Recalling the Past and Looking to the Future

Sometimes it’s helpful to recall the past as an aid to thinking carefully about the future.  The development of scientifically sound, economically sensible, and politically feasible climate-change policies would seem to be a case in point.  Such an approach is well illustrated by the thinking of Jonathan Wiener, the William and Thomas Perkins Professor of Law at Duke Law School, who shares his thoughts on the prospects for federal legislative and regulatory policy 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.

As you probably know, in these podcasts, I converse with leading experts from academia, government, industry, and NGOs.  Jonathan Wiener certainly belongs in this group.  Wiener, who also holds appointments at the Nicholas School of the Environment, the Sanford School of Public Policy, and Resources for the Future, has focused his research and writings for thirty years on a broad range of environmental policy issues, often from an economic perspective (once quite rare among environmental law scholars). 

Before launching his academic career, he served as a clerk for Judge (now U.S. Supreme Court Justice) Stephen Breyer on the U.S. Court of Appeals in Boston from 1988 to 1989. He also served at the White House Council of Economic Advisers (CEA), the Office of Science and Technology Policy (OSTP), and the U.S. Department of Justice (DOJ/ENRD), during the George H. W. Bush and Clinton Administrations.

Reflecting on his time in Washington, Professor Wiener recounts in our conversation the sense of bipartisanship that permeated environmental policy discussions on Capitol Hill during the Bush 41 and Clinton years. “On the issue, for example, of designing an economic incentive-based policy to reduce greenhouse gas emissions, there was, I would say, substantial agreement among all of those involved,” he says.

Wiener explains how there have also been significant changes in the scholarly world of environmental law in recent decades, including more mainstream support for economic incentive instruments, and for the use of economic analysis to evaluate the costs and benefits of laws and regulations.

“The advocacy of cost benefit analysis has shifted over time so that now one sees a lot more advocacy [on behalf of] economic analysis and cost benefit analysis to demonstrate the large social gains from environmental policy,” he remarks.

Jonathan also addresses the prospects for the Biden Administration to make headway on climate policy, saying that it started on the right foot. “President Biden issued a memorandum on modernizing regulatory review on his first day in office, which reaffirmed the executive orders from the Clinton and Obama Administrations.” Yet Wiener goes on to acknowledge that the administration’s promise to issue a revised estimate of the social cost of carbon has yet to be fulfilled.

At the end of our conversation, Jonathan Wiener offers – as a contrast with the slow pace of government action – his optimism that youth movements of climate advocacy which have become prominent in recent years hold great promise for advancing policy in the years ahead.

“On campuses across the country and around the world, one sees enthusiasm, energy, some sense of impatience and indignation, that the earlier generations didn’t address these problems adequately,” he says. “I think we anticipated, when you and I and …others were working on climate change policy design back 30 years ago, that we needed to design the institutions well so that we would not face a crunch time later of trying to address climate change in a big hurry. Unfortunately to some extent, we are in that crunch time right now.”

For this and much more, I hope you will listen to my compete conversation with Jonathan Wiener, which is the 35th 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.


U.S. Climate Change Policy in an Era of Political Polarization

Political polarization has reached alarming levels in the United States, with few moderates remaining in either the Republican or Democratic party who are capable of bridging the partisan divide on many, indeed most issues.  Climate change – and more broadly, environment – is one such issue.  I’m pleased to say that in the most recent webinar in our series, Conversations on Climate Change and Energy Policy, sponsored by the Harvard Project on Climate Agreements (HPCA), we featured a conversation with Congressman Garret Graves, a Republican from Louisiana’s 6th Congressional district, who serves as the Ranking Member of the House Select Committee on the Climate CrisisA 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. 

While stating that climate change is a “huge problem” in need of innovative solutions, Congressman Graves makes the case for bridging political divides by aligning environmental sustainability with economic sustainability.

It is significant that Graves represents a district that has been and will be seriously affected by climate change. The region has lost more than 2,000 square miles of coastline to subsidence and rising sea levels, an area larger than the state of Rhode Island. “This is a huge personal issue for us…South Louisiana is a state that doesn’t have a large margin of error in regard to sea level rise.” he says.

Yet Congressman Graves also acknowledges that the political divides in Washington make it very difficult to agree on climate policies, noting that politics has become “a blood sport, with party first, and the country after that.” And he remarks that things don’t seem to be getting any better at the moment.

“I don’t see a trend in the right direction,” he says. “I think people are taking things that people used to be able to rally around, like kittens and dogs and apple pies, and found ways to make them partisan.”

Climate change is certainly one of those issues, the Congressman states, because the discussion has become more emotional than science- and data-driven. But he also notes that if politicians begin speaking about the issue with an eye toward the economic benefits of creating a more diverse energy portfolio, the issue may begin to gain traction among people in both political parties.

“If you bring up climate change and global warming, you’re going to have pretty different views among Democrats and Republicans. However, we have found that if you begin slicing it up into different components [you can achieve some consensus],” he says. “I can be in a room with some liberal folks and talk about the protection of communities and the resilience of ecosystems; it resonates, absolutely. And I can be in rooms with conservative folks talking about how we’ve funded these [climate-related] disasters over and over…and there are all sorts of studies…that have clearly shown how making investments in the front end in resilience or hazard mitigation more than pays for itself in the longer term.”

While Graves expresses his ambivalence toward instituting a national carbon pricing system, he speaks passionately in favor of investing in technological solutions that balance environmental with economic sustainability, including investments in wind, solar, and geothermal. The challenge, he says, is in understanding where the best returns-on-investments will be.

“We’ve got to do a better job now helping decision makers know where and how to most effectively use the tools available to where you get affordable energy, where you get resilience performance, and where you get lower emissions over the long run.”

Congressman Garret Graves also argues that small innovative businesses could play a significant role in helping mitigate the climate crisis in the coming years.

“That is exactly where the problem is going to be solved,” he remarks. “We are going to innovate our way out of this…[because] innovators have the opportunity to come in and disrupt.”

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,” and Laurence Tubiana reflecting on “A European Perspective on COP26.”

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.  


A Call for Pragmatic Climate Policies

Economists, including myself, have long favored carbon-pricing policies – either carbon taxes or cap-and-trade – as the best approach to reducing emissions of carbon dioxide (CO2) in large, complex economies – on the basis of:  feasibility of limiting emissions from hundreds of millions of point and non-point sources; short-term cost-effectiveness in the face of highly heterogeneous abatement costs associated with highly diverse sources; and long-term effectiveness and efficiency by bringing about carbon-friendly technological change. 

Although economists would therefore argue that carbon-pricing policies will be a necessary element of a truly meaningful policy portfolio, they would not claim that they will be sufficient, partly because of the presence of other market failures (such as principal-agent problems in the context of energy-efficiency technology adoption decisions in renter-occupied properties, and information spillovers leading to insufficient private investments in research and development).

But there is another reason for the insufficiency of carbon-pricing policies, and that reason is captured by a single word:  politics.  It has become increasingly clear that in the United States carbon-pricing policies do not have sufficient constituencies among either conservative Republicans or “progressive” liberal Democrats to become a central element of meaningful climate change policy.  Hence, there is increasing recognition – even by economists – that more attention needs to be given to other, so-called “second-best” policies, which may be more costly but will also be more politically feasible.

This point is made in compelling fashion by Gilbert Metcalf, Professor of Economics at Tufts University and a long-time analyst, expert, and advocate of the use of carbon taxes, in the latest episode of our podcast, “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program.”  You can hear Gib’s plea for broader thinking by listening to our conversation here.

In these podcasts, I converse with leading experts from academia, government, industry, and NGOs.  Gib Metcalf fits well in this group, as a long-time Professor of Economics at Tufts, a Research Associate at the National Bureau of Economic Research, a University Fellow at Resources For The Future, an Associate Scholar of the Harvard Environmental Economics Program, and a former Deputy Assistant Secretary for Environment and Energy at the U.S. Department of the Treasury (2011-2012).  He has spent much of his career working on policy design and evaluation in the area of energy and climate change, both in academia and government.

Gib Metcalf’s call for pragmatism and broader thinking on climate change policy by the economics community is particularly striking (and compelling) because of his extensive analysis over more than a decade and his strong advocacy for the development of a U.S. carbon tax.  This is exemplified by his excellent 2019 book, Paying for Pollution: Why a Carbon Tax is Good for America (Oxford University Press). 

As a longtime proponent of a carbon tax to affix a social price on CO2 emissions, Metcalf is particularly convincing when he acknowledges in our conversation that he is now convinced that a carbon tax is not a practical option in today’s exceptionally partisan political climate.

“I am a firm believer that we should do the most efficient policies possible, and I think carbon pricing is precisely the way to do that. I prefer a carbon tax to cap-and-trade, I think for a number of reasons … but the political environment is such that, that’s just not going to happen,” he says. “And meanwhile, the concentration of greenhouse gases in the atmosphere continues to rise. So given, that I think we are obligated, those of us who care about the climate, to promote policies that will reduce emissions now, even if they’re not necessarily our most desirable policies.”

So, Metcalf argues that the Biden Administration should consider regulatory actions and executive orders in addition to statutory subsidies to give polluters incentives to seek cleaner energy alternatives.  Commenting on the serious legal challenges that some regulatory initiatives are likely to face (particularly given the 6-3 conservative majority on the U.S. Supreme Court), he offers a cause for optimism:

“I see less of a problem with fuel economy standards [by] ratcheting those up. So, we can do something in transportation.  I think we’ll [also] use tax credits in the electricity sector instead of regulation and perhaps we’ll do the same in buildings, but that gets to the third leg of what I would call a policy tripod in a third best world, which is R&D spending. And here, I think the R&D spending really needs to be focused on the technologies that have the greatest potential to lower the cost of clean energy.”

Gib Metcalf argues that production tax credits can be used to encourage further development of clean energy options, including wind power, but they should be designed in a way that will account for the increasingly negative impacts of carbon emissions.  

“My recommendation is that we ought to tie that tax credit to the social cost of carbon.  Given the official social cost of carbon numbers that the Biden Administration is using, that would be about a two and a half cents per kilowatt hour production tax credit. So, it doesn’t change the [tax] credit now, but as the social cost of carbon rises over time, then the production tax credit should rise over time.”

Gib Metcalf and the author on a panel at COP21 in Paris in 2015

At the end of our conversation, I ask Gib Metcalf for his thoughts on the current, prominent youth movements pressing for more aggressive action on climate change.  His response is that he was initially skeptical about their impact, thinking of them as little more than a “side show” to meaningful action through the international climate negotiations, for example.  But that is no longer the case.

“I’ve actually changed my mind entirely.  I’m more pessimistic [now] about where the negotiations will get us given the urgency of action. But the youth movements, Greta Thunberg and others, are really, to me, incredibly important in that they are driving public opinion and bringing media attention to the problem, in a way that I think is extremely valuable.  So, I see them as just absolutely essential.”

I raise the question of whether this very prominent youth activism is an age effect (hence likely to become more moderate as young people become adults) or a cohort effect (likely to retain its strength over time).  Gib responds that the young people involved in these climate movements are likely to remain engaged.

“I think the current youth movements see a very clear stake for themselves in terms of the damages that we’re seeing in the world today because of climate change. So, I think that gives them a more enduring stake that may outlast their youth.”  

That’s an excellent, optimistic note on which our conversation comes to a close.

For this and much more, I hope you will listen to my complete conversation with Gib Metcalf, the 30th 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.