An Economic View of the Environment - Page 12 of 78 - One Economist's Perspective on Climate and Other Policy

Who Better to Reflect on the “Global Energy Crisis”?

Post-pandemic demand for energy combined with the war in Ukraine and subsequent oil and gas shortages have created a global energy crisis. That’s the core assessment offered by global energy expert Daniel Yergin 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. Our complete conversation is here.

It would be much too easy for a New York Times crossword puzzle to include the clue, “Twelve letters for a world-renowned global energy expert,” because the absolutely obvious answer would be “Daniel Yergin.” So, I was delighted to host Dan for my most recent podcast. As you probably know, in these podcasts, I converse with leading experts from academia, government, industry, and NGOs, who are working at the intersection of economics, energy, and environmental policy. Dan Yergin surely belongs in this group.

He’s known as an author, historian, educator, energy analyst, and the founder of Cambridge Energy Research Associates (or CERA), which was acquired by IHS Markit in 2004, which itself recently merged with S&P Global, of which Yergin is now Vice Chair. To some audiences, Dan is best known for his books, including The Prize: The Epic Quest for Oil, Money, and Power (1991 – Pulitzer Prize), The Quest: Energy, Security, and the Remaking of the Modern World (2011), and The New Map: Energy, Climate, and the Clash of Nations (2020).

But the book that first brought this remarkably productive gentleman to my attention was Energy Future (1979, co-authored with the late Professor Robert Stobaugh of Harvard Business School).

It’s striking that in his most recent book, “The New Map: Energy, Climate, and the Clash of Nations” (2020), Yergin writes prophetically that Ukraine would soon become a significant source of tension between Russia and the West.

“I could see that Putin did not accept the outcome of the end of the Cold War and he said Ukraine’s not a country. And it tied together geopolitics and energy in a very vivid way. And it just seemed to me that a collision was going to come,” Yergin says. “I wouldn’t have imagined a war that would go on more than a hundred days specifically, but I just could see that this was going to happen.”

He observes that the war in Ukraine, coming on the heels of the post-pandemic surge in demand, has further squeezed energy supplies around the world.

“We have … moved into a period of … shortage,” he says. “I think that right now at this point we’re in a pretty dire short-term energy situation. In fact, I would say that since last October, we’ve been in a global energy crisis.”

Yergin says he believes Russian President Vladimir Putin is seeking to test the strength and resolve of the West with his actions in Ukraine.

“It seems to me that the situation is going to get worse over the next several months. That’s because it’s not only the question of markets now and investment, but it’s also this clash with Russia, and Putin is doing what Russia … and the Soviet Union did not do for half a century. He is manipulating energy supplies to make the situation in Europe more difficult by cutting back on gas. And his strategy is pretty clear – which is to create shortages in Europe, which will cause fissures in the Western unity on Ukraine so that the Alliance falls apart.”

The energy crisis, Yergin notes, is forcing many governments to temporarily pause efforts to reduce CO₂ emissions with the short-term goal of increasing oil and gas supplies to offset the loss of Russian fuel.

“Natural gas is in short supply globally, and coal is in short supply, and you can’t build enough wind turbines and solar quickly enough to accommodate for that. And politicians react to voters, and voters react to their pocketbooks when these prices get as high as they are,” he states.

Yet Dan Yergin also says he believes that the clean energy transition is continuing to gain momentum, in part due to the current crisis.

“Europe has come out with even a stronger commitment to renewables. And so, I think that the longer-term outcome of this is an acceleration of renewables, renewable electricity as the longer-term alternative. So that’s why you’ve got to deal both with the short-term crisis, and at the same time lay the basis for a different kind of future,” he explains.

For all this and much more, I hope you will listen to my compete conversation with Daniel Yergin, which is the 37^th 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:

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.

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

Bumps Along the Energy-Transition Road

There will be many bumps along the road as America transitions to a clean power system. That’s the pragmatic assessment offered by Lori Bennear, the Juli Plant Grainger Associate Professor of Energy Economics and Policy and Executive Vice Dean at the Nicholas School of the Environment at Duke University, 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. Our complete conversation is here.

As you probably know, in these podcasts, I converse with leading experts from academia, government, industry, and NGOs, who are working at the intersection of economics and environmental policy. Professor Lori Bennear belongs in this group.

Bennear, whose academic research focuses on evaluating environmental policies and improving methods and techniques for conducting these evaluations, has devoted recent years to studying issues relating to environmental justice and just tranistion, particularly surrounding the “winners” and “losers” who will emerge from the clean energy transition.

“We are in the process of [a] … once in many, many generations transition in our energy system, the likes of which we can’t … really imagine. But it’s going to involve significant land use changes, and changes to the way electricity is generated,” she says. “A lot of that is exciting from an environmental standpoint because they’re lower carbon. We have this opportunity to do this in a way that extends those benefits more evenly across the population than the fossil fuel-based energy system did, and potentially doesn’t centralize the costs of that energy system in particular communities in the same way that the fossil fuel energy system did. But we have to do that consciously from the beginning.”

Bennear admits that some areas of the country that are economically dependent on fossil fuels, including her home state of Wyoming, will suffer in the near term and accommodations must be made to reduce the negative impacts on those communities. She also remarks that there may be other downsides associated with some of the new energy sources which must be taken into account.

“While they’re good for carbon, they’re not perfectly great along every environmental dimension,” she states. “There’s waste associated with them. There’s mining associated with them. We need to take that in holistically from the beginning.”

Discussing the role of regulation in high-risk industries such as offshore oil exploration, Bennear emphasizes that government can only do so much.

“We need a series of both safety systems and safety processes that are tied to a safety culture, only some of which regulation can actually really dictate. That’s a hard pill to swallow, because on the one hand … we’re still dependent on these industries in many ways,” she remarks. “There have to be processes in place that reward people for valuing safety. That’s a harder thing. There’s a huge role for industry in that, which also gets some folks in the environmental community, gets their backs up because they feel like industry has too much say over what these regulatory processes should be. But they also have the expertise and the experience to actually make them happen.”

For this and much more, I hope you will listen to my compete conversation with Lori Bennear, which is the 36^th 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:

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.

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

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 35^th 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:

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.

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