What does carbon cost?

The Harper government allows for a price on carbon

by Aaron Wherry

Environment Minister Peter Kent announced the government’s regulations for “heavy-duty vehicles and engines” this morning. For the purposes of determining the benefit of regulations, the government uses something called the “social cost of carbon.” Here is the EPA’s explanation of that calculation. And here is how the Harper government explains the figure in today’s regulations.

The SCC is used in the modelling of the cost-benefit analysis of environmental regulations in a RIAS to quantify the benefits of reducing GHG emissions. It represents an estimate of the economic value of avoided climate change damages at the global level for current and future generations as a result of reducing GHG emissions. The calculations of SCC are independent of the method used to reduce emissions. The SCC is also used by the United States in their costbenefit analysis of regulations. The values used by Environment Canada are based on the extensive work of the U.S. Interagency Working Group on the Social Cost of Carbon.

The estimated value of avoided damages from GHG reductions is based on the climate change damages avoided at the global level. These damages are usually referred to as the social cost of carbon (SCC). Estimates of the SCC between and within countries vary widely due to challenges in predicting future emissions, climate change, damages and determining the appropriate weight to place on future costs relative to near-term costs (discount rate).

SCC values used in this assessment draw on ongoing work being undertaken by Environment Canada in collaboration with a federal interdepartmental working group, and in consultation with a number of external academic experts. This work involves reviewing existing literature and other countries’ approaches to valuing GHG emissions. Preliminary recommendations, based on current literature and, in line with the approach adopted by the U.S. Interagency Working Group on the Social Cost of Carbon, are that it is reasonable to estimate SCC values at $28.44/tonne of CO2 in 2012, increasing at a given percentage each year associated with the expected growth in damages. Environment Canada’s review also concludes that a value of $112.37/tonne in 2012 should be considered, reflecting arguments raised by Weitzman (2011)14 and Pindyck (2011) regarding the treatment of right-skewed probability distributions of the SCC in costbenefit analyses.16 Their argument calls for full consideration of low probability, high-cost climate damage scenarios in cost-benefit analyses to more accurately reflect risk. A value of $112.37 per tonne does not, however, reflect the extreme end of SCC estimates, as some studies have produced values exceeding $1 thousand per tonne of carbon emitted.

As shown in Figure 3 below, the social cost of carbon values increase over time to reflect the increasing marginal damages of climate change as projected GHG concentrations increase. The time-varying schedule of SCC estimates for Canada has been derived from the work of the U.S. Interagency Working Group. The federal interdepartmental working group on SCC also concluded that it is necessary to continually review the above estimates in order to incorporate advances in physical sciences, economic literature, and modelling to ensure the SCC estimates remain current. Environment Canada will continue to collaborate with the federal interdepartmental working group and outside experts to review and incorporate as appropriate new research on SCC into the future.

For the purposes of the cost-benefit analysis, the government appears to use the $28.44/tonne projection to project $500 million in savings.

For those worrying about the price of Thanksgiving turkey, the new regulations carry about $800 million in technology costs (that will be passed on to consumers) and another $4.8 billion in projected fuel savings.

What I suspect is necessary for a real debate on greenhouse gas emissions policy is a cost-benefit analysis that compares the Harper government’s regulations and the NDP’s cap-and-trade proposal.




Browse

What does carbon cost?

  1. Glo-Bull Warming is the biggest fraud ever perpetrated in human history.

    U.S. Interagency Working Group on the Social Cost of Carbon is nothing but a waste of time and taxpayer money.

    Increasing fuel efficiency and reducing overall emissions is always an appropriate endeavour, for example much research has been going into the use of natural gas for marine applications, natural gas is already used in many diesel engine buses and trucks.

    • science doesn’t go away because you mis-spell it, m’boy.

      • I suspect his grasp of what constitutes biggest fraud in human history is up for debate also.

      • Mann’s hockey schtick is not science, Gore’s lies are not science, Suzuki’s opinions are not science.

        The IPCC in it’s reports quote propaganda from the World Wildlife Fund, that is not science.

        • And your in a position to categorically know that aren’t you? I think i’ll listen to what the qualified scientists have to say, bearing in mind if even half of what they say is true we are in trouble, before paying any attention to an objective observer like you BB.

          • Guest post by Christopher Monckton of Brenchley

            Following my statement at the Doha climate conference last December
            that there had been no global warming for 16 years, Dr. Rajendra
            Pachauri, the railroad engineer who for some reason chairs the IPCC’s
            climate “science” panel, has been compelled to admit there has been no
            global warming for 17 years.

            The Hadley Centre/CRU records show no warming for 18 years (v.3) or
            19 years (v.4), and the RSS satellite dataset shows no warming for 23
            years (h/t to Werner Brozek for determining these values).

            Engineer Pachauri said warming would have to endure for “30 to 40
            years at least” to break the long-term global warming trend. However,
            the world’s leading climate modelers wrote in the NOAA’s State of the Climate report in 2008 that 15 years or more without warming would indicate a discrepancy between the models and measured reality.

          • I’ve learned to not trust articles that come without links from folks like you. It’s far too easy to cherry pick info and quote out of context. I’m sure I have a rebuttal to that somewhere around here.

          • Yea gods! You’re worse than i thought. Are you seriously giving me a link to the “weatherman” Watts? At least make it an actual CC scientist. Next you’ll be posting updates from Clare at the weather centre over at the CBC.

          • Watts is a meteorologist, he is much more qualified on matters atmospheric than Dr. Rajendra Pachauri, the railroad engineer who for some reason chairs the IPCC’s climate “science” panel, lying sack of crap snake oil salesman Al Gore, or David Suzuki (aka Dr. Fruitfly) the would be benevolent dictator.

          • http://www.abc.net.au/news/2012-12-14/ipcc-draft-climate-report-leaked/4429036

            Never is how long Billy bub? And don’t bother giving me Rawl’s rebuttal to the rebuttal. I’m not interested in the he said she said. You deniers are entittled to try and do what you do best – deny. Hey maybe you’re even right some of the time…no ones is saying the IPCC are perfect. At least i’m not naive enough to believe they are. But on past evidence provided by kooks like you – the so called climate gate was a beauty – where you whipped yourself up into a frenzy over some emails you couldn’t understand – on that kind of evidence i’ll remain skeptical of any thing you have to peddle.
            http://www.guardian.co.uk/environment/2012/dec/14/ipcc-climate-change-report-leaked-online
            It just gets worse. Rawls can’t even honour a peer review process. You got nothing…as usual. CC denial seems to be a religion for you guys.

          • What’s it like being a member of a cult?

          • Don’t know, you tell me? I at least have real scientists in my corner – not weathermen.

          • You and your “real scientists” are all sailing on to a
            “lee shore”……heh………..notice how Gore and Suzuki are attracting fewer and fewer people to their sermons?

            Glo-Bull Warming is a cult.

          • Projecting yet again………you need psychiatric help.

          • And you’re a psychiatrist no doubt….as well a Climate change expert, ships captain, economic expert, political pundit et al.,

          • That should be “you’re” not “your” and I’m a captain with interests in other areas besides my chosen profession.

          • “You’re” a English major too then? Or should i say a grammar nazi. Always the last refuge of a guy with nothing worthwhile to say.

          • He isn’t a scientist. Look up Potholer 54 on Youtube.

    • Chief, if 97.8 % of scientists who study the matter said a massive space projectile was about to hit the earth and destroy what we know as life, would you pay attention?

      No?

      Alrighty, then. Your position is noted. However, your flailing against all evidence should be duly marginalized and rightly mocked.

      • By Ken Haapala, Executive Vice President, Science and Environmental Policy Project (SEPP)

        Failing Models: In his August testimony before the US Senate
        Committee on Environmental and Public Works, John Christy, the
        co-developer of the satellite temperature record, presented a graph
        showing that the models relied upon by the UN Intergovernmental Panel
        for Climate Change (IPCC) are clearly failing. The graph compares the
        projections of 34 climate models with actual observations, both at the
        surface (called surface-air) and the lower troposphere (the atmosphere
        from the surface to about 10 km (about 33,000 feet). The statistical
        mean of the projections is well above the observations – with a
        statistical significance of more than two standard deviations. The
        difference shows that the models are not useful in estimating future
        temperatures. Thus, the claims that by emitting greenhouse gases (GHG),
        particularly carbon dioxide (CO), humans are causing unprecedented and
        dangerous future global warming have no scientific basis. [Note that the
        projections from a few of the models do not exceed the observations,
        however, statistically, they are outliers.]

  2. Funny how Wherry insinuates that costs are passed onto consumers, but savings aren’t.

    • Just check out the cost of gas for your car for a few months. You will understand the wisdom that of your own statement. It’s fact, not an insinuation.

    • I’m pretty sure $4.8 billion is a bigger number than $800 million, if that’s what you are referring to?

  3. Canada has to follow these rules implemented by Obama or the price of vehicles would skyrocket. Canada is not big market for new vehicles, we get what Americans get with a few tweaks, price of vehicles would increase muchly if we separate ourselves from America.

    And I wonder how much of my life is shortened by listening to twaddle like ‘social cost of carbon(SCC)’. What is the ‘social cost’ of humans breathing?

  4. “What I suspect is necessary for a real debate on greenhouse gas
    emissions policy is a cost-benefit analysis that compares the Harper
    government’s regulations and the NDP’s cap-and-trade proposal.”

    And by now just about any member of the CPC is able to read that analysis off of a single sheet of paper…altogether now…

    …The 21 $billion NDP socialistic wealth transfer scheme will kill the economy of this country, cause rivers to rise, oceans to boil, meteor’s to rain down and generally cause Mr Harper to have an extremely upset tummy…not to mention win him the next election if robo calls are found to be impracticable or unconstitutional.

  5. Cap and trade will never pass Congress, neither will a carbon tax.

    • Because they’re bad science…you meant to add that didn’t you!

  6. Grand as the inauguration was, this also marked the beginning of President Obama’s new role, that of the lame duck.

    Or more like a sitting duck.

    Over the next four years, Obama will go from walking the red carpet to being
    the stepping stone for everyone’s political ambitions.

    At every turn he’ll hear criticisms being leveled at his policies, sometimes from people who helped formulate them.

    No Cap and trade, no carbon tax, just……….quacks.

    • Your at least two years too early…go back to sleep dreamer. The next two years belong to liberals.

  7. via Politico:

    As Obama prepares an aggressive public lobbying campaign
    for his ambitious second-term agenda, Democrats on Capitol Hill are
    bluntly warning him that he has to do more to engage them if he expects
    his congressional allies to take a series of politically tough votes.

    Interviews with dozens of members of Congress and senior aides reveal
    frustration and in some cases exasperation that a president who came
    from the Senate has no apparent appetite for cultivating relationships
    on Capitol Hill. …

    The focus on socializing is tangential to a much more central
    problem: It’s not that Obama never invites them up for Camp David
    weekends or over for White House movie screenings, it’s that many fellow
    Democrats believe he’s out for himself and detached from broader party
    and member interests.

  8. See that big orange ball in the sky?

    There’s your answer to why.

      • Water vapour is the predominant greenhouse gas, maybe Obama will have the EPA declare that H2o is a pollutant the same as they did for CO2.

        Eco-tards who fully buy into the cult Glo-Bull Warming should all do the planet a favour and reduce the amount of CO2 going into the atmosphere by ceasing to breathe.

          • You haven’t done your part to save the planet yet, must not be a true believer

          • So having no argument of any worth, you try to switch to ad hominem, and yet you manage to get *that* wrong too.

            As I’ve said before, I’ve re-insulated my house, gone to almost full LED lighting, high efficiency furnace, tankless water-heating, and am currently looking at moving to an induction range specifically because of the power savings it provides. That’s over 15 grand in improvements to this place that I’ll probably not see a return on unless we get serious about taxing energy at a rate commensurate with the damage it does.

            Your point about not breathing just illustrates how amazingly uneducated you actually are. You see, the breathing process, while it does create CO2, does so in part of a natural cycle. I also take in carbon, process it, and add it to my own body mass. Not as efficiently as plants, I’ll grant, but honestly, me being alive and demonstrating for anybody else who comes on how your opinions are not only wrong, but laughably wrong and would be held only by an uneducated moron who didn’t bother to look up to see if there are any counter-arguments already existing for his points probably ends up helping the environment even more.

            Oh.. and by the way:
            Myth #135: Breathing contributes to CO2 buildup. Also already debunked: http://www.skepticalscience.com/breathing-co2-carbon-dioxide.htm

          • Enjoy living in your land of lollipops, fairy tales and unicorns.

  9. From Forbes;

    Here are some of the scientific questions at the core of this issue:

    Is the climate changing? Of course. The climate always has changed and always will.

    Is the earth getting warmer? We should hope so for at least two
    reasons: First, the world emerged from the Little Ice Age in the 19th
    century, so it would be worrisome if it weren’t getting warmer. Second,
    all the history indicates that humans thrive more during warmer periods
    than colder ones. It is likely, though, that earth has warmed less than
    many official temperature records indicate for a variety of reasons,
    including: few long-term records from either the southern hemisphere or
    the 71 percent of the planet that is covered by water; distortions from
    the urban heat-island effect and other faulty siting (e.g., temperature
    sensors next to asphalt parking lots, etc.; the decline in weather
    station reports from Siberia after the fall of the Soviet government;
    the arbitrarily ceasing to include measurements from northern latitudes
    and high elevations, etc.) The most accurate measures of temperature
    come from satellites. Since the start of these measurements in 1979,
    they show minor fluctuations and an insignificant net change in global
    temperature.

    Is the earth getting dangerously warm? Probably not, since the earth
    was warmer than it is now in 7000 of the last 10,000 years. By the way,
    does anybody know what the “right” amount of global heat is?

    Are we humans causing the warming by our carbon emissions? Actually,
    most of the “greenhouse effect” is due to water vapor, which makes one
    wonder why the EPA hasn’t designated H2O a harmful pollutant that they
    must regulate. Meteorologist Brian Sussman’s calculations in his book “Climategate” show humanity’s share of the greenhouse effect as .9 of 1 percent.

    It’s even possible that CO2 may not affect global warming at all.
    During many stretches of planetary history, there has been no
    correlation between the concentration of CO2 in the atmosphere and
    global temperature. In other long stretches, the variations of the two
    factors followed a significant sequence: increases in CO2 followed
    increases in warmth by several centuries. You don’t need to have a
    degree in climate science to know that, in a temporal universe, cause
    does not follow its effect.

    Even global warming alarmists have tacitly conceded that CO2 is not
    the primary driver of climate change when they responded to the relative
    cooling in recent years by changing their story and telling us that the
    earth is likely to cool for a few decades in spite of still-increasing
    atmospheric CO2. Translation: other factors outweigh CO2 in their impact
    on global temperatures. Those other factors include variations in solar
    activity (accounting for 3/4 of the variability in earth’s temperature
    according to the Marshall Institute); changes in earth’s orbit and axis;
    albedo (reflectivity, meaning changes in cloud cover which are
    influenced by fluctuations in gamma ray activity); and volcanic and
    tectonic activity in the earth’s crust. For humans to presume that they
    are more than a gnat on an elephant’s rump in terms of impact on climate
    change is vain and delusive.

Your email address will not be published. Required fields are marked *