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Biden administration wins temporary relief on using social cost of carbon

17 March 2022 Amena Saiyid

The Biden administration has received temporary approval to quantify the economic impacts of climate change in environment and energy rulemakings that affect public health, fossil fuel extraction and farming following a federal appeals court order handed down 17 March.

The US Court of Appeals for the Fifth Circuit ordered a stay of an injunction issued in February 2021 against the Biden administration's use of an interim price tag for releasing a metric ton of GHG emissions, while it considers the merits of the case.

The three-judge panel for the Fifth Circuit said a Louisiana-led 10-state coalition was unable to persuade the panel that the interim estimates would increase their regulatory burdens.

Further, the panel said the government would likely win on merit because the plaintiff states' claims lacked standing, a perquisite for any judicial review.

"The Plaintiff States' claims are based on a generalized grievance of the use of Interim Estimates in cost-benefit analyses of regulations and agency action," Circuit Judges Leslie Southwick, James Graves Jr., and Gregg Costa wrote in a per curiam order.

The claimed injury "does not stem from the Interim Estimates themselves, it stems from any forthcoming, speculative, and unknown regulation that may place increased burdens on them and may result from consideration of [social cost of greenhouse gases]," the judges wrote.

At issue before the appeals court was the injunction that the U.S. District Court for the Western District of Louisiana issued against the Biden administration's use of the interim social cost of greenhouse gases.

Injunction 'no longer in effect'

The appeals court ruling meant "the injunction is no longer in effect" and federal agencies could resume using the interim estimates of $51 per metric ton CO2e to quantify the effects of climate change until the White House Interagency Working Group (IWG) comes up with a new figure reflective of current inflationary conditions, Max Sarinsky, senior attorney with the New York University School of Law's nonprofit Institute for Policy Integrity, told Net-Zero Business Daily 17 March.

However, Jonathan Adler, who heads the Coleman P. Burke Center for Environmental Law at the Case Western Reserve University of Law, cautioned against reading the appellate decision as affirming the government's use of the interim estimates.

"I should reiterate that nothing in the Fifth Circuit's opinion presumes that the IWG social cost of carbon estimates are reasonable or reliable, nor does it presume that the Biden Administration's climate policies are the correct ones. It instead focused on whether the plaintiff states are pressing claims that federal courts can properly hear," Adler wrote in a 17 March blog.

The IWG restored the inflationary-adjusted interim estimate in February 2021, while it continued weighing whether to raise that figure as high as $125/mt that is reflective of current economic conditions.

The group was established under the Obama administration to calculate the cost of climate change impacts on farm productivity, human health, natural disasters, and migration.

The Trump administration disbanded the group in 2017, paring the figure down to $1/mt under an order seeking to promote fossil fuel projects and energy independence. President Joe Biden restored the IWG on the day he assumed office through an executive order on public health and environment.

Awaiting final social cost of GHGs

Although the final social costs of GHGs carbon were due out in January, the White House IWG has not yet released them.

The nonprofit Center for Biological Diversity (CBD), which has criticized the Biden administration for not being more aggressive in tackling the climate crisis, noted that the appeals court "allowed the government to continue its usual consideration of climate damage costs."

"When it comes to the climate, Biden can't continue business as usual," Kassie Siegel, director of CBD Climate Law Institute, said in a 16 March statement. "He has to meet this international crisis with bold executive action that speeds the transition to renewable energy and away from dangerous fossil fuels."

Posted 17 March 2022 by Amena Saiyid, Senior Climate and Energy Research Analyst

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.


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