Social cost of carbon estimates have increased over time

Richard S.J. Tol

doi:10.1038/s41558-023-01680-x

Social cost of carbon estimates have increased over time

Richard S.J. Tol^*

^*Corresponding author for this work

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Abstract

Estimates of the social cost of carbon are the yardstick for climate policy targets. However, there is great uncertainty and we do not know how estimates have evolved over time. Here I present a meta-analysis of published estimates showing that the social cost of carbon has increased as knowledge about climate change accumulates. Correcting for inflation and emission year and controlling for the discount rate, kernel density decomposition reveals a non-stationary distribution. In the past 10 years, estimates of the social cost of carbon have increased from US$9 per tCO₂ to US$40 per tCO₂ for a high discount rate and from US$122 per tCO₂ to US$525 per tCO₂ for a low discount rate. This trend is statistically significant if sensitivity analyses are discounted and paper quality weighted. Actual carbon prices are below its estimated value almost everywhere and should therefore go up.

Original language	English
Pages (from-to)	532-536
Number of pages	15
Journal	Nature Climate Change
Volume	13
Issue number	6
Early online date	15 May 2023
DOIs	https://doi.org/10.1038/s41558-023-01680-x
Publication status	Published - Jun 2023

Bibliographical note

Funding Information:
P. Dolton, E. Lavoie and J. Stock provided constructive comments on earlier versions that made this paper much better. A number of authors gracefully shared their estimates of the social cost of carbon. No external funding supported this research.

Publisher Copyright:
© 2023, The Author(s), under exclusive licence to Springer Nature Limited.

Funding

P. Dolton, E. Lavoie and J. Stock provided constructive comments on earlier versions that made this paper much better. A number of authors gracefully shared their estimates of the social cost of carbon. No external funding supported this research.

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10.1038/s41558-023-01680-x

Social cost of carbon estimates have increased over timeFinal published version, 1.87 MBLicence: Article 25fa Dutch Copyright Act

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abstract = "Estimates of the social cost of carbon are the yardstick for climate policy targets. However, there is great uncertainty and we do not know how estimates have evolved over time. Here I present a meta-analysis of published estimates showing that the social cost of carbon has increased as knowledge about climate change accumulates. Correcting for inflation and emission year and controlling for the discount rate, kernel density decomposition reveals a non-stationary distribution. In the past 10 years, estimates of the social cost of carbon have increased from US\$9 per tCO2 to US\$40 per tCO2 for a high discount rate and from US\$122 per tCO2 to US\$525 per tCO2 for a low discount rate. This trend is statistically significant if sensitivity analyses are discounted and paper quality weighted. Actual carbon prices are below its estimated value almost everywhere and should therefore go up.",

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Social cost of carbon estimates have increased over time

Abstract

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