Acronym Glossary For Social Cost Of Carbon Proposals
Glossary for Social Cost of Carbon Reporting (Alphabetical Order)
This glossary provides key terms, acronyms, and formulas commonly used in the context of social cost of carbon (SCC) reporting and climate economics.
Carbon Dioxide (CO₂)
- Definition: A greenhouse gas that is a primary driver of global warming. It is emitted through activities such as burning fossil fuels, deforestation, and industrial processes.
- Units: Measured in tonnes (metric tons).
Carbon Dioxide Equivalent (CO₂e)
- Definition: A standard unit for measuring the global warming potential (GWP) of greenhouse gases relative to CO₂. It allows for comparison across different gases by converting them into an equivalent amount of CO₂ based on their GWP.
- Formula: $$ CO₂e = \text{Mass of Gas} \times \text{GWP of Gas} $$
- Units: Measured in tonnes or millions of tonnes (MtCO₂e).
Discount Rate
- Definition: A percentage used to calculate the present value of future costs and benefits. In SCC calculations, it reflects how much weight is placed on future climate damages compared to immediate costs.
- Formula:
$$
PV = \frac{FV}{(1 + r)^t}
$$
Where:
- $$ PV $$: Present value
- $$ FV $$: Future value
- $$ r $$: Discount rate
- $$ t $$: Time in years
Global Warming Potential (GWP)
- Definition: A measure of how much heat a greenhouse gas traps in the atmosphere over a specific time period (usually 100 years), relative to CO₂. For example, methane (CH₄) has a GWP of about 25, meaning it is 25 times more potent than CO₂ over the same period.
Greenhouse Gases (GHGs)
- Definition: Gases that trap heat in the Earth's atmosphere and contribute to global warming. Common GHGs include:
- Carbon dioxide (CO₂)
- Methane (CH₄)
- Nitrous oxide (N₂O)
- Fluorinated gases (e.g., HFCs, PFCs)
Marginal Abatement Cost (MAC)
- Definition: The cost of reducing one additional unit of greenhouse gas emissions. It is often used in cost-benefit analyses to compare mitigation strategies.
Millions of Tonnes of Carbon Dioxide Equivalent (MtCO₂e)
- Definition: A unit representing one million metric tons of CO₂ or its equivalent. It is commonly used for large-scale emissions reporting.
Net Present Value (NPV)
- Definition: The difference between the present value of benefits and costs over time. In SCC reporting, NPV helps evaluate the economic efficiency of climate policies.
- Formula:
$$
NPV = \sum_{t=0}^{T} \frac{B_t - C_t}{(1 + r)^t}
$$
Where:
- $$ B_t $$: Benefits in year $$ t $$
- $$ C_t $$: Costs in year $$ t $$
- $$ r $$: Discount rate
- $$ T $$: Time horizon
Social Cost of Carbon (SCC)
- Definition: The monetary estimate of the economic damages associated with emitting one additional tonne of CO₂ or its equivalent into the atmosphere. It accounts for impacts such as reduced agricultural productivity, health effects, and property damage from extreme weather.
- Formula:
$$
SCC = \frac{\partial W}{\partial C} \cdot \Delta E
$$
Where:
- $$ W $$: Economic welfare
- $$ C $$: Consumption
- $$ \Delta E $$: Incremental emissions
- Units: Typically expressed as dollars per tonne ($/tCO₂).
Tonnes of Carbon Dioxide Equivalent (tCO₂e)
- Definition: A unit measuring the emissions or reductions of greenhouse gases expressed as an equivalent amount of CO₂ based on their global warming potential.