This week at the Energy Symposium, Dr. Joel Landry, Assistant Professor of Environmental and Energy Economics at Penn State University, will present a talk about political permit allocations and the feasibility of federal carbon policy.
Speaker bio: Joel R. Landry, Ph.D is an assistant professor of environmental and energy economics at the Pennsylvania State University. His research examines the welfare implications and political economy dimensions of large-scale public policies that target significant market failures, with particular focus on public policies related to climate change, energy and transportation systems, and the urban sector.
Prior to joining Penn State in 2014, he completed his PhD at Cornell University where he studied environmental and energy economics and was a member of Dr. Antonio M. Bento's research group. He also holds an M.S. in Public Policy from the University of Maryland, College Park, where he studied environmental and development policy, and two B.A.s in economic and political science from Southern Illinois University, Carbondale.
Abstract: This talk will examine how the simultaneous choice of an emissions cap and the allocation of permits through the legislative process affects the ability for a federal climate policy to emerge in the United States that is feasible, efficient, and equitable. When permits can be politically allocated, the legislative process is likely to select a cap that is relatively more stringent since yes voting legislators both support the policy because of the external benefits provided by the cap as well as the value of permits or green pork their district receives. Using novel estimates of legislators' revealed marginal external damages, I show that only when permits can be politically allocated directly to legislators' districts, does there exist a climate policy that can pass both chambers of the U.S. Congress. However, the resulting policy achieves only three-quarters of the welfare gains of the policy that maximizes national aggregate surplus given a social cost of carbon of $34.10 MTCO2e. Moreover, the policy is regressive. In totum, these results suggest an important trade-off between the feasibility of federal climate policy and efficiency and equity. In addition, I also examine current proposals to lower the Senate voting threshold to 50% and whether climate policy should be initiated in the Senate instead of the House. Both proposals lower political feasibility and may result in a less efficient federal climate policy given a social cost of carbon of $34.10 MTCO2e.
The UT Energy Symposium meets every Thursday during the fall 2019 semester.