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CHAPTER 16. MONETIZATION OF EMISSIONS REDUCTION BENEFITS 

TABLE OF CONTENTS

16.1 INTRODUCTION ......................................................................................................... 16-1

16.2 APPROACH .................................................................................................................. 16-1
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CHAPTER 16. MONETIZATION OF EMISSIONS REDUCTION BENEFITS 

16.1 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 standard levels considered for GSFL-IRL. 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 forecast period for each 

standard level. 

16.2 APPROACH 

In order 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. 

At this time, the most recent interagency estimates of the potential global benefits 

resulting from reduced CO2 emissions in 2015, expressed in 2011$, were $6.1, $25.4, $41.0, and 

$77.7 per metric ton 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. For NOx emissions, available estimates suggest a very wide 
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range of monetary values, ranging from $460 to $4,722 per ton in 2011$).a In accordance with 

OMB guidance, DOE conducts two calculations of the monetary benefits derived using each of 

the economic values used for NOx, one using a real discount rate of 3 percent and another using a 

real discount rate of 7 percent.b

DOE is investigating appropriate valuation of Hg emissions. Whether monetization of 

reduced Hg emissions will occur in this rulemaking is uncertain.

 

a

 For additional information, refer to U.S. 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, Washington, DC. b OMB, Circular A-4: Regulatory Analysis (Sept. 17, 2003).