The Social Cost of Carbon

The report critiques the Obama Administration's interagency working group for endorsing a 'central' social cost of carbon (SCC) of $21 per ton of CO2, arguing this value is too low to drive meaningful emissions reductions. The authors contend that the reliance on three specific models (DICE, FUND, and PAGE) introduces bias, as these models often underestimate damages or make morally questionable assumptions, such as valuing lives in poor countries less than those in rich ones. Furthermore, the report argues that using discount rates of 2.5% to 5% unfairly diminishes the value of future climate damages and that the failure to account for worst-case catastrophic scenarios leads to ineffectual policy. The authors recommend moving toward a cost-effectiveness framework based on science-based safety standards, citing the United Kingdom's higher carbon price range of $41–$124 per ton as a more appropriate benchmark.

• The U.S. interagency working group's 'central' estimate of $21 per ton of CO2 in 2010 is considered far too low to incentivize substantive mitigation and could lead to regulations that fail to reduce U.S. emissions.
• The reliance on the FUND, PAGE, and DICE models introduces significant bias and errors; specifically, FUND assumes that human lives in poor countries are worth less than those in rich ones and predicts that early warming reduces mortality.
• The use of discount rates between 2.5% and 5% is criticized as an ethical failure that aggressively discounts the costs borne by future generations, effectively shrinking the present-day value of future damages.
• Current SCC calculations largely ignore the risk of catastrophic climate damage, whereas the authors argue that policy should prioritize avoiding worst-case scenarios over balancing average expected costs and benefits.
• The authors suggest that instead of cost-benefit analysis via the SCC, the U.S. should adopt a 'safe' minimum standard based on scientific risk analysis and use cost-effectiveness analysis to meet that target.
• The United Kingdom's approach to carbon pricing, which uses a range of $41–$124 per ton (central case of $83), is presented as a more robust alternative to the U.S. estimate.

APA

Ackerman, F., & Stanton, E. A. (2010). The Social Cost of Carbon. Stockholm Environment Institute. https://www.sei.org/mediamanager/documents/Publications/Climate-mitigation-adaptation/socialcostofcarbon_sei_20100401.pdf

Chicago

Ackerman, Frank, and Elizabeth A. Stanton. The Social Cost of Carbon. Stockholm Environment Institute, 2010. https://www.sei.org/mediamanager/documents/Publications/Climate-mitigation-adaptation/socialcostofcarbon_sei_20100401.pdf.

Wikipedia

{{cite report |last1=Ackerman |first1=Frank |last2=Stanton |first2=Elizabeth A. |title=The Social Cost of Carbon |publisher=Stockholm Environment Institute |date=1 April 2010 |url=https://www.sei.org/mediamanager/documents/Publications/Climate-mitigation-adaptation/socialcostofcarbon_sei_20100401.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{ackerman2010social, author = {Ackerman, Frank and Stanton, Elizabeth A.}, title = {{The Social Cost of Carbon}}, institution = {Stockholm Environment Institute}, year = {2010}, month = apr, url = {https://www.sei.org/mediamanager/documents/Publications/Climate-mitigation-adaptation/socialcostofcarbon_sei_20100401.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }