CAMBRIDGE MA. – Having served as the Deputy Assistant Secretary for Climate & Energy Economics in the U.S. Department of the Treasury in 2021-2022, Catherine Wolfram has some particularly relevant insights to offer on the development and implementation of climate change policy. Wolfram is the Cora Jane Flood Professor of Business Administration at the Haas School of Business at the University of California, and currently on leave at the Harvard Kennedy School. She discussed her time in government service and on her thoughts and hopes for a carbon pricing scheme during 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.
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.
Wolfram, who earned her PhD in Economics from MIT, reflected on her service in the Biden Administration, saying it was an “honor and thrill of a lifetime.”
“I would say the high point was definitely the work on the price cap on Russian oil. That was the main thing that I spent time on in the last 10 months of my time at Treasury and was absolutely fascinating from so many different perspectives,” she said. “ I learned a lot about foreign diplomacy, or I guess I should say that I observed foreign diplomacy in action.”
During her time at the Treasury Department, Congress passed the Inflation Reduction Act, an important piece of legislation that authorized $391 billion in spending on energy and climate change initiatives.
“A lot of the Inflation Reduction Act is being implemented through tax credits, and that's Treasury's purview, so [although] it was not my office within Treasury, it was another office, the Office of Tax Policy, but I… [attended] a lot of meetings about what started out as the Build Back Better Act and became the Inflation Reduction Act. So, that was really fun to see and is certainly a momentous piece of legislation,” she remarked.
Despite the reliance on subsidies in the Inflation Reduction Act, Wolfram said that she remains optimistic about the potential role of carbon pricing in climate change policy.
“I would not call carbon pricing dead,” she argued. “I could see it coming back in some form, maybe not the economy-wide carbon price that textbooks favor but maybe something that starts, for instance, with the industrial sector … on a more limited scale.”
Wolfram expressed optimism that the international community will figure out creative ways to adopt climate policies that will make a positive difference.
“I think if the G7 countries can get together and figure out how to put a price cap on Russian oil, [then] hopefully the G7 countries can get together and figure out good ways to use their presence in the international trade community to address climate change.”
That said, Wolfram also expressed concern about the possibility that an overreliance on tax credits and government subsidies in the design of climate policy could set back efforts to impose carbon pricing.
“I worry that there's a future that evolves where the European Union gets pressure from its industry and loses enthusiasm for its carbon price, and so the competitive pressures from industry that are seeing these subsidies over in the US and thinking of moving to the US, that that causes the EU to backtrack on climate policy, just because we have these different approaches to reducing emissions,” she remarked.
Wolfram’s interview is the second 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/AFQsE
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