Scholarly Commons @ IIT Chicago-Kent College of Law

Article Title

Social Cost of Carbon: Can We Afford It?

Authors

Kita

Abstract

Environmental regulations that are passed by governmental agencies must ensure that the benefit of the regulation outweighs the burden. The failure for the benefit to outweigh the burden will result in the nullification of environmentally beneficial regulations. The methodology to measure the environmental impact of a regulation is difficult to understand and in some cases highly controversial. One example of this is the use of the social cost of carbon. The social cost of carbon is used to measure carbon reduction. The use of the social cost of carbon can help regulations succeed cost-benefit scrutiny, which would invalidate the regulation. The Department of Energy used the social cost of carbon when it created its new regulations for energy efficiency standards regarding commercialized refrigerators.

In Zero Zone, Inc. v. U.S. Department of Energy, the Seventh Circuit upheld the Department of Energy's new energy efficiency standards for commercialized refrigerators. The Seventh Circuit also upheld that the Department of Energy has the requisite authority to implement the standards. The most noteworthy part of the opinion is the Seventh Circuit upholding the use of the social cost of carbon in the cost-benefit analysis performed by the Department of Energy.

The Seventh Circuit was correct in upholding the Department of Energy's commercial refrigeration regulations, the Department's authority to do so, and the use of the social cost of carbon in the Department's cost-benefit analysis. The Department of Energy has clear authority from Congress to implement these regulations. Additionally, a Chevron analysis further supports the Department's authority to do so. The standards proposed and implemented by the Department are neither arbitrary nor capricious. Also, the social cost of carbon may be controversial, but it is a necessary tool for agencies to use while implementing standards that will further environmental and energy policy goals. The social cost of carbon may not be perfect in its present state, but it will continue to evolve and perfect itself into being a perfect tool for agencies to use in the future.

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Recommended Citation

Kita, Social Cost of Carbon: Can We Afford It?, 12 Seventh Circuit Rev. 236 (2017).
Available at: https://scholarship.kentlaw.iit.edu/seventhcircuitreview/vol12/iss1/9