Joint statement in response to Biden Administration announcement on the social cost of carbon

In a joint statement about the announcement today (19 February 2021) by the White House’s Council on Environmental Quality that it has removed the Trump Administration’s value of the social cost of carbon for cost-benefit analyses of the climate change impacts of new policies and regulations, Professor Joe Stiglitz of Columbia University and Professor Lord Nicholas Stern of the London School of Economics and Political Science, said: “It is perhaps understandable that the Biden Administration has moved quickly to get rid of the Trump Administration’s risible estimate of the social cost of carbon. But the reversion to the value of US$60 per tonne of carbon dioxide by 2030, in 2018 dollars, which was used by the Obama Administration, is flawed. As we pointed out in a paper published by the U.S. National Bureau of Economic Research earlier this week, a carbon price of about US$100 per tonne of carbon dioxide needs to be applied in order to ensure that policies and regulations are in line with the goals of the Paris Agreement. The use of lower values may lead to the decision to rule out measures that are economically justified in pursuit of the Paris goals. The low value adopted by the Obama Administration was based on the output of economic models that are known to be inadequate and ignore the largest potential impacts of climate change. We trust that the Biden Administration will carry out a thorough evaluation of the social cost of carbon before publishing its final assessment of the value next year.”