Wednesday, February 24, 2010
Will The EPA Drop The Ball On Regulating Carbon Emissions?
Mark Thoma at Economist's View links to a set of comments by Frank Ackerman on proposed regulations by the EPA to limit carbon emissions. Central to those regs are estimates of the social costs of carbon emissions, and Ackerman accurately points out that EPA economists seem to be leaning to pricing those costs at around $5-6 a ton, which would translate into about a nickel for a gallon of gas, pretty inconsequential. It would appear that these low numbers are due to their only looking at peer-reviewed articles for sources and thus not the Stern Report, using Nordhaus's old DICE model, using ridiculously high discount rates of around 3-5%, and all but ignoring the problem of catastrophic risk of runaway warming as argued by Martin Weitzman. This becomes unpleasantly important as it seems increasingly unlikely that the Senate will pass any sort of cap and trade bill on carbon emissions (or anything else related to climate change), leaving this action by the EPA that was mandated by court rulings as about all that may be done any time soon by the US government about this issue. What an embarrassing scandal. One does not know whether to laugh or cry (probably both).