A federal appeals court is upholding the Obama administration’s accounting of the costs of greenhouse gas emissions as applied to a Department of Energy (DOE) regulation.
In a unanimous decision late Monday, the Chicago-based 7th Circuit U.S. Court of Appeals rejected an industry-backed request to overturn a 2014 rule that set energy efficiency standards for commercial refrigerators.
In doing so, the court specifically backed the so-called social cost of carbon, President Obama’s administration-wide estimate of the costs per metric ton of carbon dioxide emitted into the atmosphere — currently $36.
The DOE used the carbon cost in its cost-benefit analysis, justifying the rule in part because of the amount of climate change regulators believe it would avoid.
It’s the first time a court has considered the legality of the carbon accounting, according to the Institute for Policy Integrity at New York University, which supports the policy and filed a brief backing the DOE in the case. Congressional Republicans, business interests and energy companies have criticized the accounting as bad math and improper forecasts.
The court said the carbon cost is entirely within the DOE’s discretion to use.
“To determine whether an energy conservation measure is appropriate under a cost‐benefit analysis, the expected reduction in environmental costs needs to be taken into account,” the judges wrote. “We have no doubt that Congress intended that DOE have the authority under the [Energy Policy and Conservation Act] to consider the reduction in SCC.”
They went on the say that the industry challengers were incorrect in stating that the carbon cost is “irredeemably flawed,” concluding instead that “DOE’s determination of SCC was neither arbitrary nor capricious.”
The Institute for Policy Integrity said the ruling is significant for including climate change in cost-benefit analyses.
“This ruling provides significant support for the social cost of carbon as a regulatory policy tool,” Denise Grab, a senior attorney with the institute, said in a statement.
“The judges rejected a host of arguments that are often used to challenge rules that reduce emissions. As a result of this ruling, other federal agencies will likely be more confident in using the social cost of carbon going forward.”
The Air-Conditioning, Heating and Refrigeration Institute, which led the industry litigation, said it was “disappointed” with the ruling.