Adam Smith, Methane Emissions, and Climate Change

Most of my guests in my podcast series, “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program,” have been academic economists, but I’ve also had the privilege of talking with some leading lights from other disciplines, including ones that seem adjacent to economics, such as political science and law, and also some that are further afield, such as physics and chemistry.  Most recently, I had the opportunity to delve into a realm that bridges the humanities (in particular, history) and social science (in particular, economics), by talking with a star in the field of economic history, Emma Rothschild, the Jeremy and Jane Knowles Professor of History at Harvard, and Fellow at Magdalene College and Honorary Professor of History and Economics at Cambridge University in the United Kingdom.  The podcast is produced by the Harvard Environmental Economics Program.  You can listen to our complete conversation here.

Professor Rothschild, who serves as director of the Harvard Joint Center for History and Economics and a faculty contributor to the Visualizing Climate and Loss project, has devoted much of her academic career to research and teaching at the intersection of history, economics, and the environment, where she sees growing opportunities to affect thinking about climate change.

“One of the things that makes me very optimistic now about my field is that so many people interested in economic history are now seeing that the environment and climate [are] part of economic history and vice versa,” she states. “I’ve been … struck by how many of the top [academic job] candidates this year actually have either environmental papers, climate papers, or history papers as part of their portfolios, and in many cases, both actually. I just think the PhD students are kind of understanding this much faster than perhaps the educational establishment.”

Rothschild has focused a considerable part of her scholarly work on the Scottish economist and philosopher Adam Smith, credited for helping originate the study of free market economies. Specifically, Rothschild says she became intrigued by why some people blame Smith for today’s global climate change problem.  

“I became interested in the question, ‘Well, did he say anything that could conceivably have led people to think this? And what did he, to the extent that we can discern this, think about the origins of the industrial revolution in relation to a more plausible, causal story about how industrial growth of the late 18th century actually did lead to contemporary climate change?,’” she says.  Rothschild has written a series of papers about Smith to gain a deeper understanding of “the ways in which Smith’s ideas can be of interest in thinking about the discordant times in which we now live.”

Emma is also deeply involved in the Methane In 1,800 Histories project, designed to promote discussion and research on the 1,800 local sites of severe methane emissions around the world.

“This project came about really opportunistically when I saw a very good article that was the cover piece in Science a little over a year ago by some French climate scientists who were actually able to map almost 1,800 sites of ultra methane emissions worldwide. A lot of this has been done for the U.S. and for other countries. They were able, using satellite data, to give a literally worldwide overview of where the largest methane emitters were,” she states.

“And this turned into a collaborative project,” she continues. “We’d done a big visualization of all the sites. And the aspiration is that young historians [and] young economists will actually investigate each of these sites and thereby contribute to an understanding of the history of why climate change is happening. And, of course, thereby in turn, start to think in a practical and local way about what can be done about the sites.”

Related to this is her research project with Steve Wofsy, Professor of Atmospheric and Environmental Science at Harvard, “Using Remote Sensing Data to Inform Micro-Histories of Methane-Release Sites,” which is part of the Harvard-wide Initiative on Reducing Global Methane Emissions, sponsored by the Salata Institute on Climate and Sustainability at Harvard.

Rothschild goes on to argue that local solutions to climate change may seem more plausible to people who are daunted by the enormity of the challenge.

“Part of what’s so difficult about climate change is that the instruments, mainly global policy change, seem so beyond the capacity of individuals or groups to affect,” she remarks “Climate change is really immediate to people in their early 20s or late teens thinking about their own lives and thinking about, ‘What can I do with all the knowledge I’m acquiring, all the skills that I have, to do something?’”

For this and much, much more, I encourage you to listen to this 53rd 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.

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Private Sector Initiatives to Address Climate Change

Over the past decade or more, there has been increasing attention to private-sector initiatives to address climate change, with scholarly research and considerable action being centered in business schools, particularly in the United States.  This is the focus in the latest episode of my podcast series, “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program.”

I engage in conversation with Michael Toffel, Senator John Heinz Professor of Environmental Management and Professor of Business Administration at Harvard Business School (HBS).  We discuss the many ways in which business schools are giving much greater attention to climate change and other environmental issues, as well as how businesses and governments can and are working together to address climate change.  The podcast is produced by the Harvard Environmental Economics Program.  You can listen to our complete conversation here.

Toffel, who is a Faculty Fellow of the Harvard Environmental Economics Program and hosts the Climate Rising podcast at HBS, cites several examples of climate initiatives that are bubbling up organically throughout the private sector.

“What’s very interesting are …. the movement on the finance side, where you’ve got a lot deeper pockets of capital, pools of capital that are seeking out climate solutions,” he says. “You’ve got this whole ESG [Environmental, Social, and Governance] area that’s evolved … [which is] putting new screens on the types of investments that they want to include in their portfolio. You’ve got companies making these net zero commitments, which include a combination of decarbonizing their operations and their supply chains, and then using carbon credits to offset the residual. And a bunch of commitments in that regard remains to be seen.”

Michael emphasizes that it is uncertain how much this climate talk will translate into action.

“That’s long been an interest of mine – are companies following up with action? Who is? Who isn’t? And so that continues to be an interest of mine. We will see. A lot of my research in this area has taken the form of case writing, because so much of this is so new, and we don’t have years and years of data sets to do the type of empirical work that my scholarly work tends to gravitate toward.  We’re learning in real time through cases, and then doing some empirical scholarship as well.”

Toffel cites two recent projects he’s been involved with that he is especially proud of.

“On the scholarly research side, [there] is a study that’s just coming out in AEJ Applied Micro, a leading journal or field journal … that looks at the effectiveness of U.S. OSHA, the Occupational Safety and Health Administration’s efforts to target companies for inspection. OSHA is dramatically underfunded in the sense that they can maybe inspect every establishment that they regulate [once] every 100 years, and so they really need to make some tough decisions about where to go,” he says.

“Traditionally, they’ve been making these decisions for a lot of their inspections, based on where the problems have arisen in the past … and we conjecture and find some evidence that if they change that [strategy by] using more modern techniques and machine learning to figure out and predict where are problems more likely to be in the future, or where might their inspections do the most good … they can really reduce injuries by the thousands, with millions of dollars of consequences of reduced injury, pain, and suffering.”

The other research he cites is a Case Study, co-written with his HBS colleagues Shirley Lu and George Serafeim, on BMW’s approach to decarbonization.

“It’s a very engineering focused company, so they have a very engineering orientation to carbon accounting, to carbon management, to reduction, and to even their publicity around all of this. And their CEO has taken a perspective that whereas other companies are having these phase out dates for the internal combustion engine … they’ve said, ‘We’re not going to make that claim because we don’t know if we can keep that promise, in part because we don’t know if the infrastructure is going to be there to power electric vehicles, and will it be electric or will it be hydrogen powered fuel cells? We’re not really sure where the technology will shake out.’ So, they’ve been reluctant … to make such promises, because they have a culture … where they [don’t] want to … make promises until they know they can keep them.”

Reflecting on his almost two decades at Harvard Business School, Toffel remarks on how far the field of environmental management has come in recent years.

“When I applied to Ph.D. programs, this topic was very fringe,” he says. “This whole thing has completely changed, where most business schools now are leaning into the idea of environment and climate in particular … and scholarship is really exploding on these topics. So, that’s been really heartening to see. In addition, students’ interest in this has really risen incredibly in the 17 years that I’ve been here. Originally, no one talked about environment. Now … students are bringing these [issues] up. They’re demanding more content.”

For this and much, much more, I encourage you to listen to this 52nd 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.

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The Special and Important Case of Electricity in Climate Change

I have recently hosted several guests in my podcast series, “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program,” with great expertise on the electricity sector.  And today, I’m continuing that with the most recent episode of the podcast.  This is appropriate because the electricity sector – in many countries – is both a major source of carbon dioxide (CO2) emissions, and is also a very important potential part of the “solution space,” due to the promise of increased electrification of the transportation and building sectors (accompanied by greater reliance on renewable sources of generation).

In the most recent episode, I engage in conversation with an economist who has spent close to four decades studying the electricity sector, making important contributions to the design of public policies, and one who also has great expertise in the broader realm of regulatory economics and industrial organization.  I’m referring to Severin Borenstein, who is Professor of the Graduate School at the Haas School of Business at the University of California, Berkeley, where he is the long-time Director of its highly-regarded Energy Institute.  The podcast is produced by the Harvard Environmental Economics Program.  You can listen to our complete conversation here.

As I noted above, Borenstein directs the Energy Institute at Haas.  In my view, its blog platform is among the most effective – and prolific – in energy policy circles. 

Our conversation begins with the fact that Severin has spent several decades studying the electricity power sector after having begun his career working on airline deregulation at the Civil Aeronautics Board (CAB) in the late 1970s.  It was a formative time in his career, he acknowledges, because of how immediately impactful that work was.

“During the time I was there, we basically instituted the process of deregulation which was a very complex process in terms of opening up entry of airlines to new routes, reducing and eliminating regulation of pricing, [and] figuring out how to set rules like denied-boarding compensation. So, there was just a huge amount of regulatory change going on, and with an economist [Fred Kahn] at the helm of the organization, a lot of that was based on economic reasoning. So, the economic group that I was in played a big role in it,” he says.   The Airline Deregulation Act of 1978 specified that the CAB would eventually be dissolved, which it was in 1985.

After teaching at the University of Michigan from 1983 to 1980, Severin returned to his native California to join the faculty at the University of California, Davis, at a time when the state was beginning to deregulate its electricity sector. In 1996, he moved to the Haas School of Business at the University of California, Berkeley, where he continued his work on electricity policy. Today, the state is a global leader in the clean energy transition, Borenstein argues, and should serve as an example for other regions that are lagging behind.

“Electrify everything really is the pathway to making huge gains on reducing greenhouse gas emissions, and that means a lot of renewables on the system. And that raises this challenge, which California is way ahead of almost anyone else in the world on, of keeping the system in balance when you have a lot of intermittent non-dispatchable generation,” he remarks. “You can … do it with batteries, but batteries are extremely expensive if you’re talking about long-term storage and having enough power to get through cold winters and so forth. You can do it with more trade with other areas that have different production patterns, and that’s great. We aren’t doing nearly enough of that.”

Borenstein also explains that the country would benefit tremendously from the placement of additional transmission lines that would facilitate the transfer of electricity from one region to others. He also notes the lack of public policies that would serve to reduce energy demand at peak times.

“We have not gone down the road very far at all of using demand response to help balance the system, and I think that’s just a huge waste,” he says. “There’s plenty of electricity demand that is absolutely critical, but there’s also plenty that’s not and if we can send the signals, now’s not the right time to charge your car, or it would be better if you could shift your electric dryer to later in the evening or middle of the day when we have plenty of solar, we could make this a lot easier. And no one that I’m aware of has gotten very far in doing that. And I think that’s a real disappointment and challenge.”

For this and much, much more, I encourage you to listen to this 51st 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.

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