With Thanksgiving right around the corner, you may be thinking about the cost of turkey and cranberries, to say nothing of pumpkin pie. But there’s another rising cost that you might want on your radar, and that’s the cost of carbon.
EPA this week proposed nearly quadrupling the social cost of carbon, a metric that the government uses to help determine the climate impacts of any given regulation, write POLITICO’s E&E News reporters Niina H. Farah and Lesley Clark.
The current figure, which has drawn legal challenges from Republican-led states, estimates that every metric ton of greenhouse gas emissions creates $51 in economic damage. EPA’s proposal would raise it $190 a ton.
The higher price tag could make it more difficult to justify activities that release planet-warming pollution into the atmosphere, including sources such as power plants, vehicles, or oil and gas projects.
Let’s bust out some Economics 101 to break down how this might apply to EPA’s power plant regulations.
When weighing a new set of pollution limits, regulators will consider whether the benefits of the restriction outweigh the costs.
Certain costs, like the price of pollution control equipment, are easy to calculate. But other costs, like health or climate consequences borne by the local community or the planet, are often harder to quantify. That means they’re not adequately factored into the analysis — what economists call negative externalities.
The social cost of carbon aims to rebalance the equation and create a more accurate picture of the true expense of building or operating fossil fuel infrastructure.
EPA’s proposal is in line with the figure calculated in a recent study published in the journal Nature.
The increase partly comes from EPA using a lower discount rate for the metric, which means the agency anticipates that every ton of carbon produced today will do even more damage in the future. That makes sense given the compounding effects of the climate crisis.
Meanwhile, a group of Republican attorneys general has attempted to stop the administration from using the social cost of carbon altogether for any decisionmaking. But their efforts have so far been rejected by the courts.
It’s Tuesday — thank you for tuning in to POLITICO’s Power Switch. I’m your host, Arianna Skibell. Power Switch is brought to you by the journalists behind E&E News and POLITICO Energy. Send your tips, comments, questions to [email protected]
PROGRAMMING NOTE: We’ll be off for Thanksgiving this Thursday and Friday but back to our normal schedule Monday, Nov. 28.
Today in POLITICO Energy’s podcast: Camille von Kaenel breaks down California’s new plan for the state to reach carbon neutrality by 2045 and what greens are asking for.
Climate meets insurance
More than a year after Hurricane Ida swept across Louisiana, the Category 4 storm is triggering a property-insurance crisis that has bankrupted 11 insurance companies and will force some homeowners to pay annual premiums of nearly $18,000, writes Thomas Frank.
Louisiana’s crisis could get even worse as insurers start paying tens of billions of dollars in claims for Hurricane Ian in Florida. Although Ian did not hit Louisiana, many Louisiana insurers also write policies in Florida, where they face huge losses.
How about a regional grid
As temperatures on the West Coast soared into the triple digits in early September, power demand threatened to reach record levels — and utilities braced for grid problems, writes Jason Plautz.
But no major blackouts occurred. The fact that record-high demand didn’t break the grid — at a time of year when renewable production tends to be lower, to boot — is the latest proof that the western U.S. could benefit from a unified electricity market.
Winter is coming
A contentious plan to offer Germans relief from soaring natural gas and energy prices could go into effect as early as January, writes Gabriel Rinaldi.
The plan comes as industry and consumers struggle with skyrocketing energy prices due to Russia’s war in Ukraine and inflation. Increased energy demand during the winter months will only exacerbate the challenge.
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A union that represents rail conductors has rejected a tentative labor deal, increasing the possibility of a strike, fuel supply disruptions and higher energy prices.
The Biden administration has approved an oil export terminal in the Gulf of Mexico, despite environmental and public health concerns.
Voters younger than 30 who strongly support efforts to combat climate change could tilt Georgia’s runoff election.
That’s it for today, folks! Thanks for reading.