While the Biden administration is being celebrated for its decision to rejoin the Paris Agreement in one of its first executive orders after President Joe Biden was sworn in, it wasn’t the biggest step the administration took to advance its climate agenda.
Instead, it was a move to get to the basics of monitoring and accounting, of metrics and dashboards. While companies track their revenues and expenses and monitor for all sorts of risks, impacts from climate change and emissions aren’t tracked in the same way. Now, in the same way there are general principals for accounting for finance, there will be principals for accounting for the impact of climate through what’s called the social cost of carbon.
Among the flurry of paperwork coming from Biden’s desk were executive orders calling for a review of Trump-era rule-making around the environment and the reinstitution of strict standards for fuel economy, methane emissions, appliance and building efficiency, and overall emissions. But even these steps are likely to pale in significance to the fifth section of the ninth executive order to be announced by the new White House.
That’s the section addressing the accounting for the benefits of reducing climate pollution. Until now, the U.S. government hasn’t had a framework for accounting for what it calls the “full costs of greenhouse gas emissions” by taking “global damages into account”.
All of this is part of a broad commitment to let data and science inform policymaking across government, according to the Biden Administration.
It is, therefore, the policy of my Administration to listen to the science; to improve public health and protect our environment; to ensure access to clean air and water; to limit exposure to dangerous chemicals and pesticides; to hold polluters accountable, including those who disproportionately harm communities of color and low-income communities; to reduce greenhouse gas emissions; to bolster resilience to the impacts of climate change; to restore and expand our national treasures and monuments; and to prioritize both environmental justice and the creation of the well-paying union jobs necessary to deliver on these goals.
The specific section of the order addressing accounting and accountability calls for a working group to come up with three metrics — the social cost of carbon (SCC), the social cost of nitrous oxide (SCN) and the social cost of methane (SCM) — that will be used to estimate the monetized damages associated with increases in greenhouse gas emissions.
As the executive order notes, “[an] accurate social cost is essential for agencies to accurately determine the social benefits of reducing greenhouse gas emissions when conducting cost-benefit analyses of regulatory and other actions.” What the administration is doing is attempting to provide a financial figure for the damages wrought by greenhouse gas emissions in terms of rising interest rates, and the destroyed farmland and infrastructure caused by natural disasters linked to global climate change.
These kinds of benchmarks aren’t flashy, but they are concrete ways to determine accountability. That accountability will become critical as the country takes steps to meet the targets set in the Paris Agreement. It also gives companies looking to address their emissions footprints an economic framework to point to as they talk to their investors and the public.
The initiative will include top leadership like the chair of the Council of Economic Advisers, the director of the Office of Management and Budget and the director of the Office of Science and Technology Policy (a position that Biden elevated to a cabinet-level post).
Representatives from each of the major federal agencies overseeing the economy, national health and the environment will be members of the working group, along with the representatives of the National Climate Advisor and the director of the National Economic Council.
While the rule-making is proceeding at the federal level, some startups are already developing services to help businesses monitor their emissions output.
Biden’s plan will have the various agencies and departments working quickly. The administration expects an interim SCC, SCN and SCM within the next 30 days, which agencies will use when monetizing the value of changes in greenhouse gas emissions resulting from regulations and agency actions. The president wants final metrics to be published by January of next year.
The executive order also restored protections to national parks and lands that had been opened to oil and gas exploration and commercial activity under the Trump administration, and blocked the development of the Keystone Pipeline, which would have brought oil from Canadian tar sands into and through the U.S.
“The Keystone XL pipeline disserves the U.S. national interest. The United States and the world face a climate crisis. That crisis must be met with action on a scale and at a speed commensurate with the need to avoid setting the world on a dangerous, potentially catastrophic, climate trajectory. At home, we will combat the crisis with an ambitious plan to build back better, designed to both reduce harmful emissions and create good clean-energy jobs,” according to the text of the executive order. “The United States must be in a position to exercise vigorous climate leadership in order to achieve a significant increase in global climate action and put the world on a sustainable climate pathway. Leaving the Keystone XL pipeline permit in place would not be consistent with my Administration’s economic and climate imperatives.”