“Simple math demonstrates that the average taxes (including duties) on gasoline and diesel in virtually every developed country exceed the average U.S. EPA’s (over)estimated global social cost of carbon now and through 2025 (at least). In fact, motorists in most European countries already pay taxes in excess of the upper bound estimate of the social cost of carbon through the middle of this century.”
According to the U.S. Environmental Protection Agency (EPA), the average global social cost of carbon (SCC), which is the level at which a global carbon tax should theoretically be set, ranged from $5.6 to $41.8 per tonne of carbon dioxide in 2010 (in 2012 US$), and should rise to between $18.7 and $77.4 in 2050 (as shown in Table 1). Per the EPA, the “central value” is represented by the “3% Average” column in the Table. Upper bound estimates are obviously much higher (see last column). [1]
There are several good reasons to believe that both average and upper bound SCC estimates are severely overstated. Suffice it to say that the major reasons for this are, first, the globe is warming much less rapidly than projected—not to be confused with “predicted”—by models of the same vintage as the models used by EPA to estimate SCC, that is, models from the 1990s and early 2000s [Ref. 2, pp. 4–13].
Second, the SCC estimates downplay, if not ignore, technological change that ought to occur over the next century or more and increase adaptive capacity, if the past couple hundred years are any guide. This means that impacts would be much lower than projected, particularly for the poorest countries which are deemed to be most at risk from global warming [Ref. 2, pp. 13–21]. No matter, for this exercise let’s assume that EPA’s SCC estimates are accurate.
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What about the social benefit of carbon?