by Judith Curry

The Social Cost of Carbon is on trial in Minnesota.

The backstory for this trial is given in an article Social cost of carbon gets its day in court in Minn. Excerpts:

Required by state law to establish a dollar value for the environmental damages caused by power plants carbon dioxide emissions, state utility regulators sent the contentious issue to an administrative law judge.

If it plays out like it has so far, the case will pit advocacy groups that successfully petitioned the Minnesota Public Utilities Commission to refresh outdated values for damages caused by CO2 emissions against utilities and big power users, which will try to poke holes in the methodology used by the federal interagency work group and experts.

The federal social cost of carbon already has been used in 60 federal proceedings, including the regulatory impact analysis in EPA’s Clean Power Plan released June 2, Grant said. And an Aug. 25 Government Accountability Office report concluded that the interagency working group established by the Obama administration to estimate the social cost of carbon had used an open approach that relied on consensus-based decisions (Greenwire, Aug. 26).

“We don’t have a better approach to coming up with a value than the one in front of you right now,” he told commissioners. “It’s not as if this isn’t an untested value.”

Opponents disagreed. They argued that the commission’s original order in February to update power plant pollutant externality values indicated that a new CO2 damage value would be would play out in a contested case before an administrative judge.

The CO2 externality value represents a dollar estimate of the incremental damage caused by each ton of carbon emitted from a power plant stack.

A law enacted by the state during the 1990s requires the PUC to establish externality values for CO2 and other power plant pollutants to help guide utility planning decisions. The commission in 1997 adopted a range of values, from 42 cents to $4.37 per ton of CO2. They have been updated annually for inflation since 2001, but there has been no further effort to quantify the damages caused by carbon pollution from power plants.

Clean energy advocates last year petitioned the PUC to refresh the environmental damage values for CO2 and three other criteria pollutants. The commission agreed, and ruled that the 17-year-old CO2 value was no longer scientifically supportable — a point commissioners were reminded of yesterday.

While environmental groups pushed for the PUC to include in the value damages caused by other greenhouse gases, coal producer Peabody Energy Corp. said regulators should factor in benefits of CO2 emissions.

In the end, the Department of Commerce recommended that the PUC adopt the federal social cost of carbon — a decision that would put a price of about $36 on each ton of CO2 emitted from Minnesota power plants in 2015.

But commissioners said putting the federal CO2 value on trial would build acceptance and provide transparency.

“I don’t want to find the errors later. I want to find the errors now,” Commissioner David Boyd said. “This is a very significant decision.”

Another article with further information: Coal giant Peabody Energy enters Minnesota Pollution Debate.

The Docket

The Minnesota Department of Commerce has an e-file with all of the documents filed in the case [link]. This is an enormously complicated case, with a large number of organizations involved on each side, and a very large number of witnesses.

The burden of proof in this case is described in this document.

Here I focus on the written testimony, rebuttals, and surrebuttals of the following individuals related to climate science and its impacts:

Richard Lindzen [testimony] [rebuttal] [surrebuttal]

Roy Spencer [testimony] [rebuttal]

Andrew Dessler [rebuttal] [surrebuttal]

John Abraham [rebuttal]

Note: not all of the apparent files are on the MN web site. John Abraham’s surrebutal (referenced but doesn’t seem to be available), and Lindzen’s testimony isn’t available (I obtained a copy from Lindzen). Also, I saw Pat Michael’s name mentioned somewhere in the docket, but couldn’t find any testimony from him on the web site.

On the social cost of carbon, for background reference see this document: Technical Support describing the Interagency Working Group on Social Cost of Carbon [link]. The testimony and rebuttals from the following individuals are of interest:

Richard Tol [rebuttal]

Anne Smith [testimony] [rebuttal] [surrebuttal]

The process seems to be this: the individuals testifying for energy companies/industries (who brought the lawsuit) have the opportunity to testify. Then the individuals testifying for green groups or the utilities have the opportunity to rebut the the testimony. Then the other side rebuts, and then there is a round of surrebuttals. So this is really quite an interesting exchange, covering much territory in the climate change debate.

The climate science witnesses focused on a range of topics; of course the most relevant issue to the trial is climate sensitivity. I don’t think any of the climate scientist witnesses exactly ‘nailed it’, but it is certainly an interesting exchange.

With regards to the economists (Tol and Smith), I found their testimony to be very informative. I didn’t attempt to follow the exchange from economists on both sides of this.

The trial

Apparently, the trial started last week. Roy Spencer wrote a blog post on his day at the trial [link]:

This was the first expert testimony I have provided other than the several times I have testified in Congress. Congressional testimony is much more free-wheeling…more like a show for entertainment value and political posturing.

The Minnesota hearing was more like what you have seen on TV, with objections being made, sustained, and overruled. There were even accusations of “badgering the witness”.

Scientists providing 5-minute opening statements along with me were Dick Lindzen and Will Happer. Lindzen mainly addressed climate sensitivity, Happer argued that CO2 emissions were actually a benefit, and I emphasized that the IPCC models used for the SCC calculations were demonstrably biased in their global warming projections.

As I recall, Happer received a minor question on cross-examination, while Lindzen was pressed on one of his claims regarding climate sensitivity, which he was forced to clarify. All five lawyers declined to ask me any questions on cross examination.

All of us provided written testimony well in advance of the hearing, which was responded to with rebuttal testimony from Andy Dessler and John Abraham. We also provided written rebuttal testimony in response toDessler’s and Abraham’s original written testimony. Another round of surrebuttal testimony then ensued. I believe that Dessler and Abraham provided opening statements this week, but I haven’t heard how that went.

No matter which way the judge rules, I hear the ruling will likely be appealed. Then, no matter what the final ruling is, the Minnesota Public Utilities Commission can probably just do what they want to do, anyway. I believe that the Commission simply asked the judge to help them with the process. I will admit that legal issues sometimes confuse me, so people are free to correct me on any of this I got wrong.

I suspect we are going to see more state-level challenges to the “social cost of carbon”, which is basically addressing the unintended “negative externality” consequences of our use of carbon-based fuels.

My suspicion is that we are in for years of debate and legal challenges on this issue. It seems like the social cost of carbon is an unusual case for the environmentalists to make, when the supposed damages caused by CO2 emissions are not really demonstrable, and future damages are largely theoretical.

JC comment: Its a pity they didn’t have someone like Steve Koonin doing the cross-examination (recall Koonin led the questioning at the APS workshop). The written rebuttals/surrebuttals, combined with penetrating cross-examination on the stand, would have been extremely interesting.

JC’s take on the social cost of carbon issue

I’ve written two previous blog posts on the topic of the social cost of carbon, specifically related to the report by the US Interagency Working Group (IWG):

My previous post Climate sensitivity: lopping off the fat tail is also relevant here.

It is a propos to show a table that I created for a recent version of my Uncertainty Monster talk:

Note: the 6.0 value from AR5 is actually 90th percentile.

The IWG published its response to comments in July 2015. With respect to criticisms related to climate sensitivity, the IWG stated:

“At the time the 2013 SCC update was released, the most authoritative statement about ECS [equilibrium climate sensitivity] appeared in the IPCC’s AR4. Since that time, as several commenters noted, the IPCC issued a Fifth Assessment Report that updated its discussion of the likely range of climate sensitivity compared to AR4. The new assessment reduced the low end of the assessed likely range (high confidence) from 2°C to 1.5°C, but retained the high end of the range at 4.5°C. . . . The IWG will continue to follow and evaluate the latest science on the equilibrium climate sensitivity and seek external expert advice on the technical merits and challenges of potential approaches prior to updating the ECS distribution in future revisions to the SCC estimates, including (but not limited to) using the AR5 climate sensitivity distribution for the next update of the SCC.”

On July 23, 2015, Patrick Michaels presented highly relevant testimony to the House Committee on Natural Resources. Excerpts:

“In May 2013, the Interagency Working Group produced an updated SCC value by incorporating revisions to the underlying three Integrated Assessment Models (IAMs) used by the IWG in its initial 2010 SCC determination. But, at that time, the IWG did not update the equilibrium climate sensitivity (ECS) employed in the IAMs. This was not done, despite there having been, since January 1, 2011, at least 14 new studies and 20 experiments (involving more than 45 researchers) examining the ECS, each lowering the best estimate and tightening the error distribution about that estimate. Instead, the IWG wrote in its 2013 report: “It does not revisit other interagency modeling decisions (e.g., with regard to the discount rate, reference case socioeconomic and emission scenarios, or equilibrium climate sensitivity).”

“Clearly, the IWG’s assessment of the low end of the probability density function that best describes the current level of scientific understanding of the climate sensitivity is incorrect and indefensible. But even more influential in the SCC determination is the upper bound (i.e., 95th percentile) of the ECS probability distribution. Apart from not even being consistent with the AR4, now, more than five years hence, the scientific literature tells a completely different story. And this is very significant and important difference because the high end of the ECS distribution has a large impact on the SCC determination—a fact frequently commented on by the IWG2010.”

It is COMPLETELY INDEFENSIBLE for the IWG to continue to use such high values of climate sensitivity, which are even higher than those from AR4 and AR5.

Our understanding of climate sensitivity is arguably bi-modal, with separate modes for observational versus climate model determinations. It should be a top priority to understand these differences, to clarify the situation regarding aerosol forcing, and have climate models and energy balance models use realistic values of aerosol forcing in determining climate sensitivity.

Even with these substantial uncertainties in climate sensitivity, this is but one of numerous highly uncertain elements in integrated assessment models.

A good summary is given in Anne Smith’s testimony of the uncertainties and assumptions made in the calculations of the social cost of carbon. Her concluding statement:

In conclusion, however, I believe that the primary insight that one should develop from a close reading of this report is that the SCC estimates are unreliable as a basis for making public policy for how to manage climate risks. Alternative approaches, such as avoided cost of control, may be at this time more reliable and less subject to undue speculation.

It is relevant to mention this new paper [link] that examines the uncertainties in integrated assessment models, and finds probability of CAGW “fat tails” is quite unlikely.

And finally, Richard Tol sums it up with the last statement in his rebuttal:

In sum, the causal chain from carbon dioxide emission to the social cost of carbon is long, complex and contingent on human decisions that are at least partly unrelated to climate policy. The social cost of carbon is, at least in part, also the social cost of underinvestment in infectious diseases, the social cost of institutional failures in coastal countries, and so on.

Using these models to dictate energy policy in a quantitative way, which the state of Minnesota is doing, seems completely indefensible to me.

JC reflections

As I understand it, this hearing will continue for some time, it will be very interesting to see how this is adjudicated, although according to Roy Spencer both sides will appeal whatever the decision. But I suspect that this case is a harbinger of things to come – we will see more of these kinds of cases. Lukas Bergkamp has another interesting essay – Courts should not rule on scientific debates in climate science.

I would also like to remark on the researchers (university faculty members) that testified in this case. Presumably each of them was paid for their testimony and for travel expenses (it looks like a heck of a lot of work) — on one side by Peabody Energy or whoever, and on the other side by the Clean Energy groups. Does anyone think that this pay influenced anyone’s testimony? Does anyone think that the fact that these scientists testified for one side or the other, will influence their subsequent research? Even if the pay influenced the testimony, would this be a problem? Isn’t the U.S. justice system based around each side making its best case, and the adjudication (by jury or by judges) decides which side has the strongest case?

I suspect that each of these scientists testified based on a confluence of interest with the organization that asked them to testify. In the case of Spencer and Lindzen, they have a clear interest in making their arguments about low climate sensitivity. In the case of Abraham and Dessler, they have a clear interest in defending the IPCC consensus. Whether any of these individuals have policy preferences regarding Minnesota energy policy, I have no idea (although John Abraham lives and works in Minnesota).

Does anyone think that such testimony is biased by this funding, or that the funding biases future research? If so, why is funding from Peabody better or worse than funding from a green advocacy group? Climate scientists testifying in an actual court trial (as opposed to Congressional testimony), is something relatively unusual, as far as I know. Anyone know of other examples?

The RICO20 implications of scientists testifying for big energy/industry – ‘fossil fuel industry and their supporters‘ – highlights the insanity of persecuting Lindzen, Spencer, Happer, Tol, etc. for engaging with the fossil fuel industry, apparently receiving funding from them, and providing scientific arguments that the fossil fuel industry finds useful for their interests in a court case.

And finally, does anyone on either side of the debate think that the IWG should NOT be called out for continuing to use indefensible values of climate sensitivity? Does anyone think that the financial benefits/harms of CO2 is settled science? Does anyone think that the substantial uncertainties and the nature of the assumptions made in calculations of the social cost of carbon should not be called out to be debated public on this issue?

Hopefully this trial will help point U.S. energy policy in a more sensible direction, that does not rely on highly uncertain and subjective quantitative estimates of the social cost of carbon.