Carbon Valuation in UK Policy Appraisal: A Revised Approach Response of Government Economists to Peer Reviewers Comments

The UK Government recently reviewed its methodology to value greenhouse gas emissions in policy appraisal. The Review implemented a move away from the previous approach, which used estimates of marginal social damage costs (‘the social cost of carbon’) to value changes in emissions, to one in which valuation is based on the marginal abatement costs that will need to be incurred to meet specific emissions reduction targets. This change was also suggested by several peer reviewers of the 2007 Defra paper on the Shadow Price of Carbon (SPC).