week. Today’s post highlights key points from the testimonies of Cato Institute scientist Patrick Michaels and Heritage Foundation economist Kevin Dayaratna.
First some background. The social cost of carbon (SCC) is the present discounted value of cumulative damages allegedly inflicted on society by an incremental metric ton of carbon dioxide (CO2) emissions over a period of decades to centuries.
Discernible in neither meteorological nor economic data, carbon’s social cost exists in the virtual world of “integrated assessment models” (IAMs) — computer programs that combine speculative climatology with speculative economics. By fidding with non-validated climate parameters, made-up damage functions, and below-market discount rates, SCC analysts can get almost any result they desire.
What they typically desire is to make fossil fuels look unaffordable no matter how cheap, and renewables look like a bargain at any price. However curious as an academic exercise, when used to make or influence public policy, SCC analysis is computer-aided sophistry.
The Obama administration’s Interagency Working Group (IWG) on the social cost of carbon uses three IAMs — DICE, FUND, and PAGE — to estimate SCC values. EPA and the Department of Energy routinely incorporate SCC estimates into the cost-benefit analyses they use to justify their regulatory proposals. The White House now requires all federal agencies to incorporate SCC estimates in environmental impact reviews under the National Environmental Policy Act (NEPA).
Agencies have an incentive to periodically increase SCC estimates to make their regulations look more beneficial. For example, the IWG’s 2013 technical support document (TSD) increased the SCC values of the group’s 2010 TSD by roughly 60%.
In other words, in just four short years, climate change somehow got 60% worse and CO2 reductions 60% more valuable. Yet during that period, climate models increasingly overestimated global warming, and multiple datasets still showed no clear link between climate change and the frequency and strength of storms, droughts, and floods. Your tax dollars at work!
Earlier this month, the IWG published its response to comments (RTC) on the 2013 TSD. The IWG made minor technical corrections in how it runs the DICE and PAGE models but did not accept any of the substantive corrections recommended in 150 significant comment letters.
With that as context, let’s turn to the testimonies. [click to continue…]