CAMBRIDGE MA. – UCLA Law School Professor Kimberly Clausing, who served in the Biden Administration, continues to give it high praise for its climate policies in the newest 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.
Clausing served as Deputy Assistant Secretary for Tax Analysis in the US Department of the Treasury from 2021-22. On reflection, she maintains that climate policy has been a priority for President Biden and his administration since day one.
“In fact, on day one, they rejoined the Paris Climate Agreement. They worked with climate at the center of their work in every part of that administration, including the Treasury [Department],“ she said. “The legislative achievements… were substantial, even though they were very difficult and hard fought. The infrastructure bill has some climate provisions in it, but also the Inflation Reduction Act, which I think is probably the biggest contribution we've seen to emissions reduction in the legislative sphere, and certainly in my time following these [issues].”
Clausing acknowledged that the Inflation Reduction Act was far from perfect, since it contained a disparate set of objectives, and was based almost exclusively on subsidies designed to reduce carbon emissions, a political necessity.
“There are good arguments for subsidizing. We didn't quite have the number of senators that are required to look at the cost side of this equation. It's something that I'm hopeful that maybe we could do down the road, and I think there's a moment coming ahead where that might happen. But the approach that we had is the approach that was feasible with a very delicate balance in Congress that was available,” she explained.
Clausing argued that trade policy and climate policy can be complementary, if done correctly.
“Some of the most hopeful progress that I can think of is using the carrot of trade and trade liberalization and market access to really encourage countries throughout the world to do more emissions reduction. And I think done correctly and done in a non-discriminatory fashion… I think that can be an incredible force for good,” she said. “An example of a non-discriminatory approach is the European approach where they are charging their firms for emissions allowances, and then they, in parallel, charge importers for that same amount of carbon content in particular industries. And so that basically incentivizes producers and governments in places like China and India and throughout the world to think about the carbon content of their production and goods like steel and aluminum because they know that if they want to send it to Europe, it's going to face that carbon border adjustment.”
Clausing mentioned that many countries that haven’t priced carbon in the past are now considering doing so.
“They'd rather collect the revenue themselves and pay it to the Europeans if they're exporting. But even those direct effects, while they may not be very big in many country cases, I think it's a good time for a lot of countries to look at revenue sources that meet fiscal concerns that they might have that can enable them to shift their comparative advantage in a greener direction.”
The author of “Open: The Progressive Case for Free Trade, Immigration, and Global Capital,” Clausing said the book was inspired by her desire to provide a fact-based defense of traditional American liberalism vis-à-vis trade and immigration policy.
“I wrote that book kind of in a flurry about a year after President Trump was elected as an attempt to sort of take basic economic intuition and understanding in the field of international economics and convey it to a popular audience,” she explained. “I'm really proud of [the book] in part because I think these arguments aren't made enough these days. I think that there is this sort of move towards nationalism and America first kind of thinking. And so, I think we do need voices to sort of explain the economics in terms that people can understand, not just in American Economic Review, but in a broader context.”
Clausing’s interview is the second episode of 2024 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.”
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LINK TO PODCAST: https://on.soundcloud.com/Vmj9M