Category: Energy Economics

Over the past three years, in my podcast series, “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program,” I’ve held conversations with many long-time leaders in the world of environmental economics and policy.  But that has meant, quite naturally, that I have most frequently engaged with people – like me – in the grey-haired set.  So, I was particularly pleased to welcome to my most recent podcast someone who is decidedly younger than most of the people I’ve previously interviewed, but who – I hasten to add – is nevertheless a highly accomplished scholar, a full professor at the University of California, Berkeley, and continues to carry out important research.  I’m referring to Meredith Fowlie, Professor of Agricultural and Resource Economics and Co-Director of the Energy Institute at Haas, at U.C. Berkeley.  In addition, Meredith is a Research Associate at the National Bureau of Economic Research.  The podcast is produced by the Harvard Environmental Economics Program.  You can listen to our complete conversation here.

Fowlie has worked extensively on the economics of energy markets and the environment, with investigations of the real-world applications of market-based environmental regulations, the economics of energy efficiency, the demand-side of energy markets, and energy use in emerging economies. Her work has appeared in the American Economic Review, the Journal of Political Economy, Quarterly Journal of Economics, the Review of Economics and Statistics, and other leading academic periodicals.

She received her B.Sc. degree in International Agriculture and Development from Cornell University in 1997, an M.Sc. in Environmental Economics from Cornell in 2000, and her PhD in Agricultural and Resource Economics from U.C. Berkeley in 2006.  Before joining the faculty at U.C. Berkeley, she was an Assistant Professor of Economics and Public Policy at the University of Michigan.

Meredith is well known for her research on how environmental regulations have worked in practice.  One prominent example is her 2018 QJE paper co-authored with Michael Greenstone and Catherine Wolfram (both previous podcast guests), “Do Energy Efficiency Investments Deliver?: Evidence from the Weatherization Assistance Program,” which examined the efficacy of the federal Weatherization Assistance Program, which works with local energy services providers installing energy efficiency measures.  The research was both important and controversial.

“What we found was that the energy savings were less than half of what engineering projections had anticipated. So, that was a disappointing finding. It just meant that we weren’t getting the savings that the models projected and that the program wasn’t delivering as hoped,” Fowlie remarks. The reason the paper was controversial, she notes, is that the findings did not align with what lawmakers had expected.

Fowlie celebrates the work of her research assistant on that project, Erica Myers, who demonstrated in subsequent research how some relatively simple weatherization program adjustments could have significant upsides.

“[In her research, Myers found] that if you incentivize the workers who are making these improvements on the home, such that their compensation depends partly on the performance, you can significantly increase the effectiveness of those investments. And she has also been able to identify those investments that perform the best in order to help target some of these weatherization investments,” Meredith notes.

As I noted above, the impacts of such government regulation have been the focus of much of Fowlie’s research. In the podcast, she emphasizes that market outcomes often deviate from what is anticipated, because of the unexpected impacts of economic incentives, something policymakers need to pay close attention to when seeking and designing policy solutions to climate change.

“When we think about the industries that are on the front lines of climate change – that’s electricity; it’s natural gas; it’s insurance – a lot of these sectors and firms are subject to [previous] economic regulation. Regulators determine what investments get made, how costs get recovered, what prices get set. And I’m increasingly seeing that less as a bug and more as a feature. We have these economic regulatory tools at our disposal, and if we start thinking about them like climate policy tools, we can actually get a fair bit of leverage out of those tools,” she says. “I’m thinking about how public utility commissions set electricity rates in particular, and thinking about how those regulatory decisions have pretty profound implications for how we mitigate climate change and who pays the price.”

I also asked Meredith Fowlie for her thoughts on the topics of “environmental justice” and “just transition.”

“I’ve been thinking about these elevated concerns in a number of respects. One is, who is paying for climate mitigation and adaptation? These are needed investments, but how we make these investments has some implications for who ends up paying, and sometimes that’s unintentional,” she notes. “Part of my research is thinking about how we’re paying for climate mitigation and adaptation, and who ends up paying the cost. A second concern is cap-and-trade programs and the environmental justice concerns about those programs, particularly in California, and program design changes we could consider making in light of those concerns.”

At the end of our conversation, when we turn to the current youth movements of climate activism, Meredith expresses her admiration for the ways in which they are focusing attention on important issues.

“There’s a sense of urgency among the students I teach that I think is important and I want to encourage.  I have learned a lot talking to them about their concerns and their impatience and their frustration. And I hope they’ve also learned from me about some of my concerns with how they want to move forward and what approaches they want to take,” she stated. “There’s certainly a youthful energy in terms of the level of commitment they’re bringing, but I think it’s going to change the trajectory of many, many youth who are going to have a really profound impact on how we tackle the [climate change] problem in future generations.”

For this and much, much more, I encourage you to listen to this 49^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.
• Geoffrey Heal, Donald Waite III Professor of Social Enterprise, Columbia Business School.
• Kathleen Segerson, Board of Trustees Distinguished Professor of Economics, University of Connecticut

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