Energy & Environment

Despite progress toward a cleaner energy system, current U.S. policies appear insufficient to reduce emissions enough to avoid catastrophic climate change while sustaining economic growth. Energy innovation is a crucial part of addressing this problem, but a number of inefficiencies persist in the innovation system. To address this, Goldstein, Azoulay, Graff Zivin, and Bulović examine practices and institutions that successfully support the pharmaceutical innovation system and that hold important lessons for energy innovation.

In this paper, Greenstone, Sunstein and Ori propose two major steps towards simplifying fuel efficiency standards and refocusing the program on achieving guaranteed emissions reductions at lower cost to automakers. First, they propose targeting greenhouse gas (GHG) emissions directly, without differentiating by vehicle types and sizes, using data to project a given vehicle’s lifetime greenhouse gas emissions. Second they recommend establishing a robust cap-and-trade market to reduce compliance costs for automakers while providing considerably more certainty about the future path of carbon dioxide emissions. 

This paper proposes three complementary policies for enhancing urban resilience to new climate risk. The first focuses on improving key urban infrastructure. The second addresses the urban poor, who are the most vulnerable in the face of climate change risks. The third proposal aims to reduce the cost of adaptation through better-functioning markets, and to allow prices of natural resources, energy, and coastal insurance to reflect true conditions.

In this set of economic facts, The Hamilton Project and the Energy Policy Institute at the University of Chicago provide useful context for a discussion of the dangers to the economy posed by climate change and the policy tools for addressing those dangers. 

Over the past two decades Democratic and Republican administrations have taken steps to reduce U.S. carbon-dioxide emissions by reducing use of fossil fuels. Despite growing public attention to the climate consequences of fossil fuel extraction, U.S. climate policy so far has not extended to the government’s role as a major source of fossil fuels. Kenneth Gillingham and James Stock propose to incorporate climate considerations into federal coal leasing by placing a royalty adder on federal coal that is linked to the climate damages from its combustion. A royalty adder set to 20 percent of the social cost of carbon would reduce total power sector emissions, raise the price of federal coal to align it with coal mined on private land, increase coal mining employment in Appalachia and the Midwest, and provide additional government revenues to help coal communities.

Using newly released data, The Hamilton Project presents an economic analysis and a new interactive feature to illustrate the great variation in the level and nature of water use across the country.