Trumps plan to cut “social cost of carbon” is no redemption
The US Trump administration could face legal challenges if it attempts to decrease the “social cost of carbon” (SCC), a value which is designed to reflect the economic damage resulting from each additional ton of greenhouse gas emissions. In March, President Trump issued an executive order seeking to disband the SCC working group, whilst directing federal agencies to review and potentially suspend a series of environmental regulations. The current SCC, referred to as "the most important number you have never heard of" by an Obama economist, is $40 per metric tonne of CO2 and rises slowly over time. If the number were to be reduced, it could affect the economic basis for policy on renewable energy, carbon capture and funding for vehicle efficiency research.
It’s unclear if the Trump administration will simply allow federal agencies to each calculate their own social cost of carbon going forward, or eventually issue a new, more favorable one through an executive order or other means. Among other possibilities, agencies could shrink the estimated cost by narrowing the geographic scope from global to domestic, or increasing the discount rate, which is used to account for the lower value society places on damages in the distant future, Cullenward says. Crucially, the guidelines cited in Trump’s executive order called for a discount rate as high as 7 percent, compared to rates as low as 2.5 percent under the current calculations.

That could bring the social cost of carbon down to “low single digits,” estimates Harvard’s Stock, adding that it would be totally out of line with scientifically grounded estimates of future economic damages.

Whatever the mechanism, the lower the figure agencies come up with, the greater the odds it and the policies it is used to justify will be challenged in court.

EDF’s Roberts notes that the current working group estimates are based on a large body of science projecting likely damages from climate change, input from across the federal government, several rounds of public engagement, and at least limited legal review.

In November 2007, the Ninth Circuit Court of Appeals ruled that the National Highway Traffic Safety Administration's exemption of light trucks from vehicle mileage standards, known as the SUV loophole, was “arbitrary and capricious.” The court concluded the administration’s environmental assessment of the final rule was insufficient because it ignored the economic benefits of lower greenhouse gas emissions, as required by earlier federal laws.

"While the record shows that there is a range of values," the opinion states, "the value of carbon emissions reduction is certainly not zero."

Meanwhile, in a case brought by a commercial refrigeration company challenging Department of Energy efficiency standards, the 7th U.S. Circuit Court of Appeals asserted last year that the agency had the authority to take the social cost of carbon into account, and that the analysis used to determine the particular figures was sound.

“It will be a heavy lift to come up with something that’s similarly rigorous, and if it’s not, it will be vulnerable to legal challenges as arbitrary and capricious,” Roberts says.

Many researchers believe that the current estimates of the social cost of carbon are actually far too low, not far too high. In a study published last year, researchers at Stanford, the University of Exeter, and other institutions said that incorporating various environmental tipping points, such as the dieback of the Amazon rainforest, pushes the social cost of carbon to $116 per ton of carbon dioxide. A 2015 paper concluded that if climate change slows the overall growth of the economy, as increasing evidence suggests, the cost rises to $220 per ton.

“If climate change affects not only a country’s economic output but also its growth,” coauthor Frances Moore said at the time, “then that has a permanent effect that accumulates over time, leading to a much higher social cost of carbon.”