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A recent analysis puts a price tag on climate policy in Ohio.
Adopting any of three major climate policies in the state — a renewable portfolio standard, cap-and-trade system, or a carbon tax — would help society avoid up to $1 trillion in costs over the next three decades.
The figure comes from Scioto Analysis, an Ohio public policy research group that calculated the economic stakes of the three policies in the state.
Without policy action, the range of expected climate change impacts from Ohio’s energy production include pollution- and temperature-related health problems, costs for infrastructure repairs and upgrades, and agricultural productivity losses.
Ohio is vulnerable but wouldn’t bear all or necessarily even most of those costs. Climate impacts are not equitably distributed, and many communities least responsible for global emissions face the most consequences from a warming world. At the same time, emissions from other states affect Ohio.
In any case, a federal carbon policy could ultimately force Ohio to reckon with some or all of the economic impacts if the state does not.
Scioto Analysis Principal Rob Moore argued that it is in the state’s best economic interest to start considering policies to address its greenhouse gas emissions.
“They’re all very effective, and they’re three great choices for policymakers in Ohio to choose from,” he said.
Scioto Analysis did the work without an outside client commissioning the project. Report author Aayush Nema, an intern at the firm, said he did receive a stipend from Denison University, where he was a student.
The study looked at strong and weak options for each policy choice. The report used Energy Information Administration data from 2008 to 2018 to project annual carbon dioxide emissions from Ohio’s energy production through 2050 under current law, as well as expected emissions under each policy scenario.
The team used $30 per metric ton as a conservative estimate for the social cost of carbon and $51 per metric ton as the upper limit. The latter was based on an interim estimate this year from the Biden administration.
Cumulative societal benefits by 2050 ranged from low estimates of $650 billion to expected values of $850 billion to $920 billion, with high estimates of $1 trillion for all policy choices.
A discount rate adjusts a dollar amount in the future to reflect its present value today. The Scioto Analysis team used a 3% rate, which corresponds to that used for the Biden administration’s $51 per ton figure. The team’s higher boundary of 11% is more than one recommended by the Heritage Foundation, a conservative think tank.
The dollar values would grow over time. More than half the social costs of carbon expected within the first ten years under a business-as-usual scenario could be avoided within the same period, according to the report. Savings would grow at a faster rate after 2040.
Social costs of carbon include health impacts, infrastructure costs, and food insecurity. Ohio is vulnerable, Moore and Nema said, especially when it comes to agriculture. Extreme or unpredictable weather is generally bad for farmers. Less fossil fuel pollution also would yield health benefits, such as fewer cases of lung and circulatory system disease.
“The external costs of carbon emissions are not being captured,” Moore said. The market prices charged for energy don’t reflect the total costs imposed on society by pollution, yet the expense of dealing with climate impacts is a very real cost borne by society at large. “It’s killing people and hurting infrastructure and reducing farm yields,” Moore said.
“The avoided social cost of carbon is the benefit of reducing greenhouse gas emissions,” said Ramteen Sioshansi, an economist at Ohio State University, who did not work on the report. “Economic orthodoxy holds that you should undertake an activity until the marginal cost of that activity equals its marginal benefit. So, to put it another way, if eliminating a ton of CO2 would entail $40 of cost, but the benefit of avoiding that ton of CO2 is $30, it would not make sense to undertake the reduction. If the costs and benefits are switched, it would.”
The report did not consider short-term economic impacts, such as jobs from more renewable energy, Moore said. In a separate May 2021 report, Tufts University researchers found that a carbon tax sufficient to meet U.S. commitments under the Paris climate agreement would have short-term positive economic impacts, with negligible detrimental effects on unemployment.
Ohio lawmakers adopted a renewable energy standard in 2008 by an overwhelming majority, but then they spent much of the last decade scaling it back, freezing it and finally gutting it with a nuclear and coal bailout law in 2019. The nominal level of 8.5% allows a host of opt-outs and requires nothing after 2026.
Yet Ohio remains subject to federal environmental laws, and if the federal government winds up requiring states to take action to address climate change, it will need to determine how to do that.
Action on climate change “is something that’s pressing right now with the Biden administration,” Moore said. That action could come in either regulatory or legislative form, he said.
Meanwhile, Ohio is among a dozen states whose Republican leaders are suing to block a science-based approach for calculating the social cost of carbon. Missouri, Kansas, Indiana are also in the case, filed in March. The Trump administration had used questionable methods to slash the figure in 2017.