CAMBRIDGE MA. – Stanford University Professor Lawrence Goulder analyzed some of the policy options available to government for combatting climate change 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. Listen to the interview here. A transcript of the interview is available 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.
Goulder, who graduated from Harvard College with an A.B. in philosophy in 1973 and from Stanford University with a Ph.D. in economics in 1982, served on the faculty of the Department of Economics at Harvard before returning to Stanford's economics department in 1989. His research spans a range of environmental issues, including green tax reform, the design of environmental tax systems, climate change policy, and comprehensive wealth measurement. He is co-author of “Confronting the Climate Challenge: US Policy Options,” published by Columbia University Press in 2018.
The book examines the different climate change policy options available for lawmakers through the lens of a general equilibrium framework, considering both the aggregate benefits and costs of various policies as well as the distribution of policy impacts across industries, income groups, and generations. Goulder explained that the research showed that price-based approaches such as carbon taxes or cap-and-trade are the most cost-effective methods to achieve the desired changes, but also that a Clean Energy Standard could be successful.
“The reasons it does pretty well are a bit technical, but they have to do interactions between this policy and preexisting taxes in the US economy,” Goulder said. “I think this result's quite relevant to current policy discussions since today there's a lot of focus on the CES, the Clean Energy Standard, as a way of addressing climate change. And even though our results tend to favor a carbon tax, we find that the CES could do pretty well as well.”
When asked to analyze the Trump Administration’s environmental policy portfolio, Goulder said he could find little to be positive about, noting that the administration caused quite a bit of damage, some of which will be long-term.
“The reversal or elimination of some of the Obama efforts was very problematic, in particular a signature effort by the Obama administration was the Clean Power Plan, which would try to put limits on the emissions of CO2 per unit of electricity [generated] by power plants throughout the US. I think dismantling that is a real problem,” Goulder remarked. “I must say also just the general tenor of the Trump Administration to deny the science and to deny, in particular, the idea that there is serious human-caused climate change is very problematic to the extent that it reinforces political opposition to dealing with this immense problem.”
Some of Goulder’s recent research examines the impacts of China’s new emissions trading system which launched last month.
“This is going to be the largest emissions trading system in the world; it will more than double the amount of carbon dioxide covered by emissions pricing. And it is also using an approach that has some attractions in terms of keeping costs down,” Goulder said. “The tradable performance standard approach used in China is somewhat less cost effective than would be an equivalently scaled cap-and-trade system, [but]… it's a tremendous step forward that China is taking this national level effort, that it's employing a tradable system, and that it's intent on achieving very significant reductions.”
Goulder’s interview is the 8th episode during 2021 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.”