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Reflecting on Economics, Politics, and Climate Policy

Robert Stavins's picture
Professor & Director John F. Kennedy School of Government, Harvard University

Robert N. Stavins is the A.J. Meyer Professor of Energy & Economic Development, Director of Graduate Studies for the Doctoral Programs in Public Policy and in Political Economy and...

  • Member since 2018
  • 172 items added with 141,975 views
  • Jun 14, 2021

Addressing climate change with meaningful policy action will be neither cheap nor easy, but presently the greatest barrier to action in the United States is not technological, nor perhaps even economic, but fundamentally political.  This becomes a theme in my latest podcast, where I engage in a wide-ranging conversation about economics, politics, and climate change with Gernot Wagner, Clinical Associate Professor at New York University, and former staff economist at the Environmental Defense Fund.

You can hear our complete conversation in the podcast here.

In these podcasts – “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program – I converse with very well-informed people from academia, government, industry, and NGOs.  Gernot Wagner fits well in this group, with experience in academia, industry, and the NGO world.

Wagner, whose career also includes time spent as a consultant at the Boston Consulting Group and a journalist at the Financial Times, brings to his thinking about the economics of climate change policy a rich and varied set of perspectives gained through his years of multi-sectoral experience.  

He is a graduate of Harvard College, where he took my environmental economics course as a freshman (and then proceeded to receive the highest grade in the class).  In addition, I had the privilege of serving as chair of Gernot’s dissertation committee when he received his Ph.D. in Political Economy and Government from Harvard in 2007.

Gernot Wagner is author of two books, “But will the Planet Notice: How Smart Economics Can Save the World?,”and “Climate Shock: The Economic Consequences of a Hotter Planet,” which he co-wrote with the late Harvard Professor Martin Weitzman, whom he had met his first week on the Harvard campus as a freshman in 1998.

“I went to meet Marty on a Thursday that week,” Wagner recalls in our podcast conversation. “I remember Marty sitting me down and first of all, taking me seriously…much like you did. You did try to dissuade me from taking your class, but then I ended up taking it later that year. But Marty sat me down and guided me through, maybe in an attempt at dissuading me frankly of wanting to become an environmental economist or academic.”

In my podcast conversation with Gernot, we turn to the topic of current-day climate policy, and Wagner sounds cautiously optimistic about the chances that the United States will meet the Biden Administration’s recently announced commitment to reduce CO2 emissions by 50-to-52 percent below 2005 levels by the year 2030, saying that it would be technically and economically feasible, although politically difficult.

“I’d like to think I can make a cogent argument for why it will happen, and this administration is uniquely positioned to make it happen. And the approach it is taking seems to be on the right path,” Wagner says, while also admitting that it will be a challenge for the administration to get any meaningful climate policy through a divided Congress.

Wagner also expresses his hope for establishing a carbon price of between 60 and 300 dollars per ton to provide incentives for companies and industries to reduce CO2 emissions. Exxon, he notes, has recently come out in support of a carbon price of 50 dollars per ton, but Democrats in Washington are not satisfied with that proposal.

“The progressives in the House wants something that has a higher price equivalent. The Biden Administration might be slightly less ambitious on that front,” he says. “All of it is still much more ambitious than the…simple 50 dollar per ton of CO2 carbon tax.”

At the end of our conversation, I ask Wagner for his thoughts on the youth climate movements that became prominent in 2019.

“What we do see is amazing action in the right direction, on a whole lot of different dimensions,” Gernot remarks. “Now we are back to – what should this movement push for? And frankly, now we are back to the raw politics of it all. It’s very, very difficult to see – the one simple approach that will just solve it all. That basically doesn’t exist. It exists in theory, maybe. Not in practice.”

My complete conversation with Gernot Wagner is the 24th 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:

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


The post Reflecting on Economics, Politics, and Climate Policy appeared first on An Economic View of the Environment.

Michael Keller's picture
Michael Keller on Jun 21, 2021

This whole raid on the taxpayer and consumers wallets is based on distant forecasts of the planet’s temperature that cannot be proved. We are suppose to believe folks who clearly have a vested interest in making money and acquiring power.

A superior approach is to keep moving forward with technology improvements and innovations that tend to provide more reasonably priced energy. Invariably, that process produces lower emissions of all types and is driven by achieving better profitability. 

This approach is based on reasonability, as opposed to hysterical overreactions.

Bob Meinetz's picture
Bob Meinetz on Jun 21, 2021

"I converse with very well-informed people from academia, government, industry, and NGOs..."

Robert, conspicuously lacking from your group of very well-informed people are experts on the subject of climate change: climatologists and geophysicists. Maybe they should have been first on your list.

They will likely present a perspective that will rankle representatives from all of your other groups, because they will suggest searching for a solution climate change in economics is a fool's errand. They will explain your well-informed people who work for oil companies (David Hone and Spencer Dale) stand to profit from selling products directly responsible for causing climate change. They may show how boardmembers of pseudo-environmental NGOs like "Environmental Defense Fund", "Natural Resources Defense Council", and "Sierra Club", are invested in other companies that profit not from a solution, but the problem itself.

Since profitability is driven by consumption - a primary driver of climate change - they may ask, "What if the solution to climate change uses not the most amount of fuel, occupies the most land, requires the most wind turbines / solar panels, has the most conferences, seminars, and college curricula, but the least? What if the solution lies not in economics, but economy?"

Whether it's profitable or not, they will likely point out nuclear power paves the only viable path forward on climate change - and there aren't enough well-informed (and well-paid) economists, industrialists, venture capitalists, academics, investors, lawyers, or activists in the world who can change that fact.

Michael Keller's picture
Michael Keller on Jun 23, 2021

The august panel appears heavily tilted towards academics, lawyers, and government bureaucrats while being painfully light on science and technical knowledge. In other words, more Ivory Tower humanities than practical or realistic.

I do not take much stock in parts of the younger generation that eschew reason in favor of the "feel good" emotions of the minute. Tough problems require hard work, discipline, logic and much more than a painfully thin veneer knowledge of physical sciences in order to arrive at practical solutions that do not empty the pockets of large segments of the population.

Unfortunately, many colleges simply kowtow to the mob and thus churn out simpletons dumped into society and then easily manipulated by the powerful and corrupt.

I sincerely hope the "climate change" raid on the economic health of the nation's poor, middle class and businesses is utterly jammed up in Congress. 

As for nuclear energy, the technology needs to be more competitive and essentially walk-away fail-safe. I am certain that is possible, but the costs of a grossly excessive regulatory burden must be significantly reduced and made more consistent with the level of public and economic risk. Such a more rational policy, however, seems increasingly unlikely as the regulators are hell-bent on making a bad situation much worse.

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Thank Robert for the Post!
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