Sustainable finance
Social Cost of Carbon (SCC)
Definition
The social cost of carbon is an estimate, in money, of the long-term global economic damage caused by emitting one additional tonne of carbon dioxide, computed with integrated assessment models that link emissions to warming, impacts and discounted future costs. The US EPA's 2023 update proposed a central value around USD 190 per tonne (at a 2% discount rate), up sharply from earlier official values; academic estimates vary widely with discount rate and damage assumptions.
References
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Overview
How it is used
The metric structures regulatory impact analysis, carbon pricing calibration, internal carbon prices in companies and finance ministries, and climate litigation on the costs of inaction.
Why it matters
The SCC translates climate change into the language policy machines actually process — cost-benefit arithmetic — and its level quietly decides the ambition of regulation.