US sets social cost of carbon at $51 as it tackles climate regulation

The announcement comes after US rejoined the Paris Agreement this month

A bushfire in California. Extreme weather cost the US about $1.75 trillion from 1980 to 2019. AP

US President Joe Biden reinstated a metric from the previous Obama administration to calculate the social cost of carbon – a move that could help it introduce stricter reforms to combat climate change.

The yardstick to assess the damage that greenhouse gases and associated pollution inflict on society was set at $51 per tonne of carbon dioxide.

The previous Trump administration discounted the impact of climate change and set the price at $8 a tonne.

The $51 figure is temporary and is expected to rise to $125 per tonne after thorough analysis.

The move is expected to allow the US to enact climate change-related reforms, one of Mr Biden’s key election promises during his presidential campaign, in addition to making it harder for fossil fuel projects to win government approval by factoring in their long-term economic damage.

The US rejoined the Paris Agreement this month in a move that underscored the importance of global warming to the new Democratic administration.

The Paris Agreement looks to lower global warming to well below 2°C above pre-industrial levels, preferably about 1.5°C.

Former president Donald Trump sided with climate change sceptics and allowed more lax regulations to govern US industry.

Mr Biden, who plans to unveil a $2 trillion plan to drive clean energy investment, has halted oil and gas drilling on federal land and is enforcing tighter rules on the sector.

Climate change is causing significant monetary damage to the US, with the cost to state and local economies exceeding $1 billion, according to an August report by the Environmental Defence Fund.

Extreme weather caused by greenhouse emissions and subsequent high temperatures has resulted in financial damages worth about $1bn in states such as Texas, Florida, North Carolina and Iowa, the report said.

The cost is poised to be significantly higher in Texas this year, which battled temperatures as low as minus 18°C. The cold spell froze energy infrastructure and left millions without power.

From 1980 to 2019, weather and climate disasters have caused financial damages of about $1.75tn in the US, according to official data.

The cumulative costs of 16 billion-dollar weather events in the US in 2017 stood at a record $306.2bn.

The Biden administration’s move is expected to hasten the pace of energy transition in the world’s largest producer of hydrocarbons.