This article originally appeared in Investor’s Business Daily

Investors Business Daily

Government agencies claim fossil fuels and carbon dioxide emissions cause “dangerous global warming.” Their latest strategy for advancing this thesis involves estimating the “social cost of carbon” (SCC) – monetized damages associated with alleged climate risks.


Roger Bezdek

The agencies assume Earth’s climate is highly sensitive to CO2 and hypothesize every conceivable carbon cost, including impacts on agriculture, forestry, water resources, coastal cities, ecosystems, wildlife and human health. However, as a new Management Information Services report explains, they completely ignore even the most obvious and enormous benefits of using fossil fuels and emitting carbon dioxide.

Had they followed federal laws and basic benefit-cost (B-C) analysis rules, they would have found that hydrocarbon and carbon dioxide benefits outweigh costs by at as much as 500 to 1!

Executive Order 12866 (1993) requires that federal agencies “assess both the costs and benefits” of a proposed regulation, and adopt it “only upon a reasoned determination that the benefits … justify its costs.” The Office of Management and Budget recently said B-C calculations should help determine whether a regulation is worth implementing at all.

By addressing only the supposed costs of carbon-based fuels – while ignoring even their most significant, well-documented benefits – government analyses and regulatory proposals violate the law. Their actions are illegal, misleading, even fraudulent.

The methodology for developing SCC estimates is so flexible, so devoid of rigorous standards, that it could produce almost any estimates an agency might desire. It allowed agencies to set the cost at $22 per ton of carbon dioxide emitted in 2010, and three years later arbitrarily increase it to $36/ton. Each time, they did so with little publicity, debate or public input.

They are using the $36 formula to justify proposed standards for microwave ovens, cell phone chargers, and laptops; costly, job-killing rules for automobiles and coal-fired power plants; and ultimately standards for factories, refineries, hospitals, and apartment buildings. Each time they proclaim unacceptable damages from “carbon” and enormous benefits from their regulations.

Now environmentalists want an even higher number: $43/ton.

SCC calculations rely on computer models that supposedly analyze climate processes, economic growth, and feedbacks between the climate and global economy in a single modeling framework. However, only limited, speculative research links climate impacts to economic damages.

Even the agencies admit the exercise is subject to “simplifying assumptions and judgments, reflecting the modelers’ best attempts to synthesize the available scientific and economic research characterizing these relationships.” [emphasis added]

Each model uses a different approach to translate global warming into damages. Worse, transforming economic damages over time into a single value requires “judgments” about how to discount them, and officials have been highly selective in choosing which “available scientific and economic research” they utilize.

The process is highly detrimental to American lives, jobs, living standards, health, and welfare. It lets officials exaggerate the supposed benefits of rules, minimize their costs, and ignore the value of energy, facilities, and activities being regulated. It is being imposed in the name of preventing “dangerous manmade climate change” that thousands of scientists say is hypothetical.

Literally trillions of dollars are at stake.

Driessen #3 2012 - 216 KB jpeg

Paul Driessen

Fossil fuels facilitated industrial revolutions, launched the modern world, and ensure livelihoods, living standards, health, and longevity. Over the past 200 years, largely because of hydrocarbon energy, human populations increased eight-fold, average incomes rose eleven-fold, and global life expectancy more than doubled.

Concurrently, human CO2 emis­sions increased 2,800-fold, to 8.4 billion tons/year – and atmospheric concentrations rose to nearly 400 ppm. That too has benefits. Carbon dioxide facilitates plant growth and enhances agricultural productivity. It is the basis of all life on Earth.

Hydrocarbons currently provide 81% of world energy, and forecasts say this will continue. Most important, the positive relationship between fossil fuels, economic growth, and CO2 emissions is strong – supporting some $70 trillion per year in GDP.

Under accepted benefit-cost analyses, proposed regulations would pass muster if the rules’ benefits exceed their costs by a 2:1 or 3:1 ratio. However, employing the government’s own carbon “cost” figures demonstrates that the ratios are completely and dramatically reversed.

The benefits of using carbon-based fuels outweigh any hypothesized “social carbon costs” by orders of magnitude: 50-to-1 (using the inflated 2013 SCC of $36/ton of CO2) – and 500-to-1 (using the arbitrary 2010 $22/ton estimate). In fact, any cost estimate is lost in the “statistical noise” of carbon and CO2 benefits.

If the world is serious about increasing or maintaining economic growth, living standards and access to affordable energy, fossil fuels are essential. Restrictions on hydrocarbon energy and faulty carbon cost analyses will undermine progress in all these areas.


  • Paul Driessen

    Paul Driessen is senior policy advisor for CFACT and author of Cracking Big Green and Eco-Imperialism: Green Power - Black Death.