On today’s episode of Free Range, Livermore is joined by Michael Greenstone, the Milton Freedman Distinguished Service Professor in Economics and the Director of the Energy Policy Institute at the University of Chicago. He served as the Chief Economist for President Obama’s Council of Economic Advisors and has worked for decades engaged in research and policy development on environmental issues.
Livermore and Greenstone begin by discussion the climate provisions of the Inflation Reduction Act and their policy implications (0:47-4:47) Greenstone offers his take on what the IRA means (if anything) concerning the role of economists in debates over climate policy (4:48-8:49) and the two discuss the relationship between energy prices and politics. (8:50-14:10) Livermore and Greenstone agree that transparency of pricing mechanisms can be both a feature and a bug. Greenstone mentions that while the US is viewed as a free market place, our instinct is to approach the situation as engineers. (14:11-20:20) He then offers thoughts on why the engineering approach won out in the IRA. (20:21 – 25:34)
The two discuss the factors that helped lead to lower technology costs green cleaner energy sources, which helped pave the way for the IRA. (25:35-28:12) The sulfur dioxide trading mechanism in the 1990 Clean Air Act Amendments is a classic example of policy that promoted low cost emissions reductions; R&D funding is another area where government is justified. (28:13-30:24)
The two turn to the question of economic forecasting in climate debates. (30:25-34:17) Greenstone discusses the work of the Climate Impact Lab, which he directs, which is improving estimates of climate damages and the social cost of carbon. (34:18-40:55) The two discuss the role of adaptation in climate damage estimates (40:56-47:05) and the role of distributional analysis. (47:06-51:15) The two then discuss an alternative to the social cost of carbon that is based on “marginal abatement costs” associated with achieving a given climate goal. (51:16-57:11)
To conclude, Livermore asks about the potential path forward for global cooperation on climate change. For Greenstone, he focuses on areas of policy that he can influence, and in particular on driving down the difference (delta) between the private cost of clean energy and dirty energy and looking for opportunities to leverage our policies for reductions elsewhere in the world. (57:12-59:36)
Tag Archives: energy
Season 1, Episode 26
On this episode of Free Range, Mike Livermore interviews Katherine Blunt, a journalist at the Wall Street Journal and the recent author of California Burning: The Fall of Pacific Gas and Electric and What it Means for America’s Power Grid.
The conversation begins with the book’s narrative of criminal charges, with Blunt briefly describing the cast of characters and situations in the book that led to prosecutions for a violation of the Federal Pipeline Safety Act and 84 counts of involuntary manslaughter. The latter was one of the first situations in history in which a company was charged with homicide. (0:32-7:06)
Even with these successful criminal prosecutions, many were left with a sense of dissatisfaction. (7:07-10:30) Livermore and Blunt discuss some of the moral complexities of collective criminal liability. (10:31 – 17:45) Blunt highlights the fact that the victims compensation fund is tied to the future stock price of the company; different types of penalties have the potential to weigh on the company’s share price. The two also discuss the difficulty of recruiting new talent to work at a corporation when criminal liability may be at stake. (17:46 – 28:49)
The two move to discuss broader policy issues, including how regulated utilities receive returns on capital but not operating and maintenance (O&M) expenses. Blunt believes that the company had significantly underspent on O&M with serious negative consequences. (28:50 – 33:59)
Blunt discusses possibility that the charge given to PG&E — delivering safe, reliable, affordable, and clean energy — might be an impossible task. (34:00 – 41:21) The two shift to the topic of renewable energy. Blunt describes California’s ambitious targets for carbon reduction. California’s early investments in wind and solar helped create the economies of scale which made these forms of energy are affordable, but California’s ratepayers paid billions of dollars for this power. (41:22 – 45:25)
Livermore asks how people in California should feel about how this has all played out. Blunt responds that California’s contribution to reducing carbon emissions is rightfully a point of pride. But as a leader in climate change efforts, California has incurred a real cost. (45:26- 49:29)
Blunt then discusses the broader implications of the PG&E story. Utilities everywhere are going to have to confront new risks as a result of climate change. PG&E’s story demonstrates that if any company has a narrative of mismanaging risk, it’s going to be very challenging to get ahead of things. The consequences of the failure of the electric system are becoming greater, in both an acute and a broader sense. There are lessons here for every region of the country. (49:30 – 52:10)
A question that comes out of the book is how bad PG&E’s risk management practices were compared to other utilities in California. Blunt highlights the inherent tension between private interests and public good, which is present in every utility company. PG&E is hardly the only utility to mismanage that. Historically, PG&E’s mismanagement has been more acute than others and the consequences have been much greater. (52:11 – 55:55)
Blunt then turns to bigger picture questions of centralized versus distributed energy. In her view, distributed technology will play a role in how we generate and consume power and it has the potential to reduce the amount of large centralized infrastructure in the future. But, it is hard for her to foresee a future without a need for centralized generation and transmission carried over large distances. The model has a lot of challenges which are becoming more acute, but there is no great solution for a substantially different model. The only solution is to work within the parameters of what we have and make it better. (55:56 – 1:01:00)
Season 1, Episode 12
On this episode of Free Range, Mike Livermore speaks with Cara Daggett, Assistant Professor of Political Science at Virginia Tech, about her new book The Birth of Energy: Fossil Fuels, Thermodynamics, and the Politics of Work.
Daggett begins by speaking about her path to studying energy via her background in biochemistry and politics. Daggett explains that her interest in carbon — the basis of life in a scientific context but a hot-button issue in the political sphere — led to a broader awareness of how politics treat the concept of energy as fuel. This, in turn, inspired an examination of how various terms such as power and, particularly, work are thought about. (:55 – 7:45)
Livermore and Daggett discuss the relationship between politics and science. Daggett voices concerns about the treatment of policy issues as purely empirical. Using the example of the opioid crisis, Daggett argues that many people have legitimate questions about how scientific knowledge is created, and for whose benefit – failing to acknowledge and address those questions is unlikely to build trust in cases such as climate change or vaccination. (7:50 – 12:34) Livermore asks about the interaction between scientific concepts and socio-political discourse, specifically within the context of her study of thermodynamics. Daggett explains that some of the key sites of this interaction are in areas like politics and workplace management, where life itself is governed. This leads to a close reading of a paragraph from the book, in which Daggett describes what energy is and how it fits within the context of the Western understandings of work. (12:44 – 27:15) Daggett then explains how this understanding has led to a valuation of dynamism and energy in a range of areas, including modern conceptions of masculinity. (27:20 – 33:03)
The conversation then expands to include a long discussion of the relationship between thermodynamics and economic theory, particular in relation to the shared concepts of waste and work. This part of the talk touches on a range of ideas, including the natural tensions of a society that is experiencing increased automation while still valuing the concept of work itself, and whether Jeff Bezos’ flights to space are wasteful. (33:10 – 59:10)
The podcast concludes with a discussion of the “post-work perspective” in relation to environmental regulation and climate politics. (59:20 – 1:06:35)
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