Update on Social Cost of Carbon (12/8 CIBO Committee Presentation)

The economic backdrop is currently an inflationary environment. Regulatory policy is often driven by economic environment. Wages are growing but not keeping pace with inflation. As a result, savings are down considerably as people are dipping into their savings to maintain living standards. Gasoline prices have come down, but are still higher than they were before the pandemic. Regulatory burdens just add to these burdens.

Since Jan. 2021, this administration has issued 500 new regulations. That translates to over $200 million in additional paperwork burdens. The top 10 air rules drive about $400 billion/yr in regulatory costs. That is greater than the GDP for 31 different states. EPA’s spring regulatory agenda listed 70 new rules. EPA has proposed a revision to the Risk Management Program (CAA 112(r)(7)). This is a chemical accident prevention regulation. There are 140 regulated substances. There are currently 11,740 regulated facilities. These facilities must have a risk management plan to cover potential accidents. Accidents at these facilities have been reduced by more than 70% in the last 15 years. Over 97% of regulated facilities had no reportable accidents in the last 5 years. However, EPA is pushing for “no risks”. EPA is claiming EJ considerations need to be addressed in these plans.

The Obama administration had a proposal in 2017. The Trump administration rescinded the proposed rule. There have been a number of litigations. In the new rule, there is an inclusion of climate considerations. There are also requirements for power loss issues. This requirement states the need for backup power in order to maintain pollution control equipment in operation in the event of a power loss. Third party audits have also been added. Recommendations by such an audit need to be followed or some justification must be supported in the risk plan. Rail cars that are not unloaded within 25 hours can become part of the risk plan. The Chamber has recommended slowing down EPA and coordinating with OSHA.

The Social Cost of GHGs is an analytical tool that resulted from the government estimating the amount of GHGs being reduced from a particular policy. The courts ruled that the government should apply a cost to these claims so as to better understand the costs and benefits. The Obama administration put together a team to come up with an estimate. The Trump administration decided to eliminate world damage costs and only focus on US damage estimates. Also the Trump administration changed the discount rate that was used. As a result, the SCC dropped to something like $10/ton. The current administration is redoing the estimate and will be proposing a number closer to $250/ton. The Chamber will challenge this figure.

Chad Whiteman, US Chamber of Commerce