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CHAPTER 14. MONETIZATION OF EMISSIONS REDUCTIONS BENEFITS 

TABLE OF CONTENTS

14.1 Introduction.................................................................................................................... 14-1

14.2 Approach........................................................................................................................ 14-1
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CHAPTER 14. MONETIZATION OF EMISSIONS REDUCTIONS BENEFITS

14.1 INTRODUCTION

 As part of its assessment of energy conservation standards, the U.S. Department of 

Energy (DOE) considers the estimated monetary benefits likely to result from the reduced 

emissions of carbon dioxide (CO2) and nitrogen oxides (NOX) that are expected to result from 

the energy efficiency standards levels considered for portable air conditioners (ACs). To make 

this calculation, similar to the calculation of the net present value (NPV) of consumer benefit, 

DOE considers the reduced emissions expected to result over the lifetime of the equipment

shipped in the projection period for each standard level. 

14.2 APPROACH

To estimate the monetary value of benefits resulting from reduced emissions of CO2, 

DOE plans to use the most current Social Cost of Carbon (SCC) values developed and/or agreed 

to by an interagency process. The SCC is intended to be a monetary measure of the incremental 

damage resulting from greenhouse gas (GHG) emissions, including, but not limited to, net 

agricultural productivity loss, human health effects, property damage from sea level rise, and 

changes in ecosystem services. Any effort to quantify and to monetize the harms associated with 

climate change will raise serious questions of science, economics, and ethics. But with full 

regard for the limits of both quantification and monetization, the SCC can be used to provide 

estimates of the social benefits of reductions in GHG emissions. 

The Interagency Working Group on Social Cost of Carbon released an update of its 

previous report in 2013.1 The most recent estimates of the SCC in 2015, expressed in 2013$, are

$12.0, $40.5, $62.4, and $119 per metric ton of CO2 avoided. For emissions reductions that occur 

in later years, these values grow in real terms over time. Additionally, the interagency group 

determined that a range of values from 7-percent to 23-percent should be used to adjust the 

global SCC to calculate domestic effects, although DOE will give preference to consideration of 

the global benefits of reducing CO2 emissions. To calculate a present value of the stream of 

monetary values, DOE will discount the values in each of the four cases using the discount rates 

that had been used to obtain the SCC values in each case.

DOE recognizes that scientific and economic knowledge continues to evolve rapidly as to 

the contribution of CO2 and other GHG to changes in the future global climate and the potential 

resulting damages to the world economy. Thus, these values are subject to change. 

DOE also estimates the potential monetary benefit of reduced NOX emissions resulting 

from the standard levels it considers. Estimates of monetary value for reducing NOX from 

stationary sources range from $476 to $4,893 per ton in 2013$.

2 DOE calculates monetary 

benefits using a medium value for NOX emissions of $2,684 per short ton (in 2013$), and real 

discount rates of 3-percent and 7-percent.
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REFERENCES

1. Interagency Working Group on Social Cost of Carbon, Technical Update of the Social 

Cost of Carbon for Regulatory Impact Analysis under Executive Order 12866, May 2013. 

United States Government. 

<http://www.whitehouse.gov/sites/default/files/omb/inforeg/social_cost_of_carbon_for_r

ia_2013_update.pdf>

2. Office of Management and Budget Office of Information and Regulatory Affairs, 2006 

Report to Congress on the Costs and Benefits of Federal Regulations and Unfunded 

Mandates on State, Local, and Tribal Entities, 2006. Washington, DC. 

<http://www.whitehouse.gov/omb/inforeg/2006_cb/2006_cb_final_report.pdf>