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Laurie Johnson’s Blog

The Heritage Hooligans and the "social cost of carbon" (SCC): your children and grandchildren simply don't matter

Laurie Johnson

Posted November 22, 2013

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The Heritage Foundation, an industry front group “think tank” funded by the likes of Exxon Mobil and other corporate interests, just released an analysis critiquing one of the models used by the US Government to estimate the cost of carbon pollution, or in technical jargon, the “social cost of carbon” (SCC).

The analysis imposes two assumptions** on the model that result in drastically lower estimates of the SCC—assumptions that shortchange our children and grandchildren:

  • To get its low SCC estimate, the Heritage Foundation claims that the government is required to use a 7 percent discount rate. Aside from that not being true, what does this actually mean? It means this: $100 worth of climate damage to your kid 50 years from is counted as $3; happening one hundred years from now to your grandchild, it counts as 11 cents. Yes, you read that correctly. The Heritage Foundation thinks this is perfectly fine. “People prefer benefits sooner rather than later, and costs later rather than sooner.” I couldn’t have said it better…more for us now, at great peril to those who come after us.
  • Heritage also runs the model using the most recent estimate of climate sensitivity published in the fifth IPCC report, the amount of warming expected from a doubling of CO2 concentration levels over pre-industrial levels. The upper end of this estimate decreased a little over the last IPCC report, but is no cause for comfort. The problem is that we are nowhere near stopping at a doubling. Some estimates put us at a tripling or even quadrupling of concentration levels, taking us far beyond the 2 degree C target scientists tell is critical for having a chance of avoiding catastrophic climate change.

It’s critical that this report is seen for what it is: the latest gambit among many by the fossil fuel lobby and the politicians it funds to stop the Environmental Protection Agency (EPA) from doing its job of protecting our health and environment by setting common sense standards to limit carbon pollution. Following last year’s  extreme weather on carbon-pollution steroids, which cost Americans more than $140 billion, it should be clear that unlimited dumping of carbon pollution into our atmosphere is not only wrong, it is very costly. And it should also be clear that the kind of future the Heritage Foundation wants for our children is deeply unethical.

What the Foundation should instead be focusing on is the fact that the SCC models only estimate a very limited amount of climate damages. Most of the damages from climate change are not in the models; the SCC is therefore greatly underestimated. For example, nowhere in the administration’s technical support document explaining their estimate do they mention any of the following as being included in the models: forest fires, drought, smog (and associated asthma and other respiratory illnesses), interaction effects from higher sea levels and storm surge (which is what made Superstorm Sandy so devastating), power outages (8.5 million homes and businesses lost power from Sandy), increasing food prices from drought, dried up canals where goods can’t be shipped, water shortages, forest dieback from pest infestations, coral reef disintegration, ocean acidification, socio-economic conflict from shrinking water availability and other resources.

The sad and scary truth about the damage estimates being used by the administration is that they exclude most climate impacts, and some of the most important ones. Why? Because the economics literature cannot keep pace with climate disruption impacts, and because it’s much easier to measure the kind of things included in the models, like costs for more air conditioning or the value of property swallowed up by the sea, than these other impacts. At a minimum, we should be using the little we can estimate, not whacking it away with extreme discount rates or taking false comfort in new, but still dire, climate projections.

We need to call Heritage’s analysis for what it is—a deep betrayal of our children and all future generations to come.


** This blog originally noted that a third assumption made by Heritage was shortening the time frame of the model from 2300 to 2050. It was shortened to 2150, not 2050. In the end, the change in this assumption didn't reduce the SCC as much as the other two did due to the effect of the 7 percent discount rate: $100 worth of damage occurring in 2150 equates to $0.009, while the same $100 in 2300 equates to $0.00000037.

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Michael BerndtsonNov 23 2013 10:48 AM

I clicked on the Heritage report link provided in the above post. Totally excited to read it in detail. Here's a wonderful disclaimer or caveat that was presented to us, the dear reader:

"Nothing written here is to be construed as necessarily reflecting the views of The Heritage Foundation or as an attempt to aid or hinder the passage of any bill before Congress."

That's interesting. I've worked as an engineer, a consultant and a contractor and appreciate language we in the industry call "weasel words" or "outs." Those are some of the best weasel words I've ever written. Here's my translation:

"We here at Heritage are run by slack-jawed morons who can barely read. Our president is an ex senator from South Carolina for crying out loud. We're proud people. Family oriented people. This here fancy report here, written by a consulting firm full of former young republican frat bros and Tracy Flick like, we didn't read it. It says a bunch of stuff. If pollution controls on carbon dioxide emissions get submarined in Washington, it ain't this report's fault, which again we didn't read. Have a blessed day, y'all."

Michael BerndtsonNov 23 2013 11:00 AM

With all due respect to Heritage, I'm the Chicago meatball equivalent of a slack jawed southerner. I live in Berwyn of all places. My most cleverly written line in the comment above:

"Those are some of the best weasel words I've ever written..."

The word written should be replaced with read. Apologies to all the good people of Greenville and the Greenville/Spartanburg area. I don't know a soul in the rest of South Carolina. So not them.

Pat DendyNov 23 2013 11:45 PM

The bigger problem is over-population.

Laurie JohnsonNov 24 2013 08:36 AM

That is not correct MS Beaton. Please see here:

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