The Social Cost of Carbon

When it comes to discussing the optimal price of carbon, it can be notoriously difficult to determine how best to measure it. Nevertheless, putting a price on carbon is considered a critical first step in achieving meaningful climate change mitigation and adaptation. In Canada, one province has introduced a revenue neutral carbon tax, while two others have introduced a cap and trade system, as discussed in the Climate Imperative e-Dialogues.

 A new study explores the impacts of five different tipping points to assess the carbon cost. When the authors included the potential for these unpredictable events in their calculations, they found that it caused the cost to rise around 50% from $37 to $56. The latest IPCC report states that “Uncertainty in the social cost of carbon estimates is high due to the uncertainty in underlying total damage estimates, uncertainty about future emissions, future climate change, future vulnerability and future valuation”. Nevertheless, putting a price on carbon is a critical first step in meaningful climate change adaptation and mitigation.