Early on in its tenure, the Obama Administration created a measure to quantify the costs of carbon emissions, known as the "Social Cost of Carbon" (SCC). This standard allowed agencies to calculate the benefit of policies that reduced CO2 emissions.
The impacts of climate change are wide-ranging - rising sea levels, increased droughts, higher frequency of mosquito-borne illnesses and so on - and the SCC aimed to capture all of those impacts. After extensive analysis, the government determined that the SCC is currently about $40 for each emitted ton of carbon dioxide.
The Administration has used this figure to demonstrate monetary benefits of carbon reduction in the development of regulations governing power plants, vehicle emissions and appliance efficiency standards.
The controversial measure includes layers of assumptions about global weather trends, agricultural production patterns, and even how people will respond to changing climate. Some environmentalists argue that the number is ridiculously low and should be five times higher. Industry critics argue that the figure is too uncertain to provide a basis for regulation.
In 2014, a trade association challenged the use of the SCC in court. But in a ruling earlier this month, the 7th Circuit Court of Appeals ruled in favor of the Administration, strengthening the legal foundation for many environmental rules promulgated over the past several years. The SCC may not be precise, but given the consensus that climate change is having real effects on the globe, the court ruled that it was appropriate to use in policy-making.