Canyon Fuel first coal company to calculate the social cost of carbon

Canyon Fuel has agreed to calculate its Social Cost of Carbon (SCC) as part of a settlement agreement. This will be the first time a coal company has voluntarily agreed to calculate its climate damages.

The deal, which also includes the state of Utah and the US Department of the Interior, would see environmentalists drop their lawsuit challenging the expansion of a coal mine on federal land, as part of the agreement.

The SCC is a metric used to quantify the costs and benefits of emitting one additional tonne of carbon dioxide and is being used with increasing frequency to measure the damage done by industrial operations. SCC is calculated in monetary terms and incorporates forecasted future costs, and the sum can then be used to inform decision-making.

The UK government now uses a “carbon value”, measured in pounds per tonne of carbon dioxide equivalent, to inform policy decisions. SCC is also used to determine government climate regulations in the US and Canada.

According to the Organisation for Economic Co-operation and Development – the Social Cost of Carbon is usually estimated as the net present value of climate change impacts over the next 100 years (or longer) of one additional tonne of carbon emitted to the atmosphere today. It is the marginal global damage costs of carbon emissions.

The federal lawsuit comes as the Biden administration considers a hike in the underlying numbers used to determine SCC in US policy considerations. Under the current system, the cost of emitting one tonne of carbon dioxide stands at $51 but may rise to $190 per tonne, meaning that companies would have a higher SCC from the same operations.

The lawsuit was bought forward in 2015 by WildEarth Guardians and the Grand Canyon Trust, in which they argued that the US government violated the National Environmental Policy Act when issuing a lease to expand the Skyline Mine in the Manti-La Sal National Forest. It claims that the 2002 environmental analysis used to justify the mine failed to account for the climate damages of the mine’s expansion.

In addition to calculating the social cost of the mine’s expansion Canyon Fuel, a subsidiary of Wolverine Fuels, will be required to relinquish leases with nine million tons of coal at its Sufco and Dugout Canyon mines. The company also agreed to use the $51 per tonne of carbon dioxide value to calculate the SCC of its operations.