Social cost of carbon goes shopping

Your guide to the political forces shaping the energy transformation

Jan 11, 2024 View in browser   By Jean Chemnick An oil rig in the Gulf of Mexico. | John Manning/Kerr-McGee via Getty Images This could be the year the Biden administration takes climate economics to new frontiers, building the societal costs of climate change into everything from agency budgets to large federal purchases. That could be a game-changer, because the U.S. government spends more on goods and services than any entity on Earth. Policies that take the ravages of global warming into account and give an advantage to contractors that produce less carbon pollution could reshape how the government spends upwards of $630 billion a year, with ripple effects for the broader economy. Agencies will also be able to use new, higher estimates for the so-called social cost of greenhouse gases in rules, budgets, project assessments and other actions. EPA finalized the metrics last month, and the White House has given other agencies the green light to adopt it. “I think it would be quite big if it were used for lease sales and in procurement,” said Brian Prest, a fellow at Resources for the Future. “But I think that depends on to what degree these finalized estimates for the EPA are then picked up by other agencies.” The White House laid the groundwork in 2023 for the social cost of greenhouse gases to be used in new and different ways. First, it revamped its regulatory review guidelines to give more importance to impacts that happen years down the line — such as climate change. Then, it told agencies to start considering climate costs in their annual budgets, project reviews, purchasing and contracting and even when assessing fines. That’s new territory for an old regulatory staple that has been in use since the George W. Bush administration, which started developing the social cost of carbon after a federal court ruled that the government had failed to adequately weigh climate impacts when crafting a fuel economy rule. The social cost values are designed to turn the global harm done by a ton of carbon, methane or nitrous oxides into dollars and cents. That makes it easier for agencies to consider climate damage when conducting cost-benefit accounting as part of rulemakings. The estimates have sometimes popped up in other areas, such as when agencies use them to write mineral lease plans or environmental impact assessments. But the Biden administration is the first to propose using the metric to guide how the federal government uses its massive spending power. EPA’s new higher social cost estimates could also tip the scales even more strongly toward climate-friendly alternatives and vendors. EPA now puts the social cost of carbon at $190 per ton, more than three times the $51-per-ton value the Biden administration has been using.   It's Thursday — thank you for tuning in to POLITICO's Power Switch. I'm your host, Jean Chemnick. Power Switch is brought to you by the journalists behind E&E News and POLITICO Energy. Send your tips, comments, questions to jchemnick@eenews.net.   POLITICO AT CES® 2024: We are going ALL On at CES 2024 with a special edition of the POLITICO Digital Future Daily newsletter. The CES-focused newsletter will take you inside the most powerful tech event in the world, featuring revolutionary products that cut across verticals, and insights from industry leaders that are shaping the future of innovation. The newsletter runs from Jan. 9-12 and will focus on the public policy-related aspects of the gathering. Sign up today to receive exclusive coverage of the show.     Listen to today’s POLITICO Energy podcast Today in POLITICO Energy’s podcast: Blanca Begert talks about California's reliance on EPA approvals to implement its climate plans. Power Centers A Polestar electric car prepares to park at an EV charging station last year in Corte Madera, California. | Justin Sullivan/Getty Images More cash for EV chargers The latest wave of funding for electric vehicle chargers is heading to 22 states and Puerto Rico, helping to plug some of the gaps in the charging network, writes David Ferris. The $623 million in grants announced Thursday target a range of projects, including charging for library patrons in California, apartment buildings in New Jersey and e-bike riders in Arizona. It is part of a $7.5 billion pot for charging in the 2021 infrastructure law. Small oil and the swamp Testimony from two small oil and gas companies testifying before the House against EPA's new methane fee looked oddly similar. That's because they were both at least partially co-authored by the same oil lobbyist, Emma Dumain and Timothy Cama report. It’s not uncommon for industry representatives to help with congressional testimony. But oil industry lobbying is a big game in Washington, and close collaboration among witnesses and lobbyists complicates Republican arguments that views expressed by small independent oil and gas companies are different from oil industry lobbying muscle often vilified by Democrats. Conservative climate politics With the Iowa caucuses days away, conservative climate change advocates are testing differing approaches to the Republican presidential primary. Most right-of-center climate groups haven't endorsed a presidential candidate, but they're pushing hopefuls to address the issue — even if candidates flatly reject President Joe Biden's approach to rising temperatures and cutting carbon pollution, writes Timothy Cama. “We’re championing the message and showing that Republicans actually can engage on this issue in a conservative way that doesn’t alienate the base but actually grows our popularity with swing voters, with young people and those demographics that we’ve been losing for a long time,” said Chris Barnard, president of American Conservation Coalition Action, the advocacy arm of the American Conservation Coalition. In Other News Merger-mania: Chesapeake Energy and Southwestern Energy announced a merger Thursday, setting the companies up to likely become the largest natural gas producer in the United States. Advanced solar: Japan is focusing on a solar power cell that doesn't use polysilicon, a key component of solar panels, as it looks to build its own domestic supply chain. Subscriber Zone A showcase of some of our best subscriber content. Mike Sommers, president of the American Petroleum Institute, speaks about American oil policy at the Hudson Institute in Washington on Oct. 18, 2023. | Nathan Howard/AP A top oil industry official slammed the Biden administration over its oil and gas record, including possible changes to how liquefied natural gas exports are reviewed and approved. Ron DeSantis and Nikki Haley at Wednesday's Republican presidential debate indicated they would increase oil and gas production and scale back clean energy incentives championed by the Biden administration. Renewable power capacity is expected to grow by 7,300 gigawatts through 2028 and will overtake coal as the leading source of electricity globally by 2025, according to a new analysis by the International Energy Agency. But that pace falls short of the goal of tripling clean power by 2030 that was agreed to last month at global climate talks. That's it for today, folks! Thanks for reading.   SUBSCRIBE TO CALIFORNIA CLIMATE: Climate change isn’t just about the weather. It's also about how we do business and create new policies, especially in California. So we have something cool for you: A brand-new California Climate newsletter. It's not just climate or science chat, it's your daily cheat sheet to understanding how the legislative landscape around climate change is shaking up industries across the Golden State. Subscribe now to California Climate to keep up with the changes.       Follow us on Twitter Arianna Skibell @ariannaskibell   Follow us

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