DevMit walks the talk on the social cost of carbon
25 March 2014

The Energy Research Centre’s DevMit Forum makes sure it pays the full social cost of carbon for its conference off-set
What is the real cost of a ton of carbon dioxide emitted into the atmosphere? Economists call this cost the “social cost of carbon” – a reflection of the total damage that an emitted ton does through accelerated climate change.
It is not an easy thing to calculate, most obviously because it is impossible to anticipate exactly what damage will be caused by climate change, when it will be caused and what the knock-on effects might be. We know climate change is, on balance, likely to be harmful to agriculture, coastal property and human health but in an interconnected global system it is also likely to cause changes – both positive and negative - that we do not know enough about and won’t anticipate. By way of illustration, roughly half any emitted ton will currently be re-absorbed by the ocean, plants and soils. But that could change if these carbon sinks become saturated or perturbed by climate change itself. As a result, putting a value to the net change over fifty years, and attributing it to an emitted ton of carbon dioxide today is not an exact science.
The difficulty and subjectivity of calculating the social cost of carbon has not deterred economists from trying: The Stern Review (US$85 per ton), the United States’ Environmental Protection Agency (US$12-US$61 per ton) and South Africa’s own Long Term Mitigation Strategy each draw on their respective estimates of the damage caused by an additional ton of emitted carbon dioxide.
The social cost of carbon is an important concept for the carbon market, which attempts to “internalize” that cost and get the emitter to pay. The carbon market, like economists, has not yet settled on what this cost should be and instead accommodates a spread of carbon prices. What is not disputed is that most carbon market transactions come in way below the estimates of the social cost of carbon, and as a result almost certainly fail to fully internalize the damage caused by greenhouse gas emissions. This is a key component of carbon market failure.
Recognition, then, is due to the people behind the Development and Mitigation Forum hosted at the University of Cape Town’s Graduate School of Business (27-29 January 2014). They not only chose to off-set the event’s emissions, but also honoured their own research and the strategic focus of the forum, by paying what has become a record price ($40/ ton) to the Credible Carbon registry for their off-sets, and internalizing the full cost of the event’s emissions.
The direct beneficiaries of this off-set are the twelve people that work in Imizamo Yethu informal settlement at the Hout Bay Recycling Co-operative, a business that collects waste from the settlement and surrounding businesses, sorts it and sells it on for recycling. The co-op contributes to local employment, a cleaner settlement and less plastic in the stormwater system. It also, as established in an independent audit, prevented the emission of nearly 300 tons of CO2-eq in 2012/13. That is something we all benefit from and, as the people at DevMit have reminded us, is something worth paying for.

Credible Carbon



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