The Biden Administration is tweaking its estimates of the social cost of greenhouse gases.
Marking a sharp reversal of its prior policy, the Biden Administration is now accepting comments from the public on its recent “social cost of greenhouse gases” report. The report includes new estimates of the welfare cost of greenhouse gas emissions, values that will be used as part of future regulatory proceedings that could end up draining the economy of hundreds of billions of dollars through compliance costs. The move to accept comments comes after a number of politically unfriendly states filed lawsuits against the Administration, arguing that calculations in the report are arbitrary and illegal.
Last February, an interagency working group convened by the Biden Administration quietly released the report, which includes updated estimates of the social cost of greenhouse gasses. The calculations describe how “social welfare” is impacted by the release of carbon dioxide, methane and nitrous oxide.
Almost immediately, lawsuits were filed in response. Initially, 12 states, led by the attorney general of Missouri,* sued the Administration. Texas, Louisiana, and eight other states piled on with a lawsuit soon after. Among other criticisms, both lawsuits chastised the government for its failure to accept public comments on the new calculations, which may explain why the Administration is now backtracking.
The public commenting process is not the only procedural hoop the Biden Administration evaded. Under a Clinton-era executive order, economically significant rulemaking actions (defined as any action “that is likely to result in a rule that may have an annual effect on the economy of $100 million or more”) are required to have a cost-benefit analysis prepared.
Highlighting the importance of the numbers in the report, during the Obama years, regulatory proceedings estimated to cost between $447 and $561 billion relied on the social cost of carbon or social cost of methane metrics. These metrics provide critical backing for rulemaking actions, since without a solid base of evidence, a rule can end up tossed out by a court.
The skirmish over what might seem like an obscure input in regulatory analysis highlights how critical policy decisions with major economic ramifications are often made long before the passage of actual regulations.
When regulations relying on the social cost of greenhouse gas calculations are eventually proposed in the months and years ahead—as they most certainly will be—many will need a cost-benefit analysis prepared and comments will be sought from the public. However, by that point, it will be too late to question the greenhouse gas metrics used in the agencies’ analyses, since regulators can be expected to defer to the current working group’s expertise on that.
It would be one thing if the working group was basing its decisions on objective science. But value judgments about how to measure welfare improvements for citizens, or about how much a regulation’s future benefits should count relative to its benefits today, are primary drivers behind the working group’s numbers.
We should not assume that government analysts have any better judgment on these matters than the rest of us. The danger here is that something resembling science will be used as cover for what is ultimately a political decision. In fact, the new social cost of greenhouse gas values should really be viewed as expressions of analysts’ opinions about political priorities, not statements of scientific fact.
Already, the influence of the report is being felt. The EPA has proposed a regulation related to hydrofluorocarbons, estimating climate benefits using a methodology similar to that found in the working group’s report. The social cost of carbon is also factoring into timely federal decisions about pipeline certifications.
The Biden Administration talks a good game about how science is behind its political calculations. But with the social cost of greenhouse gasses, political calculations are being passed off as science. The public has a right to feel excluded when policy judgments that should be made at the political level are made by analysts instead. The question now is whether the courts will give a voice to those shut out of the process.
***
Note: The author provided pro bono consulting expertise to the Missouri attorney general’s office in relation to the social cost of greenhouse gases.
