An International Relations Authority Expresses Optimism about Climate Change

When thinking about the challenges the world faces regarding climate change, the global commons nature of the problem immediately highlights the importance of international cooperation, and that suggests that thoughts from those who study and who have experience in international relations can be very informative.  In the most recent episode of my podcast series, “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program,” I have the opportunity to engage in a conversation with someone who combines international relations scholarship with significant high-level experience in government.  I’m referring to Meghan O’Sullivan, the Jeane Kirkpatrick Professor of the Practice of International Affairs at Harvard Kennedy School, where she directs the Belfer Center for Science and International Affairs.  You can listen to our podcast conversation, produced by the Harvard Environmental Economics Program, here.

In my view, Meghan O’Sullivan can be thought of as the quintessential Harvard Kennedy School faculty member, because in addition to her extensive and relevant scholarly research, she has had abundant experience in the policy world as a practitioner, including work in policy formulation and negotiation.  In that regard, I will mention just one appointment, namely her role as Special Assistant to President George W. Bush and Deputy National Security Advisor.  Among her other books, she is the author of Windfall: How New Energy Abundance Upends Global Politics and Strengthens American Power.  Her research and writing have focused on the intersection of global energy strategies and international affairs, which inspired her to found the Geopolitics of Energy Project at the Kennedy School in 2011.  I ask her to describe the essence of the project.

“The project is founded on the idea that… this interaction [between energy policies and international affairs] is really important for foreign policymakers to understand… [because] energy is a big explanatory variable when we think about power dynamics in the system, and for people who may be on the energy and climate side to… better understand how the global system impacts their ability to move the energy system in one way or the other,” she explains.

O’Sullivan responds to another question by noting that two recent changes in world energy markets are having significant geopolitical consequences – technological advancements, and the global push toward clean energy.

“I think it’s incredibly important [that] the world can get to net-zero and in a time frame that’s going to have a big impact on our climate, and allow us to address all of the insecurities that come about through climate change,” she states. “The push to try to get to net-zero, the effort that countries and businesses and foundations and individuals are making in the interest of either advancing the energy transition or slowing down the energy transition, that has become a really big driver of international affairs.”

Meghan acknowledges that the U.S.-China relationship is also a critical component in the international effort to confront climate change.

“One of the big changes in the international system that’s become very apparent in the last several years has been this U.S.-China great power competition. And it’s in that framework that… we have to drive towards net-zero. And it makes a big difference that we’re no longer in this kind of cooperative environment that characterized a lot of the last 30 years, and we’re in a global environment that is much more competitive,” she says. “What we can achieve through global mechanisms or through international bodies, we have to assess it differently because the U.S.-Chinese relationship is a big part of the environment in which our actions are unfolding.”

She also maintains that while global emissions continue to rise, there are solid reasons for hope that climate solutions will emerge.  

“On the one hand, it’s absolutely true that we’ve seen much progress just in terms of technological advancement and the bringing down of costs of certain renewable technologies and…the really large amounts of money that are going into clean energy investments… That is very heartening,” she says. “On the flip side, though, we can’t ignore the fact that emissions continue to rise. And last year I think was the highest level of global… carbon emissions that we’ve ever seen.”

Taking a big picture view, O’Sullivan expresses the opinion that the global community will coalesce around climate strategies that will foster real progress.

“We’re going to be in a world with hopefully greater technological [capacities]… but also I think we’re going to have more and more political pressures to address this [issue], and I think our political landscape will continue to evolve in a direction where greater climate action will not just be possible, but it will be necessary,” she remarks.

You can hear this and much more in my conversation with Meghan O’Sullivan, which is the 60th episode over the past four years 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 iTunesPocket CastsSpotify, and Stitcher.

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A Behavioral Economist Thinks About Energy and Climate Change

When examining environmental, energy, and climate change policy, the methods and the topic of behavioral economics arise with some regularity.  In my podcast series, “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program,” we’ve talked about such behavioral research in regard to energy-efficiency policies with Michael Greenstone and others.  And, much more recently, in a podcast episode just released, I had the opportunity to talk with a behavioral economist who is now on the faculty of a school that’s focused on environmental studies.  I’m referring to Hunt Allcott, who is Professor of Global Environmental Policy at the Doerr School of Sustainability at Stanford University, and who – I’m proud to say – is a graduate of the PhD program in Public Policy at Harvard.  You can listen to our podcast conversation, produced by the Harvard Environmental Economics Program, here.

Allcott serves as Co-Director of the Stanford Environmental and Energy Policy Analysis Center, and is a Research Associate at the National Bureau of Economic Research, as well a member of the board of editors of the American Economic Journal: Economic Policy.

The crux of Allcott’s research focuses on the ways in which human behavior affects economic decisions and outcomes in a variety of contexts, and the lessons those have for policymaking. In our conversation, he cites several examples where government policy can influence consumer decisions in ways that will benefit both consumers and the environment.

“It’s like what behavioral economists call a shrouded attribute. It’s a future cost that’s kind of easy to forget when you’re making a purchase decision. So, if it’s… true that consumers aren’t thinking very hard about these future energy costs, then we’re probably erring on the side of buying too many gas guzzling cars and energy guzzling air conditioners and light bulbs. And so, as a result, the government can make us better off by pushing us in the direction of being more energy efficient,” Allcott remarked. “It was fun for me to… work with a group of others to develop actual empirical tests of, okay, how would you substantiate those consumer protection arguments in the data? So, that’s some of the work that I’m most proud of.”

Allcott also discusses the federal electric vehicle tax credits, which are designed to incentivize consumers to reduce carbon emissions.

“You subsidize a new electric vehicle, that’s a new EV on the road, [and] that’s good for the environment in most places. You give somebody a tax credit to buy a used EV, that’s just trading an electric vehicle from one person to another, and so there’s no new net vehicle on the road, at least [not] directly,” he stated. “Is the incidence really on the used vehicle buyer, in which case there’s no environmental benefit, or maybe the prices of used electric vehicles are going up because they’re worth more upon resale. That’s not as good for the buyers, but then it might induce more new electric vehicle sales because when you buy a new EV, you then recognize that the resale value might be higher.”

Allcott officially joined the faculty at the Doerr School in September 2022, just as the school was being launched.

“There are 60 existing faculty members that were moved into that school as part of earth systems, energy systems, civil engineering, and some other departments. I was actually… the first external hire of this school to reach through the provost and actually show up on campus. And so, I’ve been here for, I guess, 15, 16 months so far, and it’s just been a great experience trying to help Stanford have an even bigger imprint in this space of impact on energy and environmental issues.”

Ironically, Allcott notes that much of the research taking place at the Doerr School and in which he’s now engaged is not focused on behavioral economics.

“This has been an opportunity to step back and rethink what is the right research direction for the next five to ten years. And perhaps interestingly, all the topics that our group is now working on are what I would call non-behavioral topics. There’s not really a behavioral economics angle to them,” he explained. “Upon arriving at Stanford [I asked] ‘okay, I’m in the sustainability school. What are the most important environmental economics topics?’ I think energy efficiency and behavioral economics is still on that list, but there’s so much other stuff. There’s the Inflation Reduction Act, there is electricity market design, and then within each one of those two, there’s a lot of different sub-areas that we’re actually focusing on.”

You can hear this and much more in my conversation with Hunt Allcott, which is the 59th episode over the past four years 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 iTunesPocket CastsSpotify, and Stitcher.

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Electricity Sector Regulation, Carbon Pricing, and Climate Policy

In the United States, Europe, China, India, and many other parts of the world, when policymakers and others consider ways to reduce CO2 emissions to help address climate change, major attention is frequently given to the electric power sector, partly because of its standing as the first or second largest source of emissions, and partly because it frequently offers low-hanging fruit, that is, low-cost abatement opportunities.  In the most recent episode of my podcast series, “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program,” I host an economist with three decades of experience studying the electricity sector, and making important contributions to the design of new institutions and appropriate regulations. 

I’m referring to Karen Palmer, a Senior Fellow at Resources for the Future in Washington, D.C., where she directs the Future of Power Initiative.  Karen continues to carry out valuable research, participate in government panels, and recently served as President of the Association of Environmental and Resource Economists.  The podcast is produced by the Harvard Environmental Economics Program.  You can listen to our complete conversation here.

Dr. Palmer, who is renowned for her research on the U.S. electric power sector, shares her insights on electricity regulation and deregulation, carbon pricing, and climate change policy.  She has spent almost 34 years at Resources for the Future (RFF), having initially been drawn to it at a time when governments were taking early steps to deregulate the electric power sector.

“I came here because the overlaps in terms of regulation in my prior research in graduate school and what happens in electricity and also to a certain extent natural gas were evident, but things were definitely changing in both natural gas and electricity sector early during my [early] time here,” she says.

In 1996, Palmer and several colleagues wrote a book titled “A Shock to the System: Restructuring America’s Electric Industry,” which served to inform policy debates then taking place about the sector’s transformation.

“As the electricity sector started to introduce more competition in terms of who was going to actually deliver electricity, it became clear that there are a lot of challenges in terms of policy and pricing and how markets function that remained open and could use some informing,” she remarks.

Turning to the present day, Palmer observes that the Biden Administration’s energy and climate policy relies primarily on subsidies to encourage the use of clean electricity and other clean power sources, but hasn’t yet given up on efforts to use other policy tools to stimulate positive change.

“The fact that they weren’t able to fully price carbon doesn’t mean that there’s not going to be efforts to address emissions from emitting sources, which aren’t really targeted under the subsidies directly,” she argues. “We have seen the proposed form of the third try at using the Clean Air Act to regulate emissions from existing and new fossil fuel generators. There’s not only the carrot, but there is a bit of a stick.”

“Going beyond the federal level … there’s a lot of activity happening in the states on both fronts, again, in terms of subsidizing clean sources of power [and] also imposing increasingly prices on power producers. As economists, we like carbon pricing because it’s efficient. We often pose this dichotomy between … we either price carbon or we subsidize clean energy. I think that’s kind of a false dichotomy, and that policies are going to build both ways from both ends,” she continues.

Finally, acknowledging the increasingly important role played by the concept of environmental justice in climate policy considerations and debates, Palmer says that policymakers must be sensitive to addressing past harms and mitigating future harms born by those least able to afford them.

“As we look to decarbonize the economy more broadly, the costs of electricity are going to play an important role in terms of people’s incentives to adopt or to do things that will likely be necessary to get rid of fossil fuel use in buildings, like adopting heat pumps and electrifying other energy end uses such as vehicles,” she says.

“Keeping electricity prices low in general or the role that electricity prices will play in general will be part of that. But also, there are important upfront costs associated with doing these things and adopting these new technologies, which really substitute more capital costs and less energy costs. Because not only are they electrified, but they’re often extremely efficient,” Karen Palmer explains. “Finding ways to make that work across the board for all types of consumers, including low-income consumers and historically disadvantaged communities, is going to be an important part of the policy puzzle.”

For this and much, much more, I encourage you to listen to this 50th 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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