Q. Which one of the following statements best describes the term 'Social Cost of Carbon'? (UPSC Prelims 2020)
Answer: long-term damage done by a tonne of emissions in a given year
Notes: The correct answer is [A] long-term damage done by a tonne of emissions in a given year. The Social Cost of Carbon (SCC) is a critical economic metric used to quantify the hidden costs of climate change.

• Definition (Statement A – Correct): The SCC represents the marginal cost of emitting one additional tonne of greenhouse gas (carbon dioxide) into the atmosphere. It calculates the discounted monetary value of all future damages caused by that specific tonne, including impacts on agricultural productivity, human health (heat-related illnesses/deaths), property damage from increased flooding, and changes in energy costs.
• Purpose in Policy: Governments use SCC to perform cost-benefit analyses for regulations. If a policy reduces carbon emissions, the "benefit" of that policy is calculated by multiplying the tonnes saved by the SCC.
• Alternative Options (Incorrect):
  • Statement B: Describes "Carbon Intensity" or energy dependency, rather than a specific cost metric.
  • Statement C: Refers to the "Adaptation Cost" or human toll of migration, which is only a subset of what SCC attempts to quantify.
  • Statement D: Refers to an "Individual Carbon Footprint," which measures the total amount of greenhouse gases generated by our actions, not the economic damage caused by them.

Why SCC is VariableThe value of SCC is not fixed; it fluctuates based on:

1. Discount Rates: How much we value future damages compared to costs today.
2. Climate Sensitivity: How much the temperature actually rises per unit of CO₂.
3. Economic Projections: Estimated future global GDP and population growth.