New studyActual Social Cost of CO2 Emissions More Than Twice as High

18 December 2024

Photo: Pixaby

Greenhouse-gas emissions cost societies far more than previously assumed: realistically, at least 270 euros per metric ton of CO₂, as shown in a new study released by Prof. Frances Moore from the University of California in Davis, Prof. Moritz Drupp from the University of Hamburg’s Cluster of Excellence for climate research (CLICCS), and others.

The social cost of CO₂ quantifies the harm done to society by emitting one metric ton of CO₂, now and in the future. Accordingly, it is an important number that should be included in the balance sheet for all processes involving CO₂ emissions. The study shows that calculations employed around the globe fail to reflect how extensively climate change impacts human wellbeing. “When we include all factors to the extent possible, the cost to society is nearly 300 euros per metric ton of CO₂. Burning one liter of gasoline, for instance, would then produce more than 60 (euro)cents in climate damages for society,” explains economist Moritz Drupp.

Consequently, the social cost is more than twice as high as the value used in previously released scientific calculations, which was around 125 euros per metric ton on average. The new value also clearly surpasses the figure previously released by the US Environmental Protection Agency (EPA): 180 dollars per metric ton of CO₂. The German Environment Agency (UBA) was the only body to raise the social cost from 200 to 300 euros per ton, which it did in the fall of 2024 – making it the only one to reflect the current state of research. The analysis, which includes 1800 scientific calculations from the past 20 years and is the most comprehensive of its kind to date, was just released in the journal Proceedings of the National Academy of Sciences (PNAS).

“When people worry about climate change, they focus on the risks and uncertainties that it entails,” says first author Prof. Frances Moore, who until recently served as a senior economist for energy and environmental issues at the White House in Washington, DC. “They think about the long-term effects, say, on economic growth. And they worry about unique ecosystems or cultural heritages that are irreplaceable.” The impact of climate change and therefore the social cost includes effects on agriculture and human health, as well as the damage done by natural catastrophes and the degradation of ecosystems.

The social cost of CO₂ emissions is used e.g. in benefit-cost analyses. For example, in the context of major infrastructure projects, the scale of financial benefits for society when greenhouse gases are reduced is calculated. In the US, Germany, Canada and other countries, official cost estimates are used as the basis for political decision-making.

Yet the study shows that the majority of calculations underestimate the benefits of reducing CO₂ emissions. “In many cases, the effects on economic growth and the environment alike are not adequately reflected. As a result, the costs of CO₂ emissions have been systematically underestimated to date,” says Moritz Drupp.