Arizona Joins In Opposition To “Social Cost of Carbon” Analysis

Analysis is speculative and not based on science

Arizona is one of twenty-one states that filed a comment letter opposing the use of “Social Cost of Carbon” analysis by the Federal Energy Regulatory Commission (FERC) in certification decisions related to interstate natural gas pipeline construction.

The executive order has potentially devastating impacts, according to Alaska’s Attorney General Treg Taylor, who said it would allow “the federal government to assign vague and arbitrary costs to everyday regulatory and business activity.”

The comment letter, which was filed this week, argues that neither the Natural Gas Act (NGA) or the National Environmental Policy Act (NEPA) authorize FERC (Federal Energy Regulatory Commission) to use the “Social Cost of Carbon” in consideration of certification applications, that the “Social Cost of Carbon” analysis is speculative and scientifically flawed, and that FERC should adhere to its previous position that “Social Cost of Carbon” analysis is not appropriate for NEPA analysis.

FERC is charged by Congress with reviewing and certifying applications for interstate natural gas pipeline projects proposed by private companies.

The letter argues that FERC applying “Social Cost of Carbon” analysis to certifications is not authorized by the NGA. The letter states, “Congress’s subsequent actions further show that the ‘public interest’ in the NGA is concerned with keeping natural gas widely available and affordable.” To that point, the letter says, “In the NGA, Congress did not vest FERC with the authority of an international commission to mitigate global climate change, and certainly no statute contains a ‘clear’ statement of such an extraordinary delegation of authority. Utilizing the SCC or SCM is not authorized under the NGA because it would only serve to increase costs (whether regulatory burdens or other costs) based on speculation about future global damages, instead of rendering natural gas abundant and affordable.”

Similarly, as it relates to NEPA, the letter contends, “Likewise, NEPA does not mandate or permit FERC to use the SCC for pipeline certifications.  Like the NGA, NEPA does not contain any clear statement of Congress delegating authority to FERC to anticipate and mitigate global climate change under the aegis of promoting abundant and affordable natural gas,” and states later, “NEPA does not authorize the Commission to use the SCC values because NEPA’s hard look requirement and proximate cause standard does not permit agencies to rely on speculative conclusions or conclusions that the agency knows reflect substandard and outdated science.

Additionally, the letter states that “Social Cost of Carbon” analysis is speculative and not based on science, specifically because the letter contends that:

  • Global damages are not reasonably foreseeable and do not have a close causal relationship to any project
  • Damages from the year 2300 are too speculative, attenuated, and arbitrary to survive hard-look review under NEPA
  • The SCC’s choice of discount rates is arbitrary and lacks a scientific basis
  • The SCC is based on outdated scenarios and ignores science without justification