On Tuesday, in a move he said would start “putting an end to the war on coal,” U.S. President Donald Trump signed an executive order that will gut environmental regulations and programs launched during the Barack Obama administration, including the Clean Power Plan.
Most energy analysts and experts agree that the demise of coal is tied to the natural gas boom. Nevertheless, Trump followed through with one of his most notable campaign promises. At the signing ceremony, he was flanked by several coal miners and administration officials at the Environmental Protection Agency headquarters.
Among the many rules and provisions Trump’s latest executive order will reverse, one that deserves significant attention is the social cost of carbon, or SCC. Used by government agencies when assessing the impact of new regulations and investments, the SCC could include costs tied to human health, agriculture, property and fluctuating energy prices.
As Noah Kaufman of the World Resources Institute explained on TriplePundit earlier this month, SCC dates back to 1981, when the new Ronald Reagan administration required all federal agencies to crunch the financial numbers of proposed regulations implementing them.
Since the Obama administration convened a group of technical experts to finalize a set of SCC costs, such accounting has become more streamlined. Although the actual costs vary, the EPA estimated that they will rise over time as future emissions will most likely cause greater environmental and economic damage.
Most environmental experts polled by the Institute for Policy Integrity said the most used SCC price, $36 per ton of carbon, is too low. But as Kaufman and other analysts insist, such an estimate at the very least can help guide policymakers on the costs and benefits of implementing environmental regulations.
Without this metric, former White House economist Joseph Aldy says there is no way to gauge the long-term financial impacts of new or rescinded regulations – and one result is a government that is less transparent.
Investors and environmental groups attacked the executive order as misguided and one that ignores ongoing shifts in America’s energy industry and indeed its economy.
“Today’s actions are a wholesale attack on decades of bipartisan work in addressing the very real threat of climate change,” Mindy Luber, head of the investor group Ceres, said in a public statement on Tuesday.
“By taking this backward step, the U.S. risks a stalled transition to a low-carbon economy, thus giving China and other countries the upper hand as they embrace renewable energy and other low-carbon technologies that are proliferating all across the globe.”
Former U.S. Rep. Henry Waxman, now head of the consultancy Waxman Strategies, said the order kneecaps America’s leadership on climate change over the past decade:
“We don’t know how much today’s announcement from the Trump administration will hamper the deployment of wind, solar and other renewable energy, or whether and how much it will slow the transformation of our energy sector,” Waxman told 3p.
“We do know that our future is in clean, renewable energy technologies, and that we need to hurry that transition. Today’s announcement does compromise our nation’s ability to lead on international efforts to stop climate change. This is undoubtedly a step in the wrong direction.”
Other organizations pointed out that the social cost of carbon is a way for policymakers to not only gauge the impact of new environmental rules domestically, but also measure the costs and benefits of international climate resilience spending. Climate change is, after all, a global problem that requires worldwide cooperation.
The NGO Oxfam described Trump’s latest directives, particularly the dismissal of SCC accounting, as a reversal of policies that will hit poorer communities in the U.S. and abroad the hardest.
In an email to 3p, Bob Perciasepe, president of the Center for Climate and Energy Solutions, described the executive order as a “misreading” of the economic opportunities climate action can present: “The social cost of carbon is a sensible tool to prudently factor those very real economic costs into government decision-making. Ignoring those costs won’t make them go away.”
Describing Tuesday’s action, or grandstanding, as a handout to the president’s billionaire oil and gas friends may come across as simplistic and a cheap shot. But the order ignores the stubborn facts of the U.S. energy industry.
According to the U.S. Energy Information Agency, less than 25 percent of the U.S. oil supply is imported – and 40 percent of that amount comes from Canada, making Trump’s promise to boost “energy independence” hollow. And accounting for the social cost of carbon has helped fuel the U.S. clean energy sector – which, according to a recent report, now employs more people than the fossil fuels sector in the vast majority of U.S. states.
Image credit: Sarah Nichols/Flickr