Synthesis of evidence yields high social cost of carbon due to structural model variation and uncertainties

Summary

The social cost of carbon (SCC) is estimated to be higher than previously thought due to structural model variations and uncertainties. A comprehensive synthesis of 1,823 SCC estimates from 147 studies reveals a wide and right-skewed distribution, with a mean value of $132 per ton CO2. Experts believe the literature underestimates the SCC due to underrepresentation of model structures, incomplete characterization of damages, and high discount rates.

Highlights

• The social cost of carbon (SCC) is a crucial metric for climate policy analysis.
• SCC estimates vary widely due to differences in model structures and parameters.
• Experts believe the literature underestimates the SCC due to various limitations.
• A synthetic SCC distribution is generated using a random forest model and expert survey results.
• The synthetic SCC distribution has a mean value of $283 per ton CO2, higher than most official government estimates.
• The SCC is sensitive to discount rates, damage functions, and model structures.
• The study's findings have implications for climate policy and decision-making.

Key Insights

• The SCC is a critical metric for evaluating the benefits of emissions reduction policies, and its estimation is subject to various uncertainties and biases.
• The literature on SCC estimates is characterized by a wide range of values, reflecting differences in model structures, parameters, and assumptions.
• Experts' views on the SCC differ from the published literature, with many believing that the literature underestimates the true SCC due to limitations in model structures, damage functions, and discount rates.
• The synthetic SCC distribution generated in this study provides a more comprehensive and nuanced estimate of the SCC, incorporating expert judgments and uncertainty analysis.
• The study's findings highlight the importance of considering multiple lines of evidence and uncertainty analysis in estimating the SCC.
• The SCC is sensitive to various factors, including discount rates, damage functions, and model structures, which has implications for climate policy and decision-making.
• The study's results have significant implications for climate policy and decision-making, suggesting that policymakers should consider a higher SCC in their evaluations of climate change mitigation policies.

Mindmap

Citation

Moore, F. C., Drupp, M. A., Rising, J., Dietz, S., Rudik, I., & Wagner, G. (2024). Synthesis of evidence yields high social cost of carbon due to structural model variation and uncertainties. In Proceedings of the National Academy of Sciences (Vol. 121, Issue 52). Proceedings of the National Academy of Sciences. https://doi.org/10.1073/pnas.2410733121