Yale University Professor Kenneth Gillingham Talks Carbon Pricing and Climate Policy in the Newest Episode of “Environmental Insights”
CAMBRIDGE MA. – Carbon pricing, energy technology, and the importance of distributional equity in climate policy were the topics of discussion in the newest episode of “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program.” The featured guest is Kenneth Gillingham, Professor of Economics at the Yale School of the Environment. The podcast is produced by the Harvard Environmental Economics Program. Listen to the interview here.
Hosted by Robert N. Stavins, A.J. Meyer Professor of Energy and Economic Development at Harvard Kennedy School and director of the Harvard Environmental Economics Program and the Harvard Project on Climate Agreements, Environmental Insights is intended to promote public discourse on important issues at the intersection of economics and environmental policy.
A former senior staff economist at the White House Council of Economic Advisers, Gillingham is an energy and environmental economist whose research draws from the fields of applied microeconomics, behavioral economics, industrial organization, and integrated assessment modeling of climate change. Prior to joining the faculty at Yale, Gillingham spent two years as a research assistant at Resources for the Future.
“The tools of economics are incredibly powerful for helping you understand how to appropriately manage the environment and also the effects of many different policies, actions, technologies… both on the environment but also more broadly on human wellbeing,” Gillingham said in his conversation with Stavins.
Much of Gillingham’s work has focused on carbon pricing mechanisms which many economists believe must be leveraged appropriately to reduce emissions and mitigate the impacts of climate change.
“I do recognize there are real and very strong political forces that work against carbon pricing, but I don't believe that it's a foregone conclusion that we will never have carbon pricing. I do recognize that it's somehow often politically easier to give subsidies than it is to tax someone, but as we've seen with the One Big Beautiful Bill, those subsidies may not be that durable either,” he remarked. “And at the end of the day, the logic of carbon pricing is so powerful and so strong and the evidence behind it where we've seen it working in so many places that it has to remain on the table.”
Gillingham stated that carbon pricing mechanisms will become more politically viable when they are perceived as revenue generators with potentially important health benefits.
“You need to build a coalition, and you're going to have a set of people who say, ‘Look, this is going to help us address climate change.’ It may also have co-benefits and help us address a set of other co-pollutants, reduce asthma cases, et cetera. And of course it's not the direct way to do that, but it will do that as a co-benefit,” he said. “You put all of that together along with those who say, ‘We're desperate, we need new revenues, we are in a tight budget situation.’ It's possible, I believe, to build that coalition.”
Gillingham also addressed questions relating to the distributional equity of climate policies, specifically the impacts of carbon pricing on lower-income households.
“You can make an argument… that carbon pricing is hurting poor people,” he remarked. “You raise fuel prices, you really do cause quite a bit of unrest. And I think that that has to be addressed, but the key thing for carbon pricing to work, you maintain the price… You would have to find ways in which there's still an incentive for everyone – low income, middle income, high income – to reduce emissions. They still face that price, but you can redistribute some of that revenue back in a way that is means tested or related otherwise to income.”
Gillingham also offered sage advice to young people considering studying environmental economics.
“It is a fascinating, amazing field that draws together knowledge across a broad range of disciplines. It is an economics field but it's not just economics. You need to know much more, and that just keeps it incredibly interesting,” he stated. “There are an endless number of tradeoffs that will always be made. This field will always be relevant. And so, if you're interested in the environment and if you're interested in thinking carefully about tradeoffs and understanding how policies actually work in the real world and influence wellbeing and welfare, I would say that environmental economics is a great path to take.”
The interview with Gillingham is the third podcast episode released in 2026 in the Environmental Insights series, with additional episodes scheduled to drop each month.
“Environmental Insights is intended to inform and educate listeners about important issues relating to an economic perspective on developments in environmental policy, including the design and implementation of market-based approaches to environmental protection,” said Stavins. “We speak with accomplished Harvard colleagues, other academics, and practitioners who are working on solving some of the most challenging public problems we face.”
Environmental Insights is hosted on SoundCloud and is also available on Amazon Music, Apple Podcasts, Pocket Casts, Podcast Addict, and Spotify.
LINK TO PODCAST: https://on.soundcloud.com/OteWuq02MP886cbOTB