IER has submitted comments on EPA’s proposed methane rule. Our comments focus on the flaws of the Social Cost of Carbon (ie. the Social Cost of Greenhouse Gas and the Social Cost of Methane).
- EPA continues to obfuscate and not provide transparency or a robust set of alternative scenarios when they calculate the Social Cost of Carbon. Twenty years ago, the White House Office of Management and Budget created Circular A-4 to require regulatory agencies to do certain things in their regulatory analyses. Every President has followed it since then–Republican and Democratic. However, EPA refuses to include a 7 percent discount rate in its calculation of the Social Cost of Greenhouse Gases because following Circular A-4 and including 7 percent makes the Social Cost of Greenhouse Gases too low.
- Instead of including a 7 percent discount rate, EPA only uses very low discount rates to artificially increase the present value of damages more than 100 years in the future. We explain why very low discount rates are inappropriate because it distorts the comparison of alternative investment decisions.
- EPA continues to include very speculative damages in the far future (between the year 2200 and 2300) in its calculations. To put this in perspective, in the comment we note how the Starship Enterprise from Star Trek uses a matter/antimatter energy system in the mid-2200s. Star Trek is science fiction, but so too are EPA’s calculations of the costs of climate change more than 100 years in the future.
- We also argue that EPA uses the Social Cost of Greenhouse Gases to hide important climate change information. In other words, they use the Social Cost of Greenhouse Gases but exclude the temperature impact and sea level rise impact of the regulation. Like the continued exclusions of a 7 percent discount rate, EPA is withholding information from decision-makers, Congress, and the American people.