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Coalition Comments re: SC-GHG Technical Support Document (June 21, 2021) 

06-22-2021 01:16 PM

EXECUTIVE SUMMARY

The Associations appreciate the opportunity to share our feedback on the SC-GHG estimates with the IWG. These comments build on past experience and comments, identify opportunities for improvements, and provide constructive recommendations.

Developing estimates of the potential future socio-economic costs of GHG emissions is a demanding task, and we commend the members of the IWG for taking on this important work. The Associations support appropriate consideration of GHG emissions as part of benefit-cost analyses for regulatory actions required under the E.O. 12866 process. At the same time, the need to address climate change does not hinge on any one metric.

Our members have been leaders in addressing climate change and driving reductions in U.S. GHG emissions, which have declined significantly over the past two decades through innovation and the changing marketplace. While serving as the engine for growth and jobs as we emerge from COVID-19, we are advancing shared goals for reducing GHG emissions. Some of the Associations also spearheaded advocacy efforts to find common ground and enact the first meaningful piece of climate legislation in well over a decade. Our partnerships with state, local, and tribal governments have likewise led to further emissions reductions.

We look to extend this partnership with the IWG. As our membership represents nearly every sector of the U.S. economy, we offer a perspective and expertise central to the IWG. The IWG has tremendous work ahead in meeting the remaining deliverables of E.O. 13990. Trying to resolve the complex mix of economic, scientific, and policy considerations inherent in calculating SC-GHG estimates in such a short period of time is a tall order. Each and every decision made could have profound implications for the estimates. For these reasons, it is critical the IWG start this work with a proper approach.

To that end, our comments, which are designed to provide the early input that the IWG requested, seek to provide constructive recommendations to ensure the IWG can create the necessary scientific foundation for its work. This includes suggestions that the IWG first establish a clear process. Indeed, before tackling the substantive scientific and technical issues, it is critical the IWG spell out its process for revising the SC-GHG estimates and its related tasks under E.O. 13990. This process should be guided by principles of fairness and transparency, providing very clear steps that all affected members of the public can easily understand, navigate, and engage— including business representatives, community leaders, and state, local, and tribal government officials.

Following these recommendations, our comments underscore the importance of the IWG’s work to educate and reinforce what the SC-GHG is and is not. Establishing these guardrails can ensure the estimates serve their intended purpose—for use in benefit-cost analyses for regulatory actions under E.O. 12866—and can avoid misapplication to areas for which it is not designed. Then, building on our recommendations for a clearly defined process and application, our comments provide recommendations for addressing substantive elements of the estimates. These recommendations largely flow from those of the NAS and longstanding OMB guidance.

The IWG has an excellent opportunity to establish sound SC-GHG estimates based on the best available, peer-reviewed science. We want to assist the IWG in this regard as this process continues. At this early stage of the process, we submit these comments with the following top- level recommendations:

  • The Process Should Be Transparent and Include Full Engagement and Participation by the Public. The IWG should set forth a transparent and robust process for implementing E.O. 13990 that includes full public engagement. First and foremost, we suggest that the IWG establish the “predictable” three-step process for revising the SC-GHG estimates recommended by the NAS. This should include notice and public comment on any draft revised estimates, without inappropriate limitations. The IWG should adequately respond to those comments before any draft estimates are finalized and applied to a regulatory action, which will be subject to the Administrative Procedure Act and other relevant statutes. The Associations recommend that the public notice and comment process extend to draft recommendations for the President due this September as well as additional recommendations due to the President in June 2022. We also suggest the IWG make its process, with as much detail as possible, publicly available and well understood. Absent a clearly articulated process and more information and clarity on the IWG and its work, the public may not be able to meaningfully comment on the estimates or engage the IWG as the law requires or the E.O. had envisioned.
  • All Estimates Should Undergo Proper Peer Review. Peer review is critical to securing public trust in scientific information, analysis, and its real-world application. Consistent with OMB Guidelines and the NAS recommendations for independent scientific review of the revised estimates, the Associations strongly encourage the IWG to establish a process that factors in time for a full, robust peer review of any draft revised estimates.
  • The IWG Should Explicitly Limit the SC-GHG Use Outside of Regulatory Impact Analyses. The IWG should be clear with the public as to what the SC-GHG is and is not. The original SCC estimates were developed for use in benefit-cost analyses for regulatory actions under E.O. 12866, where permissible under an agency’s statutory authority. The estimates are imprecise, uncertain, and not designed for other applications, such as project- level analyses, electricity planning and subsidy schemes. The IWG should explicitly inform potential users that the SC-GHG values likewise necessarily involve significant uncertainty and are not useful outside of the limited context of regulatory analyses authorized by the agency’s governing statutes and undertaken pursuant to the E.O. 12866 process.
  • The IWG Should Harmonize its Work and Clarify its Role with Related Administration Initiatives. Additional transparency measures, such as clarifying the role of the IWG in relation to Presidential and Administration activities, can provide additional improvements to understanding the IWG’s processes and procedures. We encourage the IWG to harmonize its activities with other relevant White House and agency activities, including those implementing President Biden’s recent memoranda on regulatory review and scientific integrity. The timelines for these efforts should be complementary, well sequenced, and communicated publicly, with robust stakeholder input so that the resulting guidance from each is consistent with the other.
  • IWG Should Improve Its Major Modeling Assumptions/Inputs and Presentation of the Estimates. The IWG should draw from the directions provided in the 2016 and 2017 NAS reports evaluating the integrated assessment modeling and related analysis of the previous SCC metrics. The IWG should provide guidance to agencies on how benefit-cost estimates using the new SC-GHG should be combined and displayed with other benefit and cost estimates using different discount rates, timeframes, and geographic regions in their regulatory analyses.
  • The IWG Should More Fully Expand its Approach to Addressing Uncertainty. The IWG should conduct a formal uncertainty analysis, consistent with the NAS recommendations. The IWG should also follow the NAS recommendations and OMB guidance to characterize the uncertainty in the SC-GHG estimates, as well as the integrated assessment models, more comprehensively, consistently, and completely.
  • The IWG Should Conduct a More Complete and Transparent Account of Intergenerational Issues. While the IWG states that a lower discount rate supports intergenerational equity, OMB Circular A-4 suggests that may not be appropriate. We recommend the IWG extend and square its intergenerational equity analysis with its discount rate arguments.
  • The IWG Should Follow the NAS Directions and Circular A-4 and Include An Estimate of Domestic Benefits. Consistent with the NAS, the IWG should develop its own modules to construct an analytic approach that provides a distinct analysis of the domestic costs and benefits. This squares fully with OMB’s Circular A-4 to report benefits for U.S. citizens—while separately reporting the global effects.

Looking ahead, the Associations hope to be of service to the IWG as it considers these comments, takes steps to further implement E.O. 13990, and guides agencies’ consideration of SC-GHG estimates in regulatory actions.

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