EXPLANATION: Can climate change be solved by putting a price on carbon? – Channel 2 of WSB-TV

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BILLINGS, Mont. – (AP) – As climate change burns the planet, dozens of nations and many local governments are putting a price tag on greenhouse gas emissions that increase floods, droughts and other costly disasters.

Pennsylvania on Saturday becomes the first major fossil fuel-producing state in the United States to adopt a carbon pricing policy to fight climate change. It joins 11 states where coal, oil and natural gas power plants must buy credits for every ton of carbon dioxide they emit.

President Joe Biden is trying a less direct approach — known as the social cost of carbon — that calculates future climate damage to justify tougher restrictions on polluting industries. Republicans say it could crush many businesses. They want the U.S. Supreme Court to halt the administration after lower courts in Louisiana and Missouri split on the issue.

Elsewhere, governments have acted more aggressively. Canada, for example, imposes fuel charges on individuals and also makes big polluters pay for emissions. It is one of 27 countries with some sort of carbon tax, according to the World Bank.

The varied strategies come as scientists warn that climate change is accelerating – and all can help reduce emissions. But experts say US efforts have been hampered by its fractured approach.

“Part of the reason you need all of these things to work in tandem is that we don’t have a federal climate policy,” said Seth Blumsack, director of the Center for Energy Law and Policy at Penn State University. carbon used in regulatory decisions but not (a carbon price) that the market faces.

SO WHAT IS THE PRICE?

It varies. A lot.

The Biden administration’s social cost estimate is about $51, meaning every ton of carbon dioxide released from a power plant or tailpipe today is expected to contribute $51 in economic damage. in the years to come. New York State has its own social cost of carbon, updated in 2020 to $125 per ton to reflect economic trends.

In contrast, emissions were recently valued at $13.50 a ton at auction under the Regional Greenhouse Gas Initiative in the Northeast, which Pennsylvania is joining. A similar “cap and trade” program on emissions is in place in California, and another is expected to take effect in Washington state in 2023.

Canada’s carbon taxes include a minimum personal fuel levy equivalent to approximately $40 per tonne.

WHY THE BIG DIFFERENCES?

The social cost of carbon attempts to capture the value of all climate damage, centuries into the future. Carbon pricing reflects the amount companies are willing to pay today for a limited amount of emission credits offered at auction.

In other words, the social cost of carbon drives policy, while carbon pricing represents policy in practice.

“You’re trying to get the price to reflect the true cost to society,” said economist Matthew Kotchen, a former US Treasury Department official now at Yale University. “A stricter policy would have a higher carbon price. A more lax policy would give you a lower carbon price.

In the most efficient world, economists say the two numbers would line up, meaning there would be agreement on the cost of the damage caused by climate change and the policies used to deal with it.

DOES ALL THIS WORK?

Northeastern states’ emissions would have been about 24% higher if the carbon pricing consortium had not been in place, according to researchers from Duke University and the Colorado School of Mines.

Carbon auctions have also raised nearly $5 billion that can be used to reduce increases in household energy costs and promote renewable energy.

The consortium began in 2009 – the year of a failed push in Congress to establish a national cap and trade program. The bipartisan proposal died amid arguments over cost and whether climate change was even happening.

Following lawsuits by environmentalists, President Barack Obama’s administration elaborated on the social cost of carbon and began including future damage estimates in cost-benefit analyzes of new regulations. It has been used more than 80 times under Obama, including to tighten vehicle emissions standards and regulations to shut down coal plants.

President Donald Trump decided to roll back many Obama-era rules — and to help justify the changes, the Republican administration cut the social cost of carbon from about $50 a ton to $7 or less. The lower figure only included domestic climate impacts and not global damages.

“At first glance, this may seem correct, but when you think about it, the global damages of climate change have implications in the United States in terms of the global financial system,” said Romany Webb, expert in climate change law at the Columbia Law School.

AND AFTER?

On the day Biden took office, he set up an interagency panel that revived Obama’s estimate and promised a revised figure incorporating previously overlooked climate change consequences. Many economists expect the revised figure to be higher, possibly more than double the current $51.

Without a national cap and trade program, environmentalists and some economists want the government to be more aggressive in using the social cost of carbon to overhaul government energy policy.

Under Biden, the US Department of the Interior is applying climate damage considerations to oil and gas sales on public lands and waters for the first time. An upcoming lease sale in Wyoming, for example, could lead to future emissions of 34 million tons (31 million metric tons) of carbon dioxide. This equates to over $1.5 billion in future damages.

But the agency still plans to sell the leases because officials said there were no “established thresholds” to assess whether the increase in emissions was acceptable or not.

The expansion of carbon pricing in Pennsylvania remains tenuous. A legal challenge is underway and the state’s term-limited Democratic governor may soon be replaced by a successor who opposes state involvement.

“While carbon pricing would be the gold standard, it seems politically difficult to achieve it,” said Brian Perst of Resources for the Future, a Washington, DC-based research organization.

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Follow Matthew Brown on Twitter: @matthewbrownAP

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