The Social Cost of Carbon
By Alex Epstein
Q: The “social cost of carbon” was $50/ton a few decades ago. Now they’re even saying it’s over $100/ton. But if you look at the benefits of fossil fuels, the social cost of carbon is actually negative. Could we quantify how many people would be dead right now without fossil fuels, and call it the social cost of not having carbon?
A: I work a lot in policy these days, and someone is suggesting a taskforce on the “social cost of decarbonization,” which is what you’re getting at here. The thing I want to highlight here—we can talk about how to quantify it—but one of the things that happens in this general anti-fossil fuel movement is they use very technical terminology to obscure very crude thinking errors.
For example, they use a term called “Levelized Cost of Energy.” If you’re just a lay person and you hear that Lazard has something called “Levelized Cost of Energy,” and a newspaper is reporting that it says solar and wind are cheaper, you think, “That sounds pretty intimidating to me. I can’t challenge that.”
Then if you look at it, it says that “Levelized Cost of Energy” is the cost excluding “reliability-related considerations.” It’s just a total trash metric that allows you to favorably compare unreliable energy to reliable energy because you don’t have to actually factor in the cost of making solar and wind reliable.
This is a similar issue where they are ignoring the benefits of fossil fuels, including the climate benefits. What happens is, then, if you ignore the benefits of fossil fuels, including the climate benefits, what you can then do is take climate side-effects—and even if you don’t exaggerate them, though they do exaggerate them a lot—they pretend that, “Hey, we’re going to have all these climate side-effects and we’re not going to be able to do anything about them.” Whereas in fact, any climate side-effects of fossil fuels we’ve seen so far are trivial compared to the benefits, because fossil fuels have this unique ability to cure their own side-effects, especially in climate.
Anything we do to create climate challenges, we can do far more to neutralize climate. That’s why we’re safer from climate. First of all, you would never call it the “social cost of carbon.” Notice that the whole idea of a “social cost of carbon” is just isolating a negative side-effect from a benefit—but you cannot isolate the side-effect of fossil fuels from the benefit of fossil fuels. What they’re building in there is they want you to do that, and they want to pretend that fossil fuels don’t have unique benefits.
What you actually need to do is you need to do an analysis of the relative benefits and side-effects of fossil fuels versus alternatives, and if you did that, you’d see that getting rid of fossil fuels kills everyone and using fossil fuels makes everyone’s life better.
I just want to highlight how all this technical terminology is obscuring terrible thinking. So you need to be very careful when you use it. Even saying “we should recalculate the social cost of carbon”—we shouldn’t be thinking in those terms.
It’s the same thing when people say, “Hey, let’s talk about climate change,” I never talk about “climate change,” because what people mean by “climate change” is the climate side-effects of fossil fuels. Well, I’m never just going to have a conversation about the side-effects of antibiotics. You can’t have conversations about side-effects apart from benefits, unless you’re just isolating them temporarily to study them. The whole device is to get you to deny the benefits of fossil fuels over and over.
Most of the resources we have, by the way, you can get for free on EnergyTalkingPoints.com. But one issue I have more in my book, which unfortunately you have to pay 20 bucks for, but in Chapter 4 I talk about this and other things. There’s what’s called externalities. They’re like, “Oh, negative externalities.” They have all this terminology, which is all just very crudely just looking at negative side-effects and not looking at benefits, which never makes sense, but it makes even less sense when the benefits of something cure its own side-effects.
https://alexepstein.substack.com/p/answers-to-questions-about-the-social
We are a group of about 200 ordinary citizens who mostly live near Atlantic City, New Jersey. We volunteer our time and money to maintain this website. We do our best to post accurate information. However, we admit we make mistakes from time to time. If you see any mistakes or inaccurate, misleading, outdated, or incomplete information in this or any of our posts, please let us know. We will do our best to correct the problem as soon as possible. Thanks.
Seth Grossman, Executive Director
LibertyAndProsperity.com
