July 14, 2020

Harris, Feinstein, Whitehouse, Senators Release GAO Report: By Misrepresenting Cost of Carbon, Administration Underestimates Cost of Climate Change to Economy

WASHINGTON, D.C.U.S. Senators Kamala D. Harris (D-CA) and Dianne Feinstein (D-CA) on Tuesday joined Senator Sheldon Whitehouse (D-RI) and four of their Senate colleagues in releasing a report by the Government Accountability Office that found the Trump administration misrepresented the cost of climate change to our economy.

The GAO found that the Trump administration’s changes to the federal government’s core measure of the costs of climate change – the social cost of carbon – mean “current federal estimates [of climate effects]...are about 7 times lower than the prior federal estimates.” Despite a recommendation from the National Academies of Sciences, the Office of Management and Budget has no plans to update this key measure to reflect the best available science.

Joining Senators Harris, Feinstein and Whitehouse in requesting the report in December 2017 were Senators Michael Bennet (D-CO), Jeff Merkley (D-OR), Ben Cardin (D-MD) and Elizabeth Warren (D-MA). Congresswoman Carolyn Maloney (D-NY) led a similar request by members of the House.

“President Trump and his administration are failing to take the threat of climate change seriously,” said Senator Harris. “The administration’s decision to ignore our country’s top scientists threatens our economy and our ability to address the climate crisis. We can’t take the bold action necessary to address the climate crisis if we are not adequately accounting for the cost of greenhouse gas pollution. Yet again, this administration has put polluters over people.”

“We have to take the threat of climate change seriously,” said Senator Feinstein. “This GAO report makes it clear the administration’s formula for accounting for the cost of greenhouse gas emissions minimizes the risks. Ignoring or distorting the true costs of climate change won’t make the problem go away, it will just make it harder to respond to the very real challenges we’re facing.”

“Climate change is a massive threat to our economy. That threat will only grow in years to come, even if we take the action necessary to avoid the worst effects of climate change. We need a social cost of carbon pegged to the best available science to plan and adapt,” said Senator Whitehouse. “Instead, the Trump administration undermined the social cost of carbon, and then stuck its head in the sand when the federal government’s top scientists recommended implementing important changes. Shutting off the headlights of science and sound economics makes it more likely that we’ll drive straight off a climate cliff.”

In 2017, President Trump issued an executive order disbanding an important interagency working group charged with formulating the social cost of carbon and withdrew the guidance that the working group had issued. His administration also directed agencies to use an outdated OMB policy to monetize the value of greenhouse gas emissions from changes in federal regulation. The result has been a severe downtick in the value of the social cost of carbon. The Environmental Protection Agency’s assessment of its proposed rule to repeal the Clean Power Plan, for example, dropped the social cost of carbon from $45 per ton to as low as $1 per ton for 2020.

The Trump administration changed two key assumptions when calculating the social cost of carbon. First, it looked at only domestic economic effects of carbon pollution instead of global effects – ignoring the reality of our global economy. Second, it increased the discount rate used in the social cost of carbon. The discount rate discounts the present value of things that happen in the future based on a percentage; a higher discount rate means that future harms, injuries, and losses from climate change count for far less.

According to the new GAO findings, those changes mean “the current federal estimates, based on domestic climate damages, are about 7 times lower than the prior federal estimates that were based on global damages (when both prior and current estimates are expressed in 2018 U.S. dollars and calculated using a 3 percent discount rate).” The GAO also found that OMB has no plans for updating the methodologies used to develop the federal estimates, nor does it plan to task anyone in the federal government with doing so. 

The senators had asked the GAO to look at states and other countries’ social costs of carbon; the Trump administration’s justification for dramatically changing the way it discounts the costs or benefits of regulation change affecting carbon pollution; and the rationales that have been used to support various discount rates in assessing the social cost of carbon.

The GAO’s findings point to a lack of trust in the Trump administration’s tweaks to the social cost of carbon among other governments. The report found no state that uses the Trump administration’s lowered social cost of carbon values, while nine states – including New York, California, Minnesota, and Nevada – have continued to use the values set by the Obama administration. Of the countries the GAO studied, both Canada and Germany have developed their own values, which include global damages and lower discount rates akin to the Obama administration’s formula. In all, the states and countries evaluated showed that the Trump administration numbers were outdated and out of step with current science.

###