Natural Resource Economics Archives - Page 6 of 17 - An Economic View of the Environment

Is the Oil-and-Gas Industry Undergoing a Transformation?

It is probably fair to say that there are some environmental advocates, at least in the United States, who consider the oil and gas industry to be the moral equivalent of tobacco companies, that is, simply out to maximize profits, without any consideration given to the broader, social implications of the use of their products. Furthermore, some such critics may paint the oil and gas sector with a broad brush –ignoring ways in which the various companies may differ from one another.

My guest in the latest episode of my podcast, released today, Spencer Dale, and – more to the point – his employer, may provide a counter-example. Spencer is Group Chief Economist of BP, the multinational oil & gas company based in London, where he leads BP’s global economics team. As readers of this blog will know, in these podcasts – “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program – I talk with well-informed people from academia, government, industry, and NGOs. Spencer Dale has had very significant experience in two of these realms – government and industry.

In his current role at BP, Spencer Dale manages the company’s global economics team, and is responsible for advising the board and executive team on economic drivers and trends in global energy. He previously served in a number of roles at the Bank of England, including as executive director for financial stability, a member of the Financial Policy Committee, and ultimately Chief Economist. You can hear our complete conversation here.

The swift and sharp decline in oil demand experienced in recent months, driven by the global coronavirus pandemic and policy responses to it, has had profound impacts on the oil and gas industry, due to falling prices and reduced revenues. But Spencer Dale notes that it may also create opportunities for companies and countries to support the transition to cleaner energy sources as they strive toward net-zero emissions in the coming decades.

“I think the pandemic has highlighted the fragility of the planet and the unsustainable way in which we are living on the planet today. Moreover, the scale of the government interventions we are seeing around the world give us an unprecedented opportunity to use those government interventions to boost the economy in such a way that the growth we see going forward is greener and more sustainable than it otherwise would have been,” he says.

Spencer predicts that the COVID-19 pandemic will continue to take its toll on oil demand as people and businesses conclude that they and their employees can work just as productively at home as in an office, and can save considerable amounts of time and money via reduced business travel.

“I think the far greater impact on oil demand is not through these behavioral changes, however, it’s through the economic impacts,” he says. “Hopefully the pandemic will be brought under control within the next year or so, but the economic scars from the pandemic are likely to last far longer, and in particular, those economic scars are likely to fall disproportionally on emerging markets around the world.”

Dale says he is proud of the leadership role BP is playing in the industry by pledging to reach net-zero emissions by 2050, and by shifting its business profile away from being an “international oil company” toward being an “integrated energy company.”

“The nature of energy demand is likely to shift materially over the next 20 to 30 years, away from fossil fuels,” he observes. “And that’s to be replaced by very significant growth in renewable energy led by wind and solar power, and so we want to pivot away from those fossil fuels into a wider energy company.”

Dale also acknowledges the difficult challenge facing policymakers as they try to revive their economies and address the threats posed by climate change.

“If you ask governments today, with levels of unemployment…going back to levels not seen since many decades, if you ask them to trade off near-term jobs versus long-term climate issues, that’s a hard challenge,” he states. “But there doesn’t need to be a tradeoff between those two. You can design smart policies which are both good for long-run sustainability and also generate jobs in the near-term.”

All of this and more is found in the latest episode of “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program.” I hope you will listen to this latest discussion here. You can find a complete transcript of our conversation at the website of the Harvard Environmental Economics Program.

My conversation with Spencer Dale is the 18th episode in the Environmental Insights series, with future episodes scheduled to drop each month. 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 the Washington bureau.

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

Four Years Have Passed, and It’s Been Even Worse than I Anticipated

About four years ago, on October 9, 2016, one month prior to the U.S. Presidential election, I published a heart-felt and in some ways painful essay at this blog in which after 30 years of political privacy in my professional life — including, importantly, my teaching — I found it necessary to come out of the closet of political neutrality to condemn in no uncertain terms the threat which I believed one of the candidates, Donald Trump, posed to the United States and the world if he were elected President.

Sadly, four years later, all of my concerns have been validated, plus one threat that I had not thought about, namely that the Trump administration would damage American democracy in ways big and small, and that as the November 2020 election approached, President Trump himself would pose the greatest threat imaginable to the sanctity of the electoral process and thereby to the credibility and even the existence of our democratic form of government.

Of course, within the realm of environmental policy, the damages done to U.S. policy over the past four years are legendary, but not really a surprise. Indeed, see my essay at this blog from one week after the 2016 election (“What Does the Trump Victory Mean for Climate Change Policy?”, November 10, 2016), as well as dozens of essays I’ve posted since then.

So, rather than review the dismal record of the Trump administration over the past four years, I thought it might be more interesting for you — as it has been for me — to offer my essay of warning from four years ago.

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

This is Not a Time for Political Neutrality

October 9, 2016

I have been writing essays at this blog for over seven years, and throughout that time, through perhaps 100 more-or-less-monthly essays, I have tried very hard to keep politics at bay, and to view each and every issue I discussed from a politically neutral, yet analytical economic perspective. But I find it difficult to remain neutral in the current U.S. Presidential election cycle.

Since before the summer, I had resolved to write today’s essay, but I decided to wait until one month before the November U.S. election to post it, simply because I thought this was the point in time when people would be paying most attention to the upcoming election but would not yet have completely made up their minds. In particular, I want to address this message to people who – like me – are political independents.

Background

I have been teaching at Harvard for close to 30 years, and every year I take pride in the fact that at the conclusion of my 13-week course in environmental economics and policy, my students cannot say – on the basis of what I have said in lectures or what they have read in the assigned readings – whether I am a tree-hugging environmental advocate from the political left, or an industry apologist from the political right (actually, I am neither, although hostile voices in the blogosphere have sometimes wanted to peg me as being on the opposite of whatever extreme they occupy).

Likewise, I have remained bipartisan in politics, ever since I directed Project 88 more than 25 years ago for the bipartisan coalition of former Democratic Senator Timothy Wirth and the late Republican Senator John Heinz. Starting with the White House of President George H. W. Bush, and continuing with every administration – of both political parties – since then, I have worked on substantive matters of environmental and energy policy, in some cases closely and intensively, and in some cases indirectly and on the periphery.

Such professional bipartisanship and political neutrality have been important to me, and have been consistent with my voter registration, as I am officially registered as an independent (in Massachusetts, this goes by the designation of “unenrolled”).

So, over the years, I have voted for Democrats and I have voted for Republicans, for various offices ranging from the Mayor of my town to the President of my country. And in each and every one of those elections, although I preferred one of the two principal candidates (sometimes very strongly), in no case did I fear for the future of my community, my state, or my country if my candidate lost and the other candidate won.

This time is different. In all honesty, I fear for the United States and I fear for the world if Donald Trump is elected President. The time for my professional bipartisanship and political neutrality has ended – at least temporarily. And so I apologize to my readers for using this platform – An Economic View of the Environment – to express my broader, personal views on the upcoming election. This is a departure that I hope never again will be necessary.

I am not part of a campaign, and I am not recommending a candidate. Rather, I am recommending that everyone vote! Of course, today’s essay, like all my posts at this blog, expresses only my personal views, and is not written on behalf of my employer, nor in my capacity as a faculty member of the Harvard Kennedy School.

What Drives My Fear of a Trump Presidency? His Views on the Environment?

My fear of the consequences of a Trump victory in the Presidential election is not simply because of Mr. Trump’s misleading, (consistently) inconsistent, and fundamentally incorrect statements in the realm of environmental and energy policy.

Let me be clear. I do find Mrs. Clinton’s policy positions in my area of expertise – environmental and energy economics and policy – to be superior to Mr. Trump’s positions. I will not repeat here my views of Trump’s environmental and energy positions, because I have frequently been quoted in the press as critical of his pronouncements and positions in this realm (Climate Central, E&E News, Scientific American, New York Times, Washington Post, The Verge, New York Times, The Week, Law Street, Climate Central, New York Times, The Hill, Newsmax, Climate Central, Grist, and National Public Radio). And a few times I have been quoted as criticizing Hillary Clinton’s policy prescriptions in the environmental and energy realm (New York Times, Denver Post, and High Country News). (For that matter, I have been quoted perhaps hundreds of times over the past seven and a half years as sometimes supportive and sometimes critical of Obama administration environmental and energy policies.)

So, yes, I believe that the world would be worse off with what I anticipate would be a Trump administration’s environmental and energy policies. But that is not what really frightens me.

What Really Does Scare me about a Trump Presidency?

What frightens me is much broader and more profound. I worry about what a Trump presidency would mean for my country and for the world in realms ranging from economic progress to national security to personal liberty. This comes not from any analysis of policy proposals, but from Trump’s own words in a campaign in which he has substituted impulse and pandering for thoughtful politics. From the first day – his June 16, 2015 announcement of his Presidential bid (in which he described Mexican immigrants as drug smugglers, criminals, and rapists, and promised to “build a great wall”) – until today, Mr. Trump has built his populist campaign on false allegations about others, personal insults of anyone who disagrees with him, and displays of breathtaking xenophobia, veiled racism, and unapologetic sexism.

As disturbing as Trump’s stated positions are in economic policy, national security, and personal liberties, possibly even worse is the reality that Donald Trump, if elected President, would – intentionally or unintentionally – provide cover and support for the ignorant, racist, and xenophobic tendencies that sadly inhabit a substantial fraction of the U.S. population. In many ways, Trump represents not the best that my country has to offer, but rather the worst excesses of American culture.

Trump is clearly a politician who seeks support by appealing to popular desires and prejudices rather than by using rational argument. That is the definition – word for word – of a demagogue.

The Bottom Line

If you are an independent, like me, please do not sit on the sidelines of the upcoming election, condemning both candidates for their failings.

It has been said many times by many people that Hillary Clinton is not an ideal candidate for President. I do not disagree with that sentiment. Nor can I dispute the fact that her primary campaign against Senator Bernie Sanders pushed her to adopt positions of the left, including her unfortunate reversal regarding the Trans-Pacific Partnership Agreement.

But Mrs. Clinton would bring significant, positive experience to the presidency from four decades of public life, including as a member of the U.S. Senate and as Secretary of State. In contrast with Mr. Trump, she has surrounded herself with legions of smart and experienced advisers in dozens of key policy realms. Her campaign has produced detailed proposals on the most important challenges facing the country (although I do question some of her environmental positions). But she is, if anything, a realist – not an ideologue, and certainly not a demagogue, which is precisely how I would characterize Mr. Trump.

I recognize that many people harbor very negative feelings about Mrs. Clinton. The low approval ratings (of both candidates) validate that. I respect those voters who have serious concerns about a Clinton presidency.

My core argument is that there are great differences between the two major candidates. I disagree strongly with those of my fellow political independents (and others) who say that because both candidates are flawed, they will not vote.

In my view, that would be a mistake. The fate of the United States and the fate of the world are really in our hands. If you are an independent, please do not sit out this election. It is much too important.

Will the COVID-19 Pandemic Bring About Long-Term Societal Changes?

We have just released the newest episode of our podcast, “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program.” In this latest episode, I engage in a conversation with Scott Barrett, who – more than any other environmental economist I can name – is exceptionally well equipped, based on his research and experience, to reflect intelligently on the coronavirus pandemic, and public policies to address it.

Scott is the Lenfest-Earth Institute Professor of Natural Resource Economics at Columbia University, where he also serves as Vice Dean of the School of International and Public Affairs. Readers of this blog will recognize Scott as one of the world’s leading authorities analyzing alternative approaches to addressing the threat of climate change through international treaties, but he has also written for more than a decade on an economic perspective on global infectious disease policy.

In addition to his scholarly work, Scott has served as an advisor to many international organizations, including the European Commission, the OECD, the World Bank, and the United Nations, and he and I worked together when we were Lead Authors of the Second Assessment Report of the Intergovernmental Panel on Climate Change. Also, I’m very pleased to say that Scott has been a frequent participant in our programs and projects at Harvard, and has been my co-author on a number of occasions.

Scott Barrett, Ph.D. Lenfest-Earth Institute Professor of Natural Resource Economics Columbia University, New York

In this podcast episode, Professor Barrett assesses the massive global efforts underway to address COVID-19 and the potential impacts of the pandemic on our lives in the future. He describes how COVID-19 will be a “persistent challenge” and will result in “fundamental changes in society.” Turning to domestic U.S. policy, he comments that “what really stands out is the failure of the United States to be prepared. It’s clear that our inability to do testing has really compromised the health and well-being of Americans.” Calling it “an equitable scourge,” Scott notes that the pandemic is affecting people from all levels of income and wealth, and that “it’s in everyone’s best interest that we control it.”

Comparing the COVID-19 outbreak to the Plague in the 14^th century and the Spanish Flu of 1918-19, Scott remarks, “I think this is going to have profound changes that will last at least a generation. It’s hard to know exactly what those changes will be, but there will be changes in terms of how we understand our relationship with each other, to technology, to science, to government, to international institutions. I think all of this is in play right now.”

All of this and much more is found in the newest episode of “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program.” Listen to this latest discussion here, where, by the way, you can also find a complete transcript of our conversation.

My conversation with Scott Barrett is the eighth episode in the Environmental Insights series. 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.

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