Climate Damages, Globalism, and Federal Regulation.

• Author: Fraas, Arthur
• Position: BRIEFLY NOTED

The U.S. Environmental Protection Agency recently proposed for public comment new higher estimates of damages from greenhouse gas (GHG) emissions. The estimates, called the social cost of carbon (SCC), are "the monetary value of the net harm to society of emitting a metric ton of carbon dioxide to the atmosphere in a given year." Ranging from $120 to $340 per metric ton of carbon dioxide (CO2) emitted for 2020, these estimates represent harm to everyone on earth from a metric ton of [CO.sub.2] emissions, and therein lies a key issue. Recent administrations have split on whether the U.S. government should assess damages from GHGs using effects on the entire globe or just on the United States.

This question matters because the SCC plays a key role in implementing the Biden administration's ambitious plans to address climate change. The EPA and other agencies use the SCC to estimate benefits of climate and energy regulations, such as limits to power plant emissions or standards for vehicle fuel efficiency. Higher benefits estimates generally justify more costly regulations.

We believe that developing and reporting estimates of climate damages for both the United States and the entire globe would better inform the public than the global estimate alone, as the EPA has proposed. Both estimates should be used separately in calculations of benefits and costs of climate-related regulations and related policies.

We agree with the EPA that the domestic SCC should not be the only measure of the SCC. As the EPA mentioned, an exclusive domestic focus would undermine U.S. policies that encourage global cooperation and would not capture the effects of climate change on supply chain disruptions that affect U.S. welfare or on U.S. business and military infrastructure abroad. Using the domestic SCC in addition to the global SCC would increase transparency about who receives the benefits, foster policy discussions about fairness and equity, furnish agencies with the flexibility to prepare analyses consistent with their statutory mandates, and provide important distributional information to help in international negotiations.

The EPA's proposal presents estimates for climate effects occurring physically within the United States for a limited set of damage categories but also claims these estimates cover only a subset of total damages, do not capture spillovers or indirect effects, and do not reflect benefits for U.S. citizens and residents. The EPA gives these...