Insights on Biden Administration’s Climate Policy: Interview with Professor Amir Jina

Amir Jina is an Assistant Professor at the Harris School of Public Policy, UChicago. His research focuses on the role of the environment and environmental change in shaping of how societies develop. He has conducted fieldwork related to climate change adaptation with communities in India, Bangladesh, Kenya, and Uganda. Professor Jina is a founding member of the Climate Impact Lab – an interdisciplinary collaboration examining the socioeconomic impacts of climate change around the world. He was previously a Postdoctoral Scholar at the Economics Department of University of Chicago, and a Senior Fellow at the Energy Policy Institute of Chicago (EPIC).

What follows are edited excerpts from a conversation between Professor Jina and the Chicago Policy Review’s Shivani Shukla on the climate implications of the Biden Administration in the U.S., explainers of some climate policy tools, and a message for future climate leaders.

CPR: Thank you for joining the Chicago Policy Review for this talk. One of the biggest winners from the change in American administration, to Joe Biden’s leadership is supposedly the national climate agenda. What are your initial thoughts on the climate and environmental agendas of the new administration? Are the targets truly ambitious? Where would they need to be, and what are some of the biggest hurdles to probably achieving these targets?

Amir Jina: My main feeling seeing the executive orders is a combination of relief and excitement. Relief because there has been a pent-up feeling of frustration and anxiety for the past four years and even longer about the intention of the US government to make a concerted effort about climate change, so suddenly the signalling is, yes, we’re going to take this seriously.

Even with some positive signals during the Obama administration, it was still not an issue which had risen to the level of policy importance. So just the signalling that this is an issue that we’re going to take seriously has led to great feelings of relief. Then excitement, because the part of the content of these executive orders really does point towards a role for researchers here. Along with one of the executive orders was this idea of getting science-based decision-making back into policy where relevant and, where applicable, with the scientific advisory council and that’s very exciting.

It shouldn’t really be exciting. That should just be the baseline standard, but the idea that it is an issue that will be discussed and will be subject to a lot of attention, even if we end up with potentially not the perfect outcome, is an exciting thing. At the same time there’s a lot of work ahead, so just the signalling doesn’t necessarily mean that things will actually get followed up on. That’s where hard work on the research and policymaking side comes in. There’s a whole political machinery that needs to kick into gear here to try and find the right policies and none of those policies are going to come without some compromise.

The second part of your question was about are those measures enough. It feels like the right signals but it’s hard to judge what the actual level of effort is going to be and or what the level of effort can be here. The hurdles in the future are going to be in trying to get the effort to match the ambition and that’s a tricky thing.

CPR: Following up on the ambitious plans the administration has brought into place: one of the things that they initially did was rejoining the Paris Agreement. Seeing how there’s going to be a Conference of Parties later this year, can you contextualize the importance of climate change addressal by the administration towards global climate action? Do you think the US is now considered a leader, or could be considered a leader?

Amir Jina: On the last part, I say, oh no, it isn’t. Can it be considered a leader, I think the answer is yes, but there’s a long way to go before actually earning that leadership. Just because the US has woken up and decided it wants to lead, it cannot be taken as a leader without some humility. Two additional comments to what I said before, two very positive signs that there are representatives for climate change at the highest level of government: domestic climate envoy, Gina McCarthy, and the international climate envoy, John Kerry. Having somebody dedicated to this issue within the government and speaking out about this is a very good sign internationally for what’s going to happen.

The importance of this Conference of Parties, at the end of the year can’t really be overstated, and in fact the strange blessing in disguise of COVID, not that there’s too many silver linings to what happened in the last year, but the delay of the Conference of Parties from the end of last year to the end of this year actually might have worked in the favour for global agreements on climate change. The Conference of Parties was delayed by a year and it is now five years on from the Paris Accord.  There is a five-year review mechanism built into Paris, that means that the signalling that would have come during this would have been negative with America completely absent from negotiations at the COP.

The US has a declining share of global emissions, but it still is historically the biggest emitter, and it still is the world’s biggest economy. The rhetorical value of the US being absent for a year would have had an effect on the level of agreement and ambition. Now, we have John Kerry making the right move saying we’re back with humility and we’re going to try and earn a place here, and we think that we need to do more, and that everybody needs to do more. That message, delivered repeatedly by someone as well-known as John Kerry, who has been given a prominent role in the administration, and a year of that rhetoric will do quite a lot if the US can back up the negotiations with some concrete domestic commitments. So, first of all, setting a target and then some concrete domestic commitments to try and get to that target.

The big shock to the system will come when the US comes out with an NDC (nationally determined commitment). Then, we have some headline number which agrees with the Biden climate plan statement of net zero in various sectors and that’s what they’re declaring on an international stage in a very publicly declared way to the negotiations. Watching the next eight months or so of this will be really fascinating to see the types of promises that come out.

CPR: Moving on to the domestic side of climate policymaking, I want to dig a little deeper into two aspects of the federal climate action, their executive orders – one on January 20 reinstating the social cost of carbon, and another on January 27 bringing about some tenets of environmental justice into action. Starting with the social cost of carbon, for readers who are not policy students, could you elaborate on the concept, and why it is so crucial to get that number right?

Amir Jina: Both main people behind the original governmental definition of the social cost of carbon, Cass Sunstein and Michael Greenstone, refer to the Social Cost of Carbon as “the most important number you’ve never heard of”.  I think there’s truth to that statement, as it plays a really important role in environmental policy in the US, but one which is a little bit obscure.

In its simplest form, SCC is just the dollar value of all the damages that are caused by releasing carbon pollution into the atmosphere which enhances the greenhouse effect. It’s a quantification of the damages that come from emitting a single ton of carbon dioxide and it’s a difficult thing to calculate. First of all, any CO₂ that is emitted increases carbon dioxide concentrations in the atmosphere and raises the earth’s temperature by a certain amount, and has effects on human wellbeing and the economy. Some positive effects, mostly negative effects, and there are some costs borne by people around the world. The social cost of carbon tries to measure that sum of damages. That’s a difficult measurement exercise and you need a lot of data on what those effects are in order to be able to sum up all of the damages. It’s also difficult because carbon dioxide stays in the atmosphere for hundreds of years and so if we emit one ton of carbon dioxide today, it’s not like it only has damages this year or next year, it has damages for hundreds of years. We have to think about how we value the future so that’s also baked in some assumptions there into the social cost of carbon.

The reason it’s important in a regulatory sense in the US is because about 13 years ago there was a Supreme Court ruling, which said there’s enough evidence to show that carbon emissions are causing damages to health and other economic damages, and therefore they should be regulated under the Clean Air Act like any other pollutant would be.

One of the things you have to do when there’s environmental damages in the US, is a cost-benefit analysis. When you’re planning any infrastructure, for example, you have to think about the damages caused by environmental degradation that your infrastructure project is causing. Prior to this Supreme Court ruling, there was no price put on the damages caused by carbon. After this, we need to regulate carbon and subject it to cost-benefit. So, in the first year of the Obama administration an interagency working group was convened, which tried to come up with the scientific process for estimating that number which then became the established social cost of carbon. There was a big update in 2013 and SCC at the end of the Obama administration was between $40 and $50 per tonne, and that’s the value the marginal damages caused by CO₂ emissions into the atmosphere. There are also benefits that come from building the infrastructure.

Prior to this number being included in cost-benefit calculation, essentially the value of damages was set to zero, which is a big distortion in the market. SCC tries to correct that distortion. It has been used in hundreds of legal judgments over the course of the Obama Administration. Its value was set much lower during the Trump years. On effectively day one, and as of last week, the Biden administration has returned temporarily to the Obama Administration process almost exactly, with the intention to update it early next year.

CPR: Following up on the second executive order, how can we expect some tenets of environmental justice to actually be integrated into the climate action plans.  What would be the barometer for them being integrated?

Amir Jina: This is a big unknown so I’m not sure what direction or form it will take but I think it’s one of the genuinely more exciting aspects of this. For years, people have been talking about the way in which climate change would exacerbate inequality, both in the US and globally. All of the results seem to point towards climate change harming people who are already disadvantaged more. You get this double hit of exacerbation of inequality which is you’re already more vulnerable and the exposure changes to make you worse, and then you have fewer resources to adapt so it makes you worse yet again.

Again, even our policy responses are exacerbating inequality. When we think about climate damages, we should be taking the inequality seriously. Should we just think of that in dollar terms or should we think of that in some other way? I think that’s a little bit of a difficulty because fundamentally it means valuing damages to some people more than damages to other people. While it’s there in the research and the academic side of things, it’s potentially hard from a policy point of view to justify on valuing the lives of people differently.

That is where there’s definitely scope for the centrality of environmental justice to make a lot of difference to make sure that the process of applying policies ends up taking into account costs and benefits in a way which recognizes that the benefits are shared equally.

There’s a lot of positives but there are a couple of things that I would be somewhat worried about. The environmental justice community in the US has a negative view on some of the policy tools; cap and trade is a classic example. Cap and trade is where you place a cap on emissions. Because more polluting firms tend to be sited in locations with people having less political representation and lower incomes, those firms might just spend more money buying permits and reduce their pollution less, and so the benefits of a mitigation policy here could benefit wealthier locations. One of the reasons why cap and trade has become controversial is because that exacerbation which is described, even if it does happen, is not a feature of cap and trade. It is just the allocation mechanism and so it’s blaming the tool for how the tool is used. One of the reasons why cap and trade is attractive to economists is because it’s one of the lowest cost ways of reducing emissions.

My hope is that one of the things that this recognition of environmental justice and the government can do is find ways to expand the palette of how policies are made here to more than just considering economic efficiency, but also consider social outcomes and to do that in a way which doesn’t take any of the potential tools off the table. What I mean is that cap and trade could be implemented, but cap and trade with enough design features which means you’re guarding against the effect of exacerbating inequalities. I hope it doesn’t lead to a lot of deadlock or conflict but rather adjustments to the implementations of policies. By placing environmental justice in a central role in the administration, there’s a chance for that discussion to be had at the highest levels.

It’s a new thing and a really interesting thing to see how it will develop and what actual form it’s going to take on a day to day basis.

CPR: Could you talk a little bit about your individual research or your research with the team at Climate Impact Lab that might align with the current administration’s objectives and if your research has a role in advising the government?

Amir Jina: I’m part of a group of researchers who, for the past five or six years, have been trying to work towards data-driven estimates of the costs of climate change, to use the best climate science, the best economics and the best data possible, and to try and calculate what the costs of climate change are to people all over the world.

We’re not alone in this endeavor. There’s been a larger and larger group of people who are using new access to computation, new data sets and new empirical techniques to try and understand the economic and social costs of climate change. The science here has advanced enormously in the past 20 years and the evidence base of what’s driving damages and where the damages are around the world has completely changed. We have been part of this transformation of the scientific evidence behind how climate change and society interact. Updating these calculations, so that they reflect the latest scientific evidence is, I think the highest priority. And so, optimizing this regulatory vehicle of the social cost of carbon is the role that my research and work with the Climate Impact Lab, and other researchers, can actually have. I’m excited to be part of that process of trying to make sure we shift this onto a scientific footing as we possibly can.

CPR: If you could implement a policy with immediate effect, what would that policy be and how would you go about it?

Amir Jina: Well, here’s when I put on my economist hat, and I say that the problem is that we have a pollutant that is causing damages all over the world. By setting the price of that pollution to zero, we are effectively subsidizing those damages. When I buy the electricity that I’m using to run this computer that I’m talking to you on, even though I would want to, I’m not paying for the damages that I’m causing somewhere else in the world and, to some degree, in the United States. And so, people are having to pay those costs because I’m here, using my computer and that’s true for all of us using energy, driving with fuel cars that have fossil fuel emissions.

If the problem is those emissions and the fact that we’re essentially subsidizing them and set the value to zero, the economists’ response here is let’s put a price on that. It would make perfect sense to try and put carbon pricing into place. The exact details of that would end up being related to political reality and the situation of specific sectors, but by and large, putting a price on carbon is the biggest bang for your buck and reducing emissions. It changes the incentive structure for people who are thinking of investing in fossil fuel power generation versus renewable power generation. Whether it’s politically feasible or not your question was if I had ultimate power, what would I do and that’s probably what I would do and, but in reality, that’s not the most politically feasible thing.

Jumping a step past your question if it’s not politically feasible but not broadly applicable, having a social cost of carbon that reflects the science and can be used in various cost benefit calculations that recognize the inequality inherent in the impacts would be the other thing that I would do. That’s potentially more feasible in this political moment than getting a broad carbon tax or cap and trade program across the US. If I was thinking globally, same again, put a price on it, but the social costs of carbon is less relevant there.

Given that many countries are already feeling the effects of climate change, my big response there is that we need to commit ourselves to quite a lot of adaptation funding. We need to find ways to limit the potential human catastrophes that are being caused in not just the distant future, but happening now, and very much being exacerbated in the near future. From an international point of view, I would try to make sure that we’re focused a lot on adaptation funding.

CPR: Is there something you might want to share to inspire the future climate leaders at Harris?

Amir Jina: I wish I had time to think more about that (chuckles). Here’s what I’ll say: I’m not one of those people who talks about climate change as an existential crisis or that the world is going to end in 10 years because the truth is, it probably won’t. But the evidence points towards it being a less liveable place and less equal place. Even within 10 years exacerbating all of these things and actually challenging our view of what it means to live in a fair and just society. The time to act was 30 years ago but failing that, the time to act is right now. The optimism that I really have is that there have been so many different changes in awareness in different sectors. People are realizing that not doing something about climate change is harming us tangibly. It’s not an abstract idea, it’s making us poor, it’s making people less healthy, and less productive, it’s making people lose actual money, and will continue to do that. A recognition of that has started to happen all over society and the fact that it’s affecting people’s bottom line is a big motivator.

We have a really important decade here as it relates to the climate and almost regardless of what your passion is you can end up making this a part of it. No aspect of society or the economy will really remain untouched by climate change. A lot of the change needs to be systemic and on every single level. If you end up working at a hedge fund, make sure you are the person who thinks, “I can choose my investments to be more sustainable in the long run by not investing in something which is environmentally destructive.” And that’s just starting to make economic sense now.

We’ve gotten a pretty bad run of years, we’ve had two once-in-100-year economic shocks, we’ve had a once-in-100-year pandemic and we’re facing this completely unprecedented environmental catastrophe. This generation with those of us will now become the policy leaders poised to take over and actually change the set of priorities for what policy should do. This is an issue that we must deal with and so we’re going to, and there’s such a level of positivity and energy about that. I look at the students with a lot of hope and positivity because I’m seeing people care about it in the right way with the tools to actually do something about it.