The Interior Department’s upcoming decision on an oil project in Alaska’s North Slope could test whether a newly updated federal climate tool has any teeth. The tool is called the social cost of carbon. It’s a metric the government uses to determine the social and economic damage associated with every ton of planet-warming pollution produced. The current figure estimates that every metric ton of greenhouse gas emissions creates $51 in economic damage. The White House is raising that figure to $190 a ton, a price tag designed to make it much harder to justify fossil fuel projects and easier to defend tightened pollution limits. Under the new metric, the estimated climate damage from the Willow oil project in Alaska would jump to $79 billion from $19.8 billion, according to an analysis by the environmental group Friends of the Earth. Those climate costs far outweigh the project’s projected revenue of up to $17 billion. But the Biden administration could approve the massive oil field anyway. The project has, after all, garnered support from all three lawmakers in Alaska’s bipartisan congressional delegation. The situation highlights a fundamental concern climate advocates have with the social cost of carbon. It may not work, writes POLITICO’s E&E News reporter Jean Chemnick. For one, there is nothing binding about it. Many laws require federal agencies to weigh the costs and benefits of new rules, but the laws don’t mandate that agencies base their decisions off the results of those analyses. Under the Obama administration, the social cost of carbon was largely sidelined, according to a 2016 study by the Electric Power Research Institute. The new, higher cost estimate is intended to shift that dynamic, making climate impacts hard to ignore. But the effect may be blunted by other problems with the way federal agencies conduct regulatory analyses. For example, agencies are inconsistent in how they compare benefits and costs and how they account for emissions that occur outside the scope of an analysis, said Steven Rose, a principal research economist at EPRI. “It’s not just a matter of ‘change the value and the whole storyline changes,’” he told Jean. “We really need to address these other issues as well to make sure that we’re generating reliable insights from the benefit and cost calculations themselves.”
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