Social Cost of Carbon for use in climate and energy policy Luke - - PowerPoint PPT Presentation

CITY OF MINNEAPOLIS

Social Cost of Carbon for use in climate and energy policy

Luke Hollenkamp - City Coordinator’s Sustainability Division PECE Committee Meeting

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December 2, 2019

Staff Direction

Directing Sustainability, Finance, Health Department, and Attorney’s Office staff to bring forward to the Public Health, Environment, Civil Rights & Engagement Committee a recommendation or set of

• ptions for a social cost of carbon to be

considered for adoption by the City Council PECE Committee Meeting (Aug 26, 2019)

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Cost of Climate Change Impacts

• Lack of progress to stop

the climate emergency creates enormous societal costs

• Societal costs are not

currently being factored into the economic costs

• f greenhouse gas

emitting activities

• Economic Externalities

must be addressed to mitigate climate change

3 Courtesy: Climate Impact Lab

Social Cost of Carbon Measures Externalities

• The Social Cost of Carbon

(SCC) is a commonly employed metric calculated by the scientific community of the expected long-term damage done by a ton of carbon dioxide (CO2) emissions in a given year

• Also measures the societal

benefit of a CO2 reduction

4 Courtesy: Axios

Using a Social Cost of Carbon

Example: Shadow carbon pricing

• For internal accounting and decision-

making

• Used by many organizations to gauge

climate impact and manage risk

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City’s Fleet EV Study (2017)

• Potential payback periods:

premium capital cost was compared to the annual fuel, maintenance, and carbon savings

• Carbon savings were monetized

by using EPA’s SCC

Carbon Costs and Pricing Globally

6 “State and Trends of Carbon Pricing 2019” State and Trends of Carbon Pricing (June), World Bank, Washington, DC.

Wide Range of Recent Recommendations for 2030 Prices to Deliver on Paris Agreement W/ Supporting Policies

• $50-$100/tCO2e (CPLC)
• $75/tCO2 (IMF)

W/O Supporting Policies

• $135-$6,050/tCO2e

(IPCC)

Federal Agencies (Obama Admin)

• Prior to 2009: Multiple federal agencies developed and used their
• wn SCC as part of their rulemaking processes.
• 2009-2010: An interagency working group of scientific and

economic experts was convened to harmonize this range of different SCC values and ensure that agencies were using the best available information.

• 2010: Interagency working group recommended a set of four SCC

estimates for each emissions year after creating integrated assessment models which combined climate processes, economic growth, and interactions between the two.

• 2013 and 2015: Planned improvements and updates to the model

were made based on public and expert input.

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Federal Agencies (Obama Admin)

8 EPA Fact Sheet - Social Cost Of Carbon, Dec 2016

Represents “lower-probability, higher- impact outcomes” from climate change

MN PUC use of Social Cost of Carbon

• 1994: PUC established a SCC for weighing economic

externalities (environmental costs) in their decision- making processes for electricity generation

• 2014-2018: PUC held an extensive stakeholder process to

update SCC values

• Included environmental groups, energy utilities, business

interests, human health advocates, state agencies, the Minnesota OAG, and an administrative law judge

• Jan 2018: Adopted a range of SCC values largely based

upon the Obama administration’s federal SCC

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MN PUC’s adopted values

10 MN PUC Jan 3, 2018 Order; Docket No. 14-643

City’s 30% GHG Reduction Goal City’s 80% GHG Reduction Goal “High” values closely align with Obama Admin’s 3% Values

Staff Recommendation

• The social cost of carbon be set equivalent

to the “High” schedule of values adopted by the PUC.

• I.E., $41.56/ton CO2 in 2019 and annually

increasing

• For internal (City enterprise) shadow

carbon pricing, use the PUC’s “High” schedule of values as a baseline, but also consider higher values, including recent IMF recommendations and Obama administration levels.

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