Damage function uncertainty increases the social cost of methane and nitrous oxide

Assistant Professor Wang Tianpeng and Professor Teng Fei from the Institute of Energy, Environment and Economy, Tsinghua University have constructed a multi-model evaluation framework, which shows that the estimated social costs of CH₄ and N₂O can be up to 2-50 times higher than previous literature results when considering different loss functions. This reflects that the climate damage caused by these substances may be much higher than expected. On September 14th, the relevant paper was published online in Nature Climate Change with the title "Damage function uncertainty increases the social cost of methane and nitrous oxide."

Abstract

The social cost of greenhouse gases (SC-GHGs), indicating marginal damage from GHG emissions, is a valuable and informative metric for policymaking. However, existing social cost estimates for methane (SC-CH₄) and nitrous oxide (SC-N₂O) have not kept pace with the latest scientific findings in damage functions, climate models and socioeconomic projections. We applied a multimodel assessment framework, incorporating recent advances that are neglected by past studies to re-estimate SC-CH₄ and SC-N₂O. Models of gross domestic product (GDP) level effects reveal US$2,900 per t-CH₄ (in 2020 US dollars) for SC-CH₄ and US$49,600 per t-N₂O for SC-N₂O for the emissions year 2020, indicating a 2-fold increase over previous estimates. Models incorporating GDP growth effects over time present a further 15–25-fold increase in estimates, dominating the uncertainty in social cost estimates. Although substantial uncertainty remains, our findings suggest greater benefits from CH₄ and N₂O mitigation policies compared with those of previous studies.

Cite this article

Wang, T., Teng, F. Damage function uncertainty increases the social cost of methane and nitrous oxide. Nat. Clim. Chang. (2023). https://doi.org/10.1038/s41558-023-01803-4