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[Episode #222] – Green Industrial Policy

Apr 17 2024

In this final episode of our three-show miniseries on green industrial policy (Episodes #220, #221 and #222), we look at it from the perspective of an economist who has written a book on the subject and advocated for it in the EU.

Dr. Alessio Terzi is an economist with the European Commission who works at the intersection of academia, policy, and think-tanks. He is the author of numerous articles in major news publications, as well as a book, titled Growth for Good.

In today’s conversation, we discuss why technological transformation is the essential pathway to solving our climate problems, and how integral capitalism and growth are to that process. We explore the concept of degrowth and some critiques of conventional capitalism, along with ways that capitalism can be adapted to answer the climate challenge. Finally, Dr. Terzi presents his "blueprint for green capitalism," offering a nuanced perspective on leveraging economic tools to foster a successful energy transition.

This episode is a thoughtful, 90-minute excursion into economic theory and green industrial policy that aims to answer some of the contemporary questions about the wisdom of using the tools of capitalism and growth to make the energy transition successful.

Guest:

Dr. Alessio Terzi is an economist working at the intersection of academia, policy and think-tanks. He is an economist at DG ECFIN of the European Commission, a Lecturer in Public Policy at Cambridge University, and an Adjunct Professor in Economics at Sciences Po and at HEC Paris. Prior to this, he was an Affiliate Fellow at Bruegel, and a Fulbright Scholar at the Harvard Kennedy School. He also worked in the European Central Bank’s EU institutions division and in sovereign risk analysis for BMI Research (Fitch Ratings). He is the author of numerous articles in major news publications and the book, Growth for Good.

On Twitter: @terzibus

On LinkedIn: https://www.linkedin.com/in/alessio-terzi-39b89120/

On the Web: https://www.alessioterzi.eu/

Geek rating: 5

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[Episode #221] – Fossilflation

Apr 3 2024

Mini Episode

What causes inflation? And how is it connected to the energy transition?

Standard business press narratives often discuss inflation as if it has a mind of its own, seldom exploring its root causes. However, the connection between inflation and fossil fuel prices is both undeniable and significant. In fact, as you’ll hear at the end of today’s interview, endless interventions by the Fed may be an unavoidable consequence of the energy transition, from now until the project is complete.

So why aren’t we having a conversation about how Putin’s invasion of Ukraine ultimately led to your having to pay more for everything, as inflation was transmitted through from fossil fuels to everything else? Why did Congress give us the Inflation Reduction Act in 2022, instead of the Fossil Fuel Reduction Act? And what is the role of the Fed in the energy transition?

In this conversation, climate economist Gernot Wagner of the Columbia Business School rejoins us to help us understand the relationships between fossil fuels and inflation. We discuss why the Fed acts as it does, and we explore the Inflation Reduction Act in the US and the REPowerEU policy package in the EU, and the complex interconnections between monetary policy, industrial policy, and energy policy.

Guest:

Dr. Gernot Wagner is a climate economist at Columbia Business School. His research, teaching, and writing focus on climate risks and climate policy. Prior to joining Columbia as senior lecturer and serving as faculty director of the Climate Knowledge Initiative, Gernot taught at NYU, Harvard, and Columbia. He was the founding executive director of Harvard’s Solar Geoengineering Research Program. Prior to his time at Harvard, Gernot worked at the Environmental Defense Fund, the Boston Consulting Group, and the Financial Times. He has been a term member of the Council on Foreign Relations, a Senior Fellow at the Jain Family Institute, and is a CESifo Research Network Fellow, a Faculty Affiliate at the Columbia Center for Environmental Economics and Policy, a Member of the New York City Panel on Climate Change, a Coordinating Lead Author of the Austrian Panel on Climate Change, and he serves on the board of CarbonPlan.org.

On Mastodon: https://fediscience.org/@gwagner

On Bluesky: https://bsky.app/profile/gwagner.com

On LinkedIn: https://www.linkedin.com/in/gwagner/

On the Web: https://gwagner.com/

Geek rating: 6

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[Episode #160] – Coal Plant Buyouts

Nov 24 2021

Mini Episode

Economic factors and existing policies have done a pretty good job of stopping the construction of new coal plants around the world, but what is needed to push existing plants off the grid? Our guest in this episode has been working to phase out coal from a variety of angles for the past 13 years, and believes the only approach that might still work is to just buy out existing plants and shut them down. But how? Where will the money come from? And if the money is public, how can we make sure that coal buyouts benefit the public, and not the big banks? How will we obtain the lowest price for the plants? How quickly can we execute the buyouts and retirements? How can we make sure that the power is replaced by clean power plants and not by natural gas-fired plants?

And what about the important related questions, like: What role should US government agencies like the Federal Reserve and the Commodity Futures Trading Commission play in implementing climate policy? What responsibility do major media organizations have to support the energy transition? And what about the so-called “just transition” away from coal? Is it real, or just a comforting talking point?

Join us in this discussion for some fresh new ideas and strategies that could help the world shut down the coal industry faster and more equitably, while delivering the best outcomes for the public.

Geek rating: 3

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[Episode #144] – Investing in Energy Transition

Mar 31 2021

Mini Episode

We have a very special guest for you in this episode: Jeremy Grantham, the legendary investor who co-founded GMO, a Boston-based institutional money management firm, more than 40 years ago. With more than $60 billion in assets under management, GMO has produced steady returns for its investors through market booms and busts, largely thanks to the steady hand of Grantham and his investing philosophy, which holds that sooner or later, most valuations return to the mean.

In this interview, we talked about Grantham’s investing philosophy; the history of investment bubbles; how he values investments; what’s happening in the markets as new retail traders using the Robinhood app and participating in Reddit-based trading groups drive stocks like Game Stop wild; what the Fed should do as the world recovers from the pandemic; his views on the massive expansion of the US national debt; how the world’s governments are responding to the challenge of climate change; the role of venture capital in energy transition; and his outlook for energy transition in general.

Geek rating: 5

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[Episode #135] – Internalizing Climate Risk

Nov 25 2020

Mini Episode

Climate change poses a host of risks to the global economy. From ‘natural’ disasters causing property damage, to climate mitigation measures rendering fossil fuel assets unburnable, to potential impacts of climate change on agricultural production, energy, food, insurance, real estate, and other sectors, it’s clear that private sector companies and all kinds of investments stand to suffer significant losses as a consequence of climate change.

Yet few regulations exist to require these risks to be recognized on balance sheets, or disclosed to investors, unlike many other everyday risks that are subject to such disclosure and protection. A home built in a floodplain and destroyed in a flood, or at a wildland interface and destroyed by a wildfire, has not seen its cost of insurance go up to reflect the rising risk of another loss due to climate change. Pension funds have not been required to evaluate the risk of their investments in oil, gas, and coal companies losing value due to future restrictions on carbon emissions. And entities like the U.S. Federal Reserve have been free to continue lending to fossil fuel producers even as they warn about the damage that climate change is doing to the global economy.

Clearly, it is long past time to recognize the risk of climate change across all sectors of the economy. We must begin implementing ways of measuring those risks, testing portfolios for their risk tolerance, divesting public money from the fossil fuel sector, and start implementing economy-wide ways of pricing carbon emissions.

To that end, in 2019 the U. S. Commodity Futures Trading Commission (CFTC) formed the Climate-Related Market Risk Subcommittee, and tasked it with producing a report to consider what climate-related risks might be; examine whether adequate information about climate risks is available; identify any impediments to evaluating and managing climate-related financial and market risks; ask whether the market can do a better job of integrating climate-related scenarios and use them to stress-test investments; incorporate disclosures of climate risk into financial and market risk assessments and reporting; identify how risks can be managed and disclosed in order to protect the stability of the financial system; and ensure that information about climate-related financial and market risks are internalized into the market.

On September 9, 2020, that report was released. In this episode, we speak with the chairman of the subcommittee, Bob Litterman, founding partner and Risk Committee Chairman of Kepos Capital. Bob has had a decades-long career in risk management, and has been a champion of recognizing and integrating climate risk for many years. We’ll ask him about what the report says, why it’s important, and how its findings might be used to integrate awareness of climate risk into financial metrics and enterprise governance.

Geek rating: 6

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