Estimates of the social cost of carbon have increased over time

TL;DR

This paper conducts a meta-analysis showing that estimates of the social cost of carbon have increased significantly over time, highlighting the gap between current carbon prices and their estimated true value.

Contribution

It provides a comprehensive meta-analysis revealing the upward trend in social cost of carbon estimates and their non-stationary distribution over recent years.

Findings

Social cost of carbon estimates increased from $33 to $146 per ton for high discount rates.

Estimates rose from $446 to $1925 per ton for low discount rates.

Current carbon prices are below estimated social costs, indicating potential for price increases.

Abstract

A meta-analysis of published estimates shows that the social cost of carbon has increased as knowledge about climate change accumulates. Correcting for inflation and emission year and controlling for the discount rate, kernel density decomposition reveals a non-stationary distribution. In the last 10 years, estimates of the social cost of carbon have increased from $33/tC to $146/tC for a high discount rate and from $446/tC to $1925/tC for a low discount rate. Actual carbon prices are almost everywhere below its estimated value and should therefore go up.