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 40th 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:

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


Can Europe Decarbonize in the Midst of a Geopolitical Crisis?

Is the geopolitical crisis due to the Russian invasion of Ukraine likely to accelerate or retard the energy transformation in the European Union?  This and related topics on decarbonizing Europe were central to the most recent webinar in our series, Conversations on Climate Change and Energy Policy, sponsored by the Harvard Project on Climate Agreements (HPCA).  This time, we featured a conversation with Dan Jørgensen, the Danish Minister of Climate, Energy, and Utilities, who expressed his hope (if not expectation) that the tragic war in Ukraine will help accelerate the clean energy transformation by weaning Europe off Russian gas.  A video recording (and transcript) of the entire webinar is available here.

As many readers of this blog know, in this webinar series I feature leading authorities on climate change policy, whether from academia, the private sector, NGOs, or government.  In this most recent Conversation, I was fortunate to engage with someone who has had solid and important experience in government.

Dan Jørgensen, who played a significant role in maintaining the focus on reducing the rise of global temperatures during the 26th Conference of the Parties (COP-26) to the United Nations Framework Convention on Climate Change (UNFCCC) in Glasgow last November, lauded the efforts of European countries like Greece that are proclaiming their intent to reduce their use of Russian gas in favor of other energy sources, although Greece has simultaneously announced that it will therefore have to increase its use of coal for electricity generation.

“One of the few positive things that might come out of a terrible situation is that we will now be forced to speed up the green transformation away from fossils in Europe,” Jørgensen says. “It has opened the eyes… I think, for decision makers all over Europe to ramp up the replacement of fossils – that’s gas, that’s oil, that’s coal, with renewables. And we have a lot of potential for that in Europe.”

Jørgensen talks about important legislation being negotiated in the European Union which would create new directives on energy efficiency and renewable energy that could, he states, help EU countries greatly reduce their dependency on Russian fossil fuel.

Much of the discussion also focuses on COP-26 and the decision by participating countries to agree on language calling for a “phase down” of unabated coal and to reduce inefficient fossil fuel subsidies.

“On one hand, I’m disappointed that the text is not stronger than it is on those issues. On the other hand, it is really huge progress that it’s now in the text, meaning that…[it will be] the starting point for the next negotiations [at COP-27 in Sharm el-Sheikh, Egypt],” Jørgensen remarks. “The overall result was a positive one. There was some real progress. But first and foremost, the aim of the COP-26 meeting was to keep 1.5 alive, so to speak. What does that mean? It means that if we hadn’t made the decisions that we actually made then…it would be almost impossible for us to keep the promise of staying below 1.5 alive, and it wouldn’t be credible.”

Looking ahead to COP-27, Jørgensen says negotiators will focus on the promise of more ambitious nationally determined contributions (NDCs) as well as questions surrounding finance for developing countries requiring short-term assistance to reduce their dependency on fossil fuels and adapt to climate change.

“I do understand how some of the growing economies of this planet that are also now amongst the biggest emitters, why they think it’s only fair that the richer countries of the planet help them in the transformation,” he states. “We have a climate problem because rich countries have been polluting for more than 100 years. Now, some countries are raising their standard of living and…starting to pollute more. But I don’t really think it would be fair for us to say, ‘You cannot have the same standard of living as we do.’ That would not be legitimate, in my point of view. And it wouldn’t be fair if we didn’t also offer help to mitigate the problem. So, we need to have a clear focus on the financing part.”

Jørgensen also shares his thoughts on the potential for carbon trading systems to reduce global emissions, arguing that pricing can be complicated but is absolutely necessary.

“We need clear price signals in the market,” he says. “It needs to be more expensive to produce in a way where you’re dependent on fossil fuels and less expensive to do the opposite.”

I ask Jørgensen about the European Union’s Emissions Trading System (EU ETS), established in 2005 as the first large greenhouse gas emissions trading scheme in the world, and which now covers more than 11,000 factories, power stations, and other installations in 31 countries, including all 27 EU countries.

“It is actually pretty incredible that we have this well-functioning system with 27 countries that is economically rational, that works, that cuts emissions, even in times of crisis where normally many countries will probably say, ‘Okay, well, we want to save the climate, but we need to get through this crisis first,’” he says. “In times of crisis like that, it’s extremely important that we have these systems. And what I like especially about it is that it’s a win-win. I mean, it is the cheapest, most efficient way of making a transformation.”

During the forum, Jørgensen also responds to questions from attendees from around the world, including questions focusing on carbon capture and sequestration, solar radiation management, methane, nuclear power, and the youth climate movement. 

All of this and much more can be seen and heard in our full Conversation here.  I hope you will check it out.

Previous episodes in this series – Conversations on Climate Change and Energy Policy – have featured Meghan O’Sullivan’s thoughts on Geopolitics and Upheaval in Oil Markets, Jake Werksman’s assessment of the European Union’s Green New Deal, Rachel Kyte’s examination of “Using the Pandemic Recovery to Spur the Clean Transition,” Joseph Stiglitz’s reflections on “Carbon Pricing, the COVID-19 Pandemic, and Green Economic Recovery,” Joe Aldy describing “Lessons from Experience for Greening an Economic Stimulus,” Jason Bordoff commenting on “Prospects for Energy and Climate Change Policy under the New U.S. Administration,” Ottmar Edenhofer talking about “The Future of European Climate Change Policy,” Nathaniel Keohane reflecting on “The Path Ahead for Climate Change Policy,” Valerie Karplus talking about “The Future of China’s National Carbon Market,” Laurence Tubiana reflecting on “A European Perspective on COP26,” and Congressman Garret Graves on “U.S. Climate Change Policy in an Era of Political Polarization.”

Watch for an announcement about our next webinar. You will be able to register in advance for the event on the website of the Harvard Project on Climate Agreements.  


The Dean of Wine Economists Talks About the Impacts of Climate Change

The most climate sensitive sector of virtually any economy is agriculture, and of the many agricultural crops, surely one of the most sensitive to the climate is grape production for premium wines.  The impacts will be different for different wine-producing regions, ranging from Bordeaux to the Napa Valley, and it will be good news for some regions, such as the United Kingdom, with its burgeoning production of excellent sparkling wines. 

There is simply no one better in the world to talk about these impacts and what they mean for the wine industry than Orley Ashenfelter, the Joseph Douglas Green 1895 Professor of Economics at Princeton University, who virtually launched rigorous economic analysis of wine production and consumption.  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 these podcasts, I converse with leading experts from academia, government, industry, and NGOs.  Orley Ashenfelter fits perfectly in this group.  Beyond his Princeton professorship, he has served as president of the American Economic Association, the American Law and Economics Association, and the Society of Labor Economics, and was the long-time Editor of the American Economic Review (for 16 years!).  He is a Member of the National Academy of Sciences, and a Distinguished Fellow of the American Economic Association, the American Academy of Arts and Sciences, and the Econometric Society.

Although he is very well known for his extensive research and writing in labor economics, econometrics, and law and economics, for those of us who are wine aficionados, he is celebrated for his pioneering work on the economics of wine.  So, in addition to all of the positions I mentioned above, for purposes of this blog essay, it may be more important to note that he is the current president of the American Association of Wine Economists and my fellow Co-Editor of the Journal of Wine Economics.  

When we discuss the relationship between global climate change, grape growing, and wine production, Ashenfelter remarks that there are already some “quite remarkable things happening,” because some grapes are adaptable to extreme weather. For example, he cites the Marquette and Frontenac grapes which have been hybridized to withstand the cold winters of Minnesota!

Ashenfelter also references his research on French grapes, some of which have actually benefitted from global warming.

“After 1980, there’s literally not a year in which temperatures dropped back into the levels they were in the summers of the 1960s and 70s,” he says. “The primary effect in Bordeaux has been much warmer summers, and the primary effect of that has been much better wines.”

Ashenfelter also notes that some of the grapes grown in northern Italy, which are sensitive to cooler summers, are performing better in recent years.

“You can see the prosperity [in that region]. They’re getting more wine at high quality,” he says. “Now the problem of course is that some places are already too hot, and you can see the adaptation going on … in Greece, where what people are trying to do is to grow grapes at higher elevations. Higher elevations get you a little cooler.”

“In Spain, there’s deep concern about it,” he continues. “The Torres family has bought a lot of property in the mountains of Catalonia, preparing for the possibility that they may have to grow grapes at much higher elevations if they want to keep growing the same grapes they have grown. What you do see is a little incursion of some of these hybridized grapes.”

Adaptation also brings its challenges, Ashenfelter emphasizes, particularly for European winemakers.

“The ability to be able to adapt is in some places going to be restricted by government regulations, and it may just be that over time, there’ll have to be some relaxation of those regulations as there has been for example, in Italy. It may just be necessary. The Americans are … more loose about this. We use place names, but we don’t have any requirement that a certain grape be grown in a certain place.”

Temporary heat spikes or extreme cold snaps also pose a threat to grape growers, because they are highly unpredictable, and their effects can be severe.

“Grapes do not do well above 95 degrees, and they don’t do well below 55 degrees. These 105-degree heat spikes, unless you just throw water at the plant, the plant will actually suck the juice right out of the grapes and leave you with nothing,” Ashenfelter explains.

“A vine takes five years to mature,” he continues. “It’s extremely costly when you get these giant, super cold spells. And we’ve seen them happen in places where no one really would’ve expected them in the past. I don’t know how much that is climate change or how much it is something else.”

For this and much more, I hope you will listen to my compete conversation with Orley Ashenfelter, the 34th episode in 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:

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