Determining the “social cost” here means putting a dollar amount to the burden that results from pollution, such as greenhouses gases.
The social cost of carbon can even be used to calculate the real environmental cost of household appliances that have varying levels of efficiency.
The Obama administration is making a second attempt to institute it (as reported June 19 in the New York Times). Conservatives are calling it a “red herring”, saying that “social cost” calculations will be used to forestall energy projects like the Keystone XL pipeline. The EPA now says that US agencies – including the Sate Department – should use the Social Cost of Carbon in its decision-making. The Dept. of Transportation used the social cost of carbon in its decision to raise mileage standards. Appliance manufacturers are not so keen; consumer advocates say that it must benefit consumers before it should be applied.
While there is disagreement over the use of the Social Cost of Carbon, this is a critical step toward actually accounting for the future costs of our actions today.