Emissions Monetization

The EES group estimates the potential monetary benefits of reduced CO2 and NOX emissions resulting from proposed energy efficiency standards, using a spreadsheet model and a range of estimated social costs. For emissions reductions that occur in later years, these values grow in real terms over time, and the present value of the stream of monetary benefits are calculated with a range of discount values.

In order to estimate the monetary value of benefits resulting from reduced emissions of CO2, the EES group uses the most current social cost of carbon (SCC) values developed by the Interagency Working Group on Social Cost of Carbon. The interagency group consists of technical experts from numerous federal government agencies who met on a regular basis to consider public comments, explore the technical literature in relevant fields, and discuss key model inputs and assumptions. The SCC is intended to be a monetary measure of the incremental damage resulting from greenhouse gas (GHG) emissions, including, but not limited to, net agricultural productivity loss, human health effects, property damage from sea level rise, and changes in ecosystem services. Any effort to quantify and to monetize the harms associated with climate change will raise serious questions of science, economics, and ethics. But with full regard for the limits of both quantification and monetization, the SCC can be used to provide estimates of the social benefits of reductions in GHG emissions.

At this time, the most recent interagency estimates of the potential global benefits resulting from reduced CO2 emissions in 2015, expressed in 2011$, were $6.1, $25.4, $41.0, and $77.7 per metric ton avoided. Additionally, the interagency group determined that a range of values from 7 percent to 23 percent should be used to adjust the global SCC to calculate domestic effects. For NOX emissions, available estimates suggest a very wide range of monetary values, ranging from $460 to $4,722 per ton in 2011 dollars.