The U.S. federal government is significantly underestimating the costs of carbon emissions because it is using a faulty analytical model, according to a study published in the Journal of Environmental Studies and Sciences.

Dr. Laurie Johnson, chief economist in the climate and clean air program at the Natural Resources Defense Council, who co-authored the study, “The Social Cost of Carbon in U.S. Regulatory Impact Analyses” with Chris Hope of Judge Business School, University of Cambridge, said the model used by the government is incomplete because it all but ignores the economic damages that climate change will inflict on future generations. The real benefits of carbon reduction range from 2.6 to more than 12 times higher than the government’s estimate, Johnson said.

Without properly accounting for pollution costs, natural gas appears to be the cheapest generation option for new power plants. However, the revised estimates show that, after incorporating the economic costs of carbon and other pollutants from fossil fuel generation, building new generation using wind and solar power would be more cost effective than either natural gas or coal.

Supplementary analysis shows even greater gains from replacing existing coal plants with new wind and solar photovoltaic technology, or with new fossil fuel generation that has carbon capture and storage technology.

The journal is available for download here.