Leading Academic Economist Offers Optimism about Climate Change Policy

Over the past three years, I’ve had the pleasure of engaging in podcast conversations with some truly outstanding scholars who have carried out important research in the realm of environment, energy, and resource economics, and recently was no exception, when my guest was Michael Greenstone, the Milton Friedman Distinguished Service Professor of Economics at the University of Chicago.  You can listen to our conversation in the latest episode of my podcast, “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program.”  Our full conversation is here.

In our conversation, Michael Greenstone talks about his graduate work in economics at Princeton, the path that took him to faculty positions at the University of Chicago, MIT, and then back to Chicago, as well as his time in government during the Obama administration at the Council of Economic Advisers.  In the process, Michael identifies both some high points and low points of his time in government, as well as some of the changes he has seen over the past twenty years in environmental economics scholarship.

When Michael reflects on his time serving as chief economist at the White House Council of Economic Advisers, he describes his work on regulatory policy, in particular trying to find a way to estimate in economic terms the benefits of reducing CO₂ emissions.

“So, I had this idea, why shouldn’t the government have a coherent and uniform social cost of carbon? And I suggested it to [then Administrator of the White House Office of Information and Regulatory Affairs] Cass Sunstein at lunch one day, and we decided to set off on this journey to set a social cost of carbon for the U.S. government,” he remarks. “And we co-ran an inter-agency process and one thing led to another, and there was a U.S. government social cost of carbon at the end.”

Related to this, in recent years Michael helped launch and now co-leads the Climate Impact Lab at the University of Chicago, which is building a comprehensive body of research quantifying the impacts of climate change.

Interestingly, when I ask him to comment on the explosion of youth climate activism in recent years, although Michael voices some disappointment with young activists who have tried to turn climate change into a moral issue rather than an environmental, technological, and economic one, he notes that the energy and passion that young people have brought to the climate debate has been very effective in making others pay attention to it.

“These youth movements have been incredibly successful, in my view, in raising political consciousness in ways … that cold blooded cost benefit analysis somehow [doesn’t] seem to hit the mark. And I give them a lot of credit for that,” he says. “A second reaction is, I do not think that the right way to confront climate change is by treating it as a moral issue, or as an issue that is beyond economics. I think it’s a really interesting economic question that has all kinds of subtleties, but I do not think that the tools of cost benefit analysis and or economic analysis are inappropriate for climate change.”

Having worked extensively and intensively on climate change in both the scholarly and policy worlds, he voices considerable optimism about where we are now, and what the future is likely to bring.  He points to two trends he feels are most critical for building momentum in climate change policy debates. The first, he says, is that opportunities to leverage technology to reduce CO₂ emissions are becoming more realistic as the costs of alternative energy sources continue to fall compared with the costs of fossil fuel sources of energy. The second, he says, is that people are beginning to experience in real time the impacts of climate change.

“I do think a real game changer has been that we can see the fingerprints of climate change now, in ways that we couldn’t 10 or 15 years ago,” he says. “I think the two things that we can see – the fingerprints and that it’s not as economically challenging a bar to jump over – have come together in a reinforcing way, and helped with the youth activism [by underscoring the fact that] we don’t have only infeasible responses.”

For this and much more, I hope you will listen to this 40^th episode of the Environmental Insights series, with future episodes scheduled to drop each month.  You can find a transcript of our conversation at the website of the Harvard Environmental Economics Program.  Previous episodes have featured conversations with:

• Gina McCarthy, former Administrator of the U.S. Environmental Protection Agency
• Nick Stern of the London School of Economics discussing his career, British politics, and efforts to combat climate change
• Andrei Marcu, founder and executive director of the European Roundtable on Climate Change and Sustainable Transition
• Paul Watkinson, Chair of the Subsidiary Body for Scientific and Technological Advice (SBSTA) within the United Nations Framework Convention on Climate Change
• Jos Delbeke, professor at the European University Institute in Florence and at the KU Leuven in Belgium, and formerly Director-General of the European Commission’s DG Climate Action
• David Keith, professor at Harvard and a leading authority on geoengineering
• Joe Aldy, professor of the practice of public policy at Harvard Kennedy School, with considerable experience working on climate change policy issues in the U.S. government
• Scott Barrett,  professor of natural resource economics at Columbia University, and an authority on infectious disease policy
• Rebecca Henderson, John and Natty McArthur University Professor at Harvard University, and founding co-director of the Business and Environment Initiative at Harvard Business School.
• Sue Biniaz, who was the lead climate lawyer and a lead climate negotiator for the United States from 1989 until early 2017.
• Richard Schmalensee, the Howard W. Johnson Professor of Management, and Professor of Economics Emeritus at the Massachusetts Institute of Technology.
• Kelley Kizier, Associate Vice President for International Climate at the Environmental Defense Fund.
• David Hone, Chief Climate Change Adviser, Shell International.
• Vicky Bailey, 30 years of experience in corporate and government positions in the energy sector. 
• David Victor, professor of international relations at the University of California, San Diego.
• Lisa Friedman, reporter on the climate desk at the The New York Times.
• Coral Davenport, who covers energy and environmental policy for The New York Times from Washington.
• Spencer Dale, BP Group Chief Economist.
• Richard Revesz, professor at the NYU School of Law.
• Daniel Esty, Hillhouse Professor of Environment and Law at Yale University. 
• William Hogan, Raymond Plank Research Professor of Global Energy Policy at Harvard.
• Jody Freeman, Archibald Cox Professor of Law at Harvard Law School.
• John Graham, Dean Emeritus, Paul O’Neill School of Public and Environmental Affairs, Indiana University.
• Gernot Wagner, Clinical Associate Professor at New York University.
• John Holdren, Research Professor, Harvard Kennedy School.
• Larry Goulder, Shuzo Nishihara Professor of Environmental and Resource Economics, Stanford University.
• Suzi Kerr, Chief Economist, Environmental Defense Fund.
• Sheila Olmstead, Professor of Public Affairs, LBJ School of Public Affairs, University of Texas, Austin.
• Robert Pindyck, Bank of Tokyo-Mitsubishi Professor of Economics and Finance, MIT Sloan School of Management.
• Gilbert Metcalf, Professor of Economics, Tufts University.
• Navroz Dubash, Professor, Centre for Policy Research, New Delhi.
• Paul Joskow, Elizabeth and James Killian Professor of Economics emeritus, MIT.
• Maureen Cropper, Distinguished University Professor, University of Maryland.
• Orley Ashenfelter, the Joseph Douglas Green 1895 Professor of Economics, Princeton University.
• Jonathan Wiener, the William and Thomas Perkins Professor of Law, Duke Law School.
• Lori Bennear, the Juli Plant Grainger Associate Professor of Energy Economics and Policy, Nicholas School of the Environment, Duke University.
• Daniel Yergin, founder of Cambridge Energy Research Associates, and now Vice Chair of S&P Global.
• Jeffrey Holmstead, who leads the Environmental Strategies Group at Bracewell in Washington, DC.
• Daniel Jacob, the Vasco McCoy Family Professor of Atmospheric Chemistry & Environmental Engineering at Harvard.

“Environmental Insights” is hosted on SoundCloud, and is also available on iTunes, Pocket Casts, Spotify, and Stitcher.