In Calculating the Social Cost of Methane, Equity Matters

Thursday, Apr 22, 2021
by Julie Chao, Lawrence Berkeley National Laboratory, and Keely Swan, C-PREE
New study finds the economic harms of methane emissions can vary greatly by region

When a climate-warming gas such as carbon dioxide or methane is emitted into the atmosphere, its impacts may be felt years and decades into the future — in the form of rising sea levels, changes in agricultural productivity, or more extreme weather events, such as droughts, floods, and heat waves. Those impacts are quantified in a metric called the “social cost of carbon,” considered a vital tool for making sound and efficient climate policies. By properly accounting for future damages that may be caused by greenhouse gas emissions, policymakers can weigh present costs against future avoided harms.

Now a new study led by researchers from Princeton University, Lawrence Berkeley National Laboratory (Berkeley Lab), and UC Berkeley reports that the social cost of methane — a greenhouse gas that is 30 times as potent as carbon dioxide in its ability to trap heat — varies significantly between industrialized and developing regions of the world.

Published recently in the journal Nature, this study provides a clearer picture of how the social cost of methane could be weighted across countries, depending on their relative wealth. Rather than assuming that $1 has the same value for both rich and poor individuals, as past models have, the authors’ model acknowledges that the same climate impact, when measured in dollars, has a greater effect on the well-being of someone with less wealth. Therefore, in wealthier countries, the social cost of methane must carry a higher price tag to express the same loss of welfare compared to poorer regions.

“Our results capture that the same climate impact, when measured in dollars, causes a greater loss in well-being for low-income regions relative to wealthy ones,” said Frank Errickson, the study’s lead author who is now a postdoctoral research associate at Princeton’s Center for Policy Research on Energy and the Environment.

The study calculated a global average estimate of the social cost of methane of $922 per metric ton. But when accounting for economic inequalities between countries and regions, the researchers find that the social cost of methane drops to $130 per metric ton for sub-Saharan Africa and rises to $8,040 per metric ton for industrialized countries, such as the United States. Their model quantifies how much more wealthy countries should pay, compared to poorer nations, to have the same climate benefit for future generations.

Like the social cost of carbon, the social cost of methane is a metric that is not widely used by the public but is increasingly used by government agencies and corporations in making decisions around policies and capital investments. In fact, the recent White House executive order on the climate crisis established a working group to provide an accurate accounting of the social costs of carbon, methane, and nitrous oxide within a year.

“The Biden administration’s climate policy agenda calls for prioritizing environmental justice and equity,” Errickson said. “We provide a way for them to directly incorporate concerns for equity in methane emission regulations.”

Errickson conducted his research while a graduate student with co-author, David Anthoff, a professor in UC Berkeley’s Energy and Resources Group.

“Given its potency as a greenhouse gas, regulating emissions of methane has long been recognized as a critical component for designing an economically efficient climate policy,” said Anthoff. “Continuing our work to further explore the relationship between climate change and socioeconomic uncertainties — not to mention the complex but important issues that arise when we account for equity — is a promising area for future research and policy exploration.”

The paper, “Equity is more important for the social cost of methane than climate uncertainty,” first appeared in Nature on April 21, 2021. Other study co-authors were Klaus Keller and Vivek Srikrishnan of The Pennsylvania State University and William D. Collins of Lawrence Berkeley National Laboratory and the University of California Berkeley. The research was supported by the National Science Foundation, the Sloan Foundation, and the Penn State Center for Climate Risk Management.

This story was adapted from a news release written by Julie Chao at the Lawrence Berkeley National Laboratory, a multiprogram national laboratory managed by the University of California for the U.S. Department of Energy’s Office of Science; with Keely Swan, Center for Policy Research on Energy and the Environment at the Princeton School of Public and International Affairs.