CAMBRIDGE MA. – Energy and resource economist Meredith Fowlie spoke about the complex regulatory challenges and ‘just transition’ dynamics of climate policy in the latest episode of “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program.” 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.
Fowlie, Professor of Agricultural and Resource Economics and co-director of the Energy Institute at Haas at U.C. Berkeley, is well known for her research on how environmental regulations have worked in practice. One example is her 2018 paper co-authored with Michael Greenstone and Catherine Wolfram, “Do Energy Efficiency Investments Deliver?: Evidence from the Weatherization Assistance Program,” which examined the efficacy of the federal Weatherization Assistance Program, which works with local energy services providers installing energy efficiency measures.
“What we found was that the energy savings were less than half of what engineering projections had anticipated. So, that was a disappointing finding. It just meant that we weren't getting the savings that the models projected and that the program wasn't delivering as hoped,” Fowlie remarked. The paper was somewhat controversial, she admitted, because the findings didn’t align with what lawmakers had expected.
Fowlie went on to say that subsequent research by her project RA Erica Myers demonstrated how some simple weatherization program adjustments can have significant upsides.
“[In her research, Myers found] that if you incentivize the workers who are making these improvements on the home, such that their compensation depends partly on the performance, you can significantly increase the effectiveness of those investments. And has also been able to identify those investments that perform the best in order to help target some of these weatherization investments,” she said.
The impacts of such government regulation have been the focus of much of Fowlie’s research. She emphasized that market outcomes often deviate from what is anticipated because of the unexpected impacts of certain economic incentives, something policymakers need to pay close attention to when seeking and designing policy solutions to global warming.
“When we think about the industries that are on the front lines of climate change – that's electricity; it's natural gas; it's insurance – a lot of these sectors and firms are subject to economic regulation. Regulators determine what investments get made, how costs get recovered, what prices get set. And I'm increasingly seeing that as less as a bug and more like a feature. We have these economic regulatory tools at our disposal, and if we start thinking about them like climate policy tools, we can actually get a fair bit of leverage out of those tools,” she stated. “I'm thinking about how public utility commissions set electricity rates in particular and thinking about how those regulatory decisions have pretty profound implications for how we mitigate climate change and who pays the price.”
Fowlie also addressed the topic of environmental justice or the so-called ‘just transition.’
“I've been thinking about these elevated concerns in a number of respects. One is, who is paying for climate mitigation and adaptation? These are needed investments, but how we make these investments has some implications for who ends up paying, and sometimes that's unintentional,” she remarked. “Part of my research is thinking about how we're paying for climate mitigation and adaptation and who ends up paying the price. A second concern is cap-and-trade programs and the environmental justice concerns about those programs, particularly in California and [the] program design changes we could consider making in light of those concerns.”
Regarding the current youth movements of climate activism, Fowlie expressed her admiration for the ways in which they are focusing attention on these important issues.
“There's a sense of urgency among the students I teach that I think is important and I want to encourage. … I have learned a lot talking to them about their concerns and their impatience and their frustration. And I hope they've also learned from me about some of my concerns with how they want to move forward and what approaches they want to take,” she stated. “There's certainly a youthful energy in terms of the level of commitment they're bringing, but I think it's going to change the trajectory of many, many youth who are going to have a really profound impact on how we tackle the [climate change] problem in future generations.”
Fowlie’s interview is the seventh episode of 2023 in the Environmental Insights series, with future 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, iTunes, Pocket Casts, Podcast Addict, and Spotify.
LINK TO PODCAST: https://on.soundcloud.com/ucRgz
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