Energy Economics Archives - An Economic View of the Environment

An Expression of Hope and Frustration re Climate Change Progress

In our podcast series, “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program,” I’ve had the pleasure of engaging in conversations over the past three years with a significant number of truly outstanding economists who have carried out important work in the realm of environmental, energy, and resource economics. My most recent guest is no exception, because I am joined by Geoffrey Heal, the Donald Waite III Professor of Social Enterprise at Columbia Business School, where he previously served as Senior Vice Dean, essentially the chief academic officer of the School.

More to the point, Geoff Heal is the author of 18 book and some 200 articles, a Fellow of the Econometric Society and the Association of Environmental and Resource Economists, where he served as President. And Geoff has also held – and continues to hold – important advisory and other positions with governmental, multi-governmental, and non-governmental organizations. I hope you will listen to our complete conversation here.

Among his writings is the pathbreaking 1979 book “Economic Theory and Exhaustible Resources,” co-authored with Partha Dasgupta, which is widely viewed as a seminal work in the field of resource and environmental economics. I asked Geoff how the book came about.

“Partha and I enjoyed collaborating, and I think it’s something that we just felt sort of intellectually compelled to write because we felt the time was right and we felt that we could make a contribution … particularly acting together,” Heal remarks. “But I don’t think we had any sense of the impact it would have, quite frankly. And I find students still reading it today, which is quite remarkable.”

Heal also addresses the question of how much the field of resource and environmental economics has changed during his time in academia over the past 40 years.

“The field has been transformed, hasn’t it? I mean, in the last decade or so, it’s been transformed into a much more empirical field than it was before that. What they call the ‘credibility revolution’ in economics has taken hold in environmental and resource economics,” he said. “We’ve got a vast number of papers using interesting novel data sets to look at climate impacts or regulatory impacts, and I think they’ve increased our understanding of the impact of environmental issues and environmental policies… considerably.”

Serving as a Coordinating Lead Author in Working Group III of the Intergovernmental Panel on Climate Change’s (IPCC) Fifth Assessment Report, which was finalized in 2014, Heal had a front row seat in the analysis of climate change policy. That said, he admits he is a bit frustrated with the pace of collective efforts to reduce greenhouse gas emissions and combat the effects of global climate change.

“I think that we know a lot about how to solve the climate problem. I think the technologies that we need to solve it are largely, perhaps not totally, but largely available… So, I think we know how to move to an electric grid which is powered entirely without fossil fuels,” he states. “We have a lot of the pieces available. We’re not just deploying them fast enough to reach the targets that we think we need to reach …so I find that frustrating. We’re very close to being able to achieve the goal, but we’re not actually doing what we need to do.”

When I ask Geoff Heal why current climate policies don’t seem to be accomplishing their goals, he cites politics.

“It’s the enormous influence of the fossil fuel industry and the sense of mostly some conservatives that this is a plot to increase the powers of the state. And of course, the Ukraine war has really been a major problem too, because it’s caused Europeans to move away from natural gas and in some cases back to coal, which is a terrible piece of backsliding, and it’s understandable under the circumstances, but it’s very regrettable from the climate perspective,” he says. “The Ukraine war, I hope, is a temporary phenomenon, whereas the power of the fossil fuel industry and the sort of conservative misapprehensions about what climate change is all about, I think are more real and more enduring.”

For this and much, much more, I encourage you to listen to this 47^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, Vasco McCoy Family Professor of Atmospheric Chemistry & Environmental Engineering at Harvard.
Michael Greenstone, Milton Friedman Distinguished Service Professor of Economics, University of Chicago.
Billy Pizer, Vice President for Research & Policy Engagement, Resources for the Future.
Daniel Bodansky, Regents’ Professor, Sandra Day O’Connor College of Law, Arizona State University.
Catherine Wolfram, Cora Jane Flood Professor of Business Administration, Haas School of Business, University of California, Berkeley, currently on leave at the Harvard Kennedy School.
James Stock, Harold Hitchings Burbank Professor of Political Economy, Harvard University.
Mary Nichols, long-time leader in California, U.S., and international climate change policy

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

Vision for Energy Transition

In our podcast series, “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program,” I’ve had the pleasure of engaging in conversations over the past three years with a number of truly outstanding economists who have carried out important work in the realm of environment, energy, and resource economics, and also served in important government positions, and my most recent podcast episode is no exception, because I’m joined by James Stock, the Harold Hitchings Burbank Professor of Political Economy at Harvard, where he is also Harvard’s inaugural Vice Provost for Climate and Sustainability, and the Director of the new Salata Institute for Climate and Sustainabilty. Also, Jim served as a Member of President Obama’s Council of Economic Advisers, where he focused on macroeconomics and energy & environmental policy.

In the podcast, we discuss the arc of Jim’s economic research, including on energy and climate change, his government service, his thoughts on the current state of climate change policy, as well as new his new role directing the Salata Institute at Harvard. You’ll find this and much more in the latest episode of “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program,” a podcast produced by the Harvard Environmental Economics Program. I hope you will listen to our complete conversation here.

It is striking that when talking about recent developments in U.S. climate policy, particularly over the past year, Jim Stock is really quite positive.

“The nation has made huge progress over [the course of] 2022 with the passage of the Inflation Reduction Act,” he said. “This is a huge piece of legislation. It’s really going to set the stage for driving substantial emission reductions, especially in the power sector. So that’s fantastic, [and] we all have to applaud that passage.”

Jim also commends the U.S. Congress for its bipartisan infrastructure bill which includes – among many other things – some $5 billion over five years to help states create a network of electric vehicle charging stations. But even with such significant pieces of legislation, Stock acknowledges that the most optimistic projection for emission reductions in 2040 relative to 2005 is only about 40 percent.

“So, it’s not even a glass half-full situation,” Stock remarks. “We’ve done this huge amount of work and we’ve passed this really important legislation, but we’re only at 40 percent reduction. There is so much more work that needs to be done, and I think a big part of that work is actually figuring out what the right agenda is.”

Part of the agenda, Stock says, is determining what actions need to be taken at all levels of government and business to achieve meaningful progress. But the potential for significant progress is possible, he argues, because of the tremendous technological advancements in recent years. Interestingly, Jim Stock thus explains the reliance in the Inflation Reduction Act on “carrots” (subsidies), as opposed to “sticks,” not just on the basis of political feasibility, but also on the reality of technological change.

“If you think back to 2005 … there really weren’t good alternatives to coal and natural gas in the power sector, and electric vehicles were ridiculously expensive, and we just didn’t have the technology. Today everything is totally different, where we are looking at technologies, whether they’re light duty vehicles or solar or wind, and now increasingly batteries, even grid storage batteries, are really becoming at a much better cost point and are actually beating out their fossil fuel alternatives. So now the question is, what can we do to spur that? At this point, subsidies can be very effective.”

I also ask Jim about his recent appointment as director of the Salata Institute, and he responds by noting that it reflects Harvard’s commitment to pursue pragmatic solutions to the climate problem and communicate them to policymakers and the general public.

“The mission of the Institute is to harness the strengths and abilities and powers of Harvard University and its scholars and students to press forward viable solutions and practical solutions in an impactful way in the real world,” he says, emphasizing that the challenge reaches across multiple disciplines. “It spans economics. It spans the sciences. It spans health and spans business, and so you need to have expertise drawing from across the different parts of the university and different fields to really be able to make progress.”

For this and much, much more, I encourage you to listen to this 45^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, Vasco McCoy Family Professor of Atmospheric Chemistry & Environmental Engineering at Harvard.
Michael Greenstone, Milton Friedman Distinguished Service Professor of Economics, University of Chicago.
Billy Pizer, Vice President for Research & Policy Engagement, Resources for the Future.
Daniel Bodansky, Regents’ Professor, Sandra Day O’Connor College of Law, Arizona State University.
Catherine Wolfram, Cora Jane Flood Professor of Business Administration, Haas School of Business, University of California, Berkeley, currently on leave at the Harvard Kennedy School.

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

A Soup-to-Nuts Initiative to Reduce Global Methane Emissions

The mission of a new university-wide initiative at Harvard University is to develop and drive effective national and international policies to reduce emissions of methane, an exceptionally important greenhouse gas, by tapping the intellectual diversity and expertise of 17 Harvard faculty members across four departments of the Faculty of Arts and Sciences plus five professional schools, blending science, engineering, economics, political science, law, business, and policy studies.

As Principal Investigator, I have the privilege and pleasure of leading this effort, which is funded by one of five inaugural grants for multi-disciplinary, solutions-focused initiatives tackling the challenges posed by global climate change, awarded by Harvard’s new Salata Institute for Climate and Sustainability, as announced on February 13^th. The Salata Institute got its start in June 2022, and is supported by a $200 million gift from Melanie and Jean Eric Salata, as was featured in the Institute’s opening symposium in October 2022. The other funded “research clusters” focus on: Climate Adaptation in the Gulf of Guinea; Strengthening Communities; Climate Adaptation in South Asia; and Corporate Net-Zero Targets.

Methane has a short atmospheric lifetime and very high global warming potential, compared with carbon dioxide (CO₂). Therefore, methane-emissions abatement can significantly reduce concentrations, temperature, and damages, particularly in the short term. This could help give the world time to “bend the curve” on CO₂ emissions, conduct research on carbon removal, and, more generally, implement longer-term strategies to mitigate and adapt to climate change.

The ambitious goal of our Climate Research Cluster – “An End-to-End, Collaborative Strategy to Reduce Global Methane Emissions: Science, Engineering, Economics, Business, Policy, Law, Politics, Communications, and Action” – is to achieve meaningful and sustained progress in methane emissions reductions through research and effective engagement with key stakeholders. More specifically, we seek to deliver information that will facilitate the design and implementation of new and existing methane-emission-reduction policies and programs. Within our scope will be the major sectors from which methane is emitted, including the oil and gas sector, landfills, and agriculture.

We will conduct research, policy outreach, and public engagement along eight tracks:

Building on satellite-based measurement and attribution of emissions;
Identifying technologies that can best reduce emissions;
Applying insights from economic research and decision science to design policies that can best contribute to methane-emissions reduction;
Identifying legal and regulatory opportunities for and constraints to methane emissions reduction;
Defining and addressing key political issues constraining attempts to reduce methane emissions;
Defining roles that business can play in reducing methane emissions;
Identifying key international and multilateral opportunities for and constraints to reducing methane emissions; and
Undertaking historical examination of economic activities that result in methane emissions.

At every stage, we will facilitate frequent interactions among researchers in the various tracks, to build on synergies, advance cross-disciplinary understanding, and catalyze action. Moreover, the team is engaging policymakers in government and key leaders in business, nongovernmental organizations, and international organizations to translate science into action. Such engagement will create two-way communications with policymakers and key constituencies and stakeholders, in a manner that translates into specific actions to reduce emissions.

The engagement process entails consultations with government officials and leading stakeholders at the international, regional, national, and sub-national levels. Faculty involved in this work are also focusing on translating their research into useful materials, such as videos and written briefs, which can be used by climate practitioners in the public and non-profit sectors to design and implement new emission-reduction strategies. Through targeted work with business leaders, this effort will seek to inform emissions reduction practices in target industries.

Our team brings together the work of seventeen different research groups from across Harvard, including four departments in the Faculty of Arts and Sciences (Earth and Planetary Science, Economics, Government, and History) and five professional schools (Harvard Business School, Harvard John A. Paulson School of Engineering and Applied Sciences, Harvard Kennedy School, Harvard Law School, and Harvard T.H. Chan School of Public Health). Thus, the faculty involved are approaching methane-emissions research from a range of disciplinary lenses, including those of science, engineering, economics, political science, law, business, history, and policy studies, producing a comprehensive approach. By communicating and collaborating across research teams, we intend for the whole to be greater than the sum of its parts, producing a holistic approach to policy solutions.

The participating faculty members include:

Joseph Aldy, Professor of the Practice of Public Policy (HKS)
Stephen Ansolabehere, Frank G. Thompson Professor of Government (FAS)
Jody Freeman, Archibald Cox Professor of Law (HLS)
Jeffry Frieden, Professor, Department of Government (FAS)
James Hammitt, Professor of Economics and Decision Sciences (HSPH)
Nathaniel Hendren, Professor of Economics (FAS)
John Holdren, Teresa and John Heinz Research Professor of Environmental Policy (HKS)
Daniel Jacob, Vasco McCoy Family Professor of Atmospheric Chemistry & Environmental Engineering (SEAS; FAS)
Carrie Jenks, Executive Director, Executive Director, Environmental and Energy Law Program (HLS)
Richard Lazarus, Howard and Katherine Aibel Professor of Law (HLS)
Meghan O’Sullivan, Jeane Kirkpatrick Professor of the Practice of International Affairs (HKS)
Forest Reinhardt, John D. Black Professor of Business Administration (HBS)
Robert Stavins, A.J. Meyer Professor of Energy and Economic Development (HKS)
Emma Rothschild, Jeremy and Jane Knowles Professor of History (FAS)
Dustin Tingley, Professor of Government (FAS)
Michael Toffel, Senator John Heinz Professor of Environmental Management (HBS)
Steven Wofsy, A.L. Rotch Professor of Atmospheric and Environmental Science (SEAS; FAS)

In addition, participating as an external collaborator is Mark Brownstein, Senior Vice President, Energy Transition, Environmental Defense Fund.

This is a true soup-to-nuts initiative, because we’re going from scientific detection and estimation of methane emissions all the way to public policy and communication with the public. We are excited to launch our activities; and as the work progresses, I will do my best to keep readers of this blog up to date.