Energy Economics Archives - Page 6 of 55 - An Economic View of the Environment

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.

An Experienced Economist Reflects on Government Service, Carbon Pricing, and Climate Policy

Having served as the Deputy Assistant Secretary for Climate & Energy Economics in the U.S. Department of the Treasury in 2021-2022, Catherine Wolfram has some particularly relevant insights to offer on the development and implementation of climate change policy in the most recent episode of my monthly podcast. Wolfram is the Cora Jane Flood Professor of Business Administration at the Haas School of Business at the University of California, Berkeley, currently on leave at the Harvard Kennedy School. In the podcast, we discuss her time in government service and her thoughts and hopes for a carbon pricing scheme. You’ll find this and much more in the newest 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.

In this new podcast episode, Catherine Wolfram, who earned her PhD in Economics from MIT, begins by reflecting on her service in the Biden Administration, and she does so in very positive terms, saying that it was an “honor and thrill of a lifetime.”

“I would say the high point was definitely the work on the price cap on Russian oil. That was the main thing that I spent time on in the last 10 months of my time at Treasury, and was absolutely fascinating from so many different perspectives,” she says. “I learned a lot about foreign diplomacy, or I should say that I observed foreign diplomacy in action.”

During her time at the Treasury Department, Congress passed the Inflation Reduction Act, important legislation that authorizes $391 billion in spending on energy and climate change initiatives, making it the most important climate legislation ever enacted in the United States.

“A lot of the Inflation Reduction Act is being implemented through tax credits, and that’s Treasury’s purview, so [although] it was not my office within Treasury (it was another office, the Office of Tax Policy), I … [attended] many meetings about what started out as the Build Back Better Act and became the Inflation Reduction Act. So, that was really fun to see, and is certainly a momentous piece of legislation,” she remarks.

Despite the reliance on subsidies (tax credits) in the Inflation Reduction Act, Catherine says that she remains optimistic about the potential role of carbon pricing in climate change policy.

“I would not call carbon pricing dead,” she argues. “I could see it coming back in some form, maybe not the economy-wide carbon price that textbooks favor, but maybe something that starts, for instance, with the industrial sector … on a more limited scale.”

More broadly, Wolfram expresses optimism that the international community will figure out creative ways to adopt climate policies that will make a positive difference.

“I think if the G7 countries can get together and figure out how to put a price cap on Russian oil, [then] hopefully the G7 countries can get together and figure out good ways to use their presence in the international trade community to address climate change.”

However, Catherine also expresses concern about the possibility that an overreliance on tax credits and government subsidies in the design of climate policy could set back efforts to impose effective carbon pricing.

“I worry that there’s a future that evolves where the European Union gets pressure from its industry, and loses enthusiasm for its carbon price, and so the competitive pressures from industry that are seeing these subsidies over in the U.S., and thinking of moving to the U.S., that causes the EU to backtrack on climate policy, just because we have these different approaches to reducing emissions.”

For this and much, much more, I encourage you to listen to this 44^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.

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

A Long-Time Participant and Observer Places the Climate Talks in Historical Perspective

With the 27th Conference of the Parties (COP27) of the United Nations Framework Convention on Climate Change (UNFCCC) having concluded less than two months ago in Sharm El-Sheikh, Egypt, this is a good time to step back, and reflect on the history and evolution of these annual international negotiations, which began with COP1 in Berlin in March of 1995, following on the 1992 United Nations Conference on Environment and Development in Rio de Janeiro, Brazil. To do this, there’s no one I know who is better positioned to provide such perspective than Daniel Bodansky, the Regents’ Professor of Law at the Sandra Day O’Connor College of Law at Arizona State University. This is included 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 the complete interview and conversation here.

Bodansky, who served as Climate Change Coordinator for the U.S. State Department during the Clinton Administration, is the author of the 2010 book, Art & Craft of International Environmental Law. Note that a second edition of the book will be published later this year by Oxford University Press.

Dan says that the 2015 Paris Agreement was a promising step forward, but domestic political concerns have subsequently hindered international efforts to achieve meaningful action on climate policy.

“There’s … been an inability to really come up with a structure that everybody is on board with sufficiently, [so] that we can move from negotiations to an implementation phase. And I think that’s because the climate change issue is just a much, much bigger issue [than other environmental problems] in terms of its implications for a country’s economy, for the entire way it’s organized domestically, because virtually everything contributes to climate change. Virtually everything is affected by climate change. So, it has just a much, much, much bigger impact on a country’s domestic policies.”

Bodansky remarks that he considers himself “realistic” when contemplating the future of climate policy.

“I think that there has been progress, but it’s not nearly enough. I guess I’m doubtful that the Paris Agreement will be able to deliver on its expectation or hope of limiting climate change to 1.5 degrees,” he says. “That’s why I’m actually quite interested in some of the other kinds of policies that might be able to be used to address climate change, including things like carbon dioxide removal, trying to reflect sunlight from the earth, because I think we may ultimately need them to avert catastrophic climate change. I hope that the Paris Agreement is enough, but I wouldn’t want to bet on it. So, I think we also need to be thinking about if it’s not enough, what are the other options that we could potentially try to use?”

Dan notes that climate clubs, in which countries voluntarily cooperate to combat the problem of “free riders,” could be an additional tool to slow the spread of global warming, but they too have their limits.

“I think if countries want to go further than other countries, then carbon border adjustments can be important in trying to protect their position to prevent carbon leakage to countries with weaker standards. But I think ultimately the carbon clubs aren’t going to be enough, because the biggest emitter right now is China,” he says, intimating that the world’s most populous country isn’t likely to participate.

Daniel Bodansky, Coral Davenport, Zou Ji, and Robert Stavins participate in a Harvard University Forum Event in November 2015 focusing on that year’s Conference of the Parties in Paris.

Bodansky expresses optimism, however, that the youth climate movements taking place in many parts of the world will help keep the pressure on policymakers to take action.

“One of the functions of the climate conferences like the one that wrapped up in Sharm El-Sheikh in November is to focus attention on the issue, and put pressure on countries and leaders to do more to deal with the question. And so, I think the youth movement is an important part of that equation of trying to motivate countries to do more both at the international level and … also within the domestic political scene,” he says.

I encourage you to listen to this 43^rd 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.

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