Comprehensive evidence implies a higher social cost of CO2

TLDR

The social cost of carbon dioxide (SC‑CO₂) quantifies the monetized damages per tonne of CO₂ emissions and has guided climate policy for over a decade, yet a 2017 NASEM report highlighted that existing estimates no longer reflect the latest research. This study implements the NASEM recommendations by integrating improved probabilistic socioeconomic projections, climate models, damage functions, and discounting methods to produce a more accurate, risk‑consistent valuation of SC‑CO₂. The authors use the open‑source Greenhouse Gas Impact Value Estimator (GIVE) model, updating all components of SC‑CO₂ estimation to align with the NASEM guidance. The resulting preferred mean SC‑CO₂ is $185 per tonne (range $44–$413) at a 2 % discount rate, 3.6 times higher than the U.S.

Abstract

Abstract The social cost of carbon dioxide (SC-CO 2 ) measures the monetized value of the damages to society caused by an incremental metric tonne of CO 2 emissions and is a key metric informing climate policy. Used by governments and other decision-makers in benefit–cost analysis for over a decade, SC-CO 2 estimates draw on climate science, economics, demography and other disciplines. However, a 2017 report by the US National Academies of Sciences, Engineering, and Medicine 1 (NASEM) highlighted that current SC-CO 2 estimates no longer reflect the latest research. The report provided a series of recommendations for improving the scientific basis, transparency and uncertainty characterization of SC-CO 2 estimates. Here we show that improved probabilistic socioeconomic projections, climate models, damage functions, and discounting methods that collectively reflect theoretically consistent valuation of risk, substantially increase estimates of the SC-CO 2 . Our preferred mean SC-CO 2 estimate is $185 per tonne of CO 2 ($44–$413 per tCO 2 : 5%–95% range, 2020 US dollars) at a near-term risk-free discount rate of 2%, a value 3.6 times higher than the US government’s current value of $51 per tCO 2 . Our estimates incorporate updated scientific understanding throughout all components of SC-CO 2 estimation in the new open-source Greenhouse Gas Impact Value Estimator (GIVE) model, in a manner fully responsive to the near-term NASEM recommendations. Our higher SC-CO 2 values, compared with estimates currently used in policy evaluation, substantially increase the estimated benefits of greenhouse gas mitigation and thereby increase the expected net benefits of more stringent climate policies.