Host Jason Bordoff sits down with Dr. Paul Joskow to discuss the history and outlook for power markets in the United States. Joskow, a leading scholar in energy and environmental economics, utility markets and regulation, recently stepped down as President of the Alfred P. Sloan Foundation and is back at the Massachusetts Institute of Technology where he has served as a member of the faculty since 1972.
Among many topics Jason and Paul discuss, several include: the history and outlook for competitive power markets; whether or not renewable energy can accomplish deep decarbonization goals; the connection between resilience, reliability and the rise of natural gas and renewable energy sources; and the role of philanthropic organizations in research and advocacy on climate change.
View the full transcript
Hello and welcome to the Columbia Energy Exchange. I’m Jason Bordoff. Today I am excited to share with all of you a conversation I had recently with one of my favorite people, a giant in the field of energy economics, utility markets, and regulation – Paul Joskow. For nearly four decades, Paul has been one of the foundational scholars of modern empirical regulatory economics. He literally wrote the book on it, authoring a landmark analysis of the electric utility industry. He’s authored more than 100 highly influential articles and books that has really created an enormous body of highly regarded work on the regulation of electric utility and that’s a topic that is very much in the news today as the industry is undergoing some seismic shifts and historic changes.
He’s a fellow of the Econometrics Society, the American Academy of Arts and Sciences, a distinguished fellow of the American Economic Association, his honors go on and on. He has served as an advisor to many groups, including the National Science Foundation, the EPA, and others. He’s serves on many boards and advisory boards, including that of the Center on Global Energy Policy. Most recently, Paul has spent the last decade serving as the President of the Sloan Foundation after a long and distinguished career as a professor of economics at MIT.
I went down in New York City to visit Paul at his office at the Sloan Foundation as he was packing up many books in his office and had a conversation with him about his time at the Sloan Foundation, what’s happening in U.S. energy policy today, and the evolution of the field of energy economics of regulation of utility markets more generally. You’ll note this conversation happened before FERC rejected the energy department’s recent proposal related to grid reliability. Paul and I discussed this in the conversation. I always learn a tremendous amount when I get the chance to sit down with Paul Joskow, I hope you will as well. Here’s our conversation.
Paul Joskow: Pleasure to be here.
Jason Bordoff: And, we’re excited to scale up and expand the Columbia Energy Exchange with generous support from Sloan Foundation. We announced that recently on our episode of -- our 100th anniversary episode, so, thank you for that.
Paul Joskow: Well, it’s a great thing you're doing. We’re happy to help support it.
Jason Bordoff: So, you’ve had -- as you step down from 10 years leading the Sloan Foundation, and before that a remarkably influential career as one of the leading energy, electricity, environmental economist out there, I thought it would be interesting for our listeners to talk with you a little bit about the history of the field of environmental and energy policy and economics and your role in that including writing probably the seminal textbook that help give a lot of momentum to electricity market to regulations.
So, let’s get to all of that. But first, I just want to hear how you came into this field. And your father was a very prominent energy economist. Talk a little bit about what he did and then was it kind of obvious to you that this was the field you were going to go in or how did that come about?
Paul Joskow: Sure. I can go back to when I'm a graduate student at Yale in the early 1970s. I wasn’t particularly interested in energy to tell you the truth. I was interested in government regulation and the behavior of regulatory agencies and their effects on firms. And in my thesis, I ended up focusing on regulation of electric utilities in part because there were a lot of them, a lot of utilities or a lot of regulators. And I knew a little bit about it from work my father had done and my advisor at Cornell, Alfred Kahn when I was an undergraduate.
Jason Bordoff: He founded for people listening, National Economic Research Associates, NERA which is still a prominent economic consulting firms.
Paul Joskow: Yes, my father was one of the founders. And before that, he was a professor at City College at Baruch. And Fred Kahn was an early consultant that worked for the firm and a friend of my father’s and ultimately my thesis advisor at Cornell. So, I was really focused on regulatory agencies and how they interacted with firms and behaved. But I picked electric utility regulation for reasons I mentioned that there were a lot of utilities and there were a lot of regulators. And they were going through a difficult time in the early 70s after a couple of decades of peaceful relationships with their regulators.
Jason Bordoff: This is a field when you did it or when you went to grad school and said I want to study -- you said I want to study energy economics; did that mean anything to people?
Paul Joskow: No. Not only did energy economics not mean anything, but even the field of regulation was something that was not very prominent. And this was of course, before all the studies of effects of regulations on airlines and trucks and trains and natural gas prices and so on. In fact, someone at MIT -- at Yale told me that I should work in urban economics; that was the hot new field, not focusing on government regulation.
But as a results of working on the regulation of electric utilities, I got interested in electric power pricing first, the Time-Of-Day pricing. I became a student of French economists who had worked on Time-Of-Day pricing and planning and then on a whole lot of issues involving electric power supply and demand just by virtue of trying to understand what the businesses were that these people were in.
I got my PhD in early 1972. I went to MIT as an Assistant Professor in September of 1972. And in November, MIT created something called the MIT Energy Laboratory which I think was very farsighted. It was an umbrella to try to provide some organization to the research that was going on primarily at that time in the engineering school, but also work in economics that was _____ [00:06:05] and worked on, world oil markets Paul Macovei and Bob Pindyck were working on natural gas regulation and its effects on supply. Paul was working with Steve Briere who was then a young professor at Harvard Law School. And --
Jason Bordoff: And Justice on the Supreme Court.
Paul Joskow: Yeah, now a Justice on the Supreme Court. And so, there was a small group of people interested in energy stuff and I somehow became the electricity guy in the energy laboratory --
Jason Bordoff: And were you also working on Natural Gas Priced Regulation issues? That was a hot topic in the 70s.
Paul Joskow: Yes, I wasn’t, but Bob Pindyck and Paul Macovei were the leaders of modeling -- looking at the effects of fuel price regulation --
Jason Bordoff: Was this at a time – I mean – some may not know – maybe say a word about it. This was a time when gas prices were mostly regulated, we had new gas prices, old gas prices, old, old gas prices and that kind of began -- toward the end of the 70s came undone with the [crosstalk] [00:07:10] pieces of legislation.
Paul Joskow: So, pipeline charges have always been regulated. But beginning in the late 1950s and especially starting in the 1960s, the federal government began regulating the field price as the price of natural gas and the field that was going into the interstate market. And, a variety of rationales for why they were doing it, but the effect was that they really did not do a good job at regulating in the sense that they kept prices low, but they didn’t take account of the fact that that affected supply decisions that energy suppliers were making. It also affected decisions about what gas would flow in the interstate market, what gas would stay in Texas and Louisiana and Oklahoma.
Jason Bordoff: And in late 70s, people would remember sort of the oil shortages at the early 70s, but late 70s, you had gas shortages.
Paul Joskow: It were gas shortages. There was a long list of a rationing hierarchy on days you couldn’t get hooked up for natural gas. If you didn’t have it in some areas, they couldn’t extend natural gas distribution system to areas. It was kind of a real mess, but of course challenging to unwind because it meant raising prices for consumers. But Pindyck and Macovei worked hard on this and then as you know gradually beginning in the 80s, they began to deregulate the field prize of natural gas and markets came into equilibrium.
At that time, nobody had in their horizons the shale gas revolution, but at least the problems of shortages and allocations and so on kind of disappeared by the late 80s and early 90s.
Jason Bordoff: And then late 80s, early 90s is when deregulation was sort of the buzzword for electricity markets.
Paul Joskow: Yeah.
Jason Bordoff: So, talk a little bit about what --
Paul Joskow: So, how do we get into deregulation of electricity? I’m studying regulations, then I’m also -- I also did modeling with a colleague in the energy laboratory – we had a regional electricity model with supply and demand, demand for different fuels and so on. And in the late 70s and early 80s, there was a big deregulation revolution. The first airlines, then trucks, then railroads and people came to _____ [00:09:40] in advance said well, why don’t we just deregulate the electric power system.
And we still will just help you deal with the airlines – poof, no more regulation, that would kind of be problematic. These are monopolies with the assets that are not movable. And we – as you had a contract from the department of energy to think through what models of deregulation might be feasible --
Jason Bordoff: It wasn’t around what year?
Paul Joskow: This was 1980 and you know, explained why this isn't like trucks and trains and airlines and then come up with some alternative models, what segments could be deregulated, what segments had to continue to be regulated, how would they be regulated. And we wrote -- ultimately wrote a book on Markets For Power that laid out a number of scenarios and some of the complications of moving from here to there and basically deregulating the wholesale markets for electricity and restructuring, separating transmission and distribution from generation. And that book was published --
Jason Bordoff: Because that was the focus on competition, it was on generation?
Paul Joskow: That was our -- that was our view, yes. Our view was that’s where there was potential competition, infrastructure – they were natural monopolies and they need to continue to be regulated. We did not anticipate in any of our models I will say. The unbundling of retail supply where there’s a separate wires charging and you can contract with an energy supplier who would basically pay for the electricity flowing over your lights.
Jason Bordoff: Because it wasn’t just seen as an issue that would come up the way it is a big issue today given that the electricity system has changed.
Paul Joskow: Yeah. Yeah, we hadn’t thought about it. I mean -- we just hadn’t thought about it. And I would say no -- I think our work was like a red balloon initially. In the early 80s no one really cared that much about it. As you recall, after the big run up in prices in ’79, ’80, ’81 energy prices kind of fell in the middle of the decade and the pressure on electricity prices receded. The great inflation came to an end.
And it was really what renewed interest was what happened in the U.K. roughly around 1990 when they restructured their state on the monopoly system kind of around one of our models which was competitive generation, regulated transmission, regulated distribution and gradual unbundling of retail supply.
And the events in the U.K. became of interest rather quickly in the U.S., in California and in particular in New York and a number of other states that had high electricity rates and had problems with inefficiency in their utilities and were also very interested in the environment and wanted to create a system that would encourage entry of more environmentally acceptable or more environmentally benign technologies.
And I then did a lot of work on market design and transmission pricing and other issues associated with electricity restructuring, deregulation and reregulation. And on the regulatory side, I still maintained an interest in that; still do, trying to promote a more incentive based regulatory system.
Jason Bordoff: And the goal is if you create competition in generation, maybe not -- can't do that with the distribution of the wires that need to be regulated, their monopolies, more competition, lower prices for consumers. So, talk a little bit looking back now on the legacy of that. I think people have mixed views on how successful that experience was. What's your take on it and what’s the future of competitive wholesale power markets going forward, especially with the rise of distributed energy sources?
Paul Joskow: So, I would say on reflection, this was much harder to do than first met our eyes. Although in our book, we said it was hard. I mean there were reasons why vertical integration was then norm around the world. And designing these markets in a way that really accommodated all of the attributes of electricity, it’s physical attributes, some of its economic attributes, creating markets that really involve many, many different products, not just energy, but the ancillary services of various kinds, harmonizing it with reliability, rules that that were established by the various regional authorities and financing new investment under regime that relied heavily on short term spot markets and short term contracts.
And it was much more of a challenge than we had anticipated. I think -- and the second thing that happens, the commitment to competition declined rather dramatically after the California electricity crisis in 2000 and 2001. And I think one of the reasons why it’s been challenging is people can't seem to stop fiddling with the electricity markets changing this and changing that, trying to put their thumb on the scale.
There were still price caps in many electricity markets that caused problems when demand is tight and they should be sending high price signals. So, I think in regions -- in New York in PJM, in Texas for sure, the markets I think are working pretty well. More recently, a factor that’s made the markets more problematic had been the subsidized entry of renewable energy. So, you want to promote renewable energy, there are arguments for providing subsidies.
But I think initially people didn’t think through how this was going to affect electricity markets when you're mixing some technologies that are -- have to pay for their own supper where some technologies that are getting subsidies and some of the subsidies were perverse. So, a production tax credit means that you earn now 2.6 or 2.7 cents of kilowatt hour for every kilowatt hour you produce, even if the value is zero which it often is at night. And in fact, the prices go down to negative prices, -$30 a megawatt hour.
And this has adverse effects on incumbent technologies like nuclear power plants in particular that aren’t flexible. So, this time it was only anticipated the entry of solar and wind which have high capital cost and basically zero marginal operating cost. And exactly how you run, how you design a market where you’re mixing those technologies with traditional energy based technologies I think is proven to be rather challenging.
Jason Bordoff: So, what’s the answer to that? How would you design that?
Paul Joskow: Well, I’m not sure what the answer is. That’s something I’m going to work on when I go back to MIT. Yeah, at the extreme if you think about it, if all the technologies we had with solar and wind, the marginal price of energy would be zero at every point in time. Well, that suggests you can't really build a competitive electricity market based on energy price if they’re zero all the time. So it’s got to be some combination of capacity, prices and scarcity pricing during periods when supply is scarce.
Unfortunately, the government and regulators don’t like it when the price of electricity goes up to $50,000 a megawatt hour even though the average is over 760 hours a year. So, I just think it’s truly something that hasn’t been thought through properly to --
Jason Bordoff: So, you mentioned problems with the production tax credit. If you think there’s a rationale for supporting renewables, especially in the world where we can't price negative externalities from other sources of energy, is there a better way to provide that [crosstalk] [00:18:29] support??
Paul Joskow: Yeah, I think probably an investment tax credit is better with some kinds of guardrails on minimum performance that you have to achieve to get the tax credit. I think the production tax credit, especially for wind -- luckily the sun doesn’t shine at night is more problematic.
Jason Bordoff: And you mentioned the zero marginal cost and you sort of read every day, it seems like another headline about staggeringly low price record that the new solar auction or wind auction has set. People look at those often with these levelized costs of electricity metrics which you’ve been a little bit critical of. Help our listeners understand how you think about the competitiveness of renewables with other forms of electricity, power generation/
Paul Joskow: Well, I think one thing is certainly true. If the goal of the subsidies was to get both the wind and the solar industry down a learning curve where the cost of building and installing them to a client, that’s been a great success. They’ve some way, way down. But their value has to evaluated very, very carefully. So, let’s say the price all in for wind goes down to two and half cents, ignoring the subsidies. So, that seems like it's really cheap.
But if the wind isn’t there on peak days when you need the capacity, it's not as cheap as it looks like because you then need to have back up power to meet demand or if it’s producing at night when the price is -30 and they’re producing a two and half cents, they’re getting paid two and half cents for it, that’s actually not a good deal, it's a loser. And this actually goes back to the work I did when I just got out of graduate school on peak load pricing.
And that’s the whole purpose of markets is that the pricing of electricity -- since electricity as of yet cannot be stored in large quantities economically, the market value varies widely from day to day. On a hot summer day in New York City, the price is very high. On a spring day in California when there’s a big hydro runoff, the price is basically zero. And that needs to be reflected in valuing these technology. So, my criticism of levelized cost was it wasn’t doing that.
So, other things equal -- solar which generates electricity on hot summer days is more valuable than wind if it's generating it primarily at night and you know, off peak hours it’s not available during peak hours. And if you look at the profile of wind generation in Texas and to some extent in California, you see for reasons I don’t fully understand, the wind doesn’t seem to like to blow on hot summer days. And that reduces the value of that technology and just making these comparisons, it's two and half cents versus five and half cents for a gas combined cycle, or if you’ve got to use the gas combined cycle during the peak times, that’s where the relevant – that’s a cost of --
Jason Bordoff: So, the relevant metric should account from that --
Paul Joskow: To me, the relevant metric should use the market -- should say. Here’s the production profile of the wind, here’s what the value at different times. Are the implicit revenues that you would get, they're greater than or less than the cost. And to me, that’s the way an investor would make that decision if I’m just worried by subsidies or other effects.
Jason Bordoff: What do you think the future of renewables is? There’s a heated academic debate now about whether a 100% renewables is feasible or not and I think when people have conversations about decarbonization, there’s often very strong if not complete focus on renewable energy, very small share of the energy mix today. But you think if -- especially if, hopefully we’re successful in meeting or even coming close to meeting climate targets, how far can renewables get us?
Paul Jascow: Well, I’ll say out of the 100% versus 80% debate. I think the real question is, right now it’s wind and solar, depending on exactly how you count the roof top solar which is not counted very well, this maybe 7% of the kilowatt hours that are generated, that’s pretty small. It’s growing relatively fast. People tend on focus on kilowatts, but you really need to focus on kilowatt hours because even a really good wind generator has got a capacity factor of 40% or 45% in it.
Jason Bordoff: And that’s just the current power sector, nevertheless growing that denominator because you electrified transport or heating or --
Paul Jascow: Yes, exactly. And solar, maybe 20%, it’s a got a capacity factor without storage. So, I think to get to a very high percentage, let’s call it 80%, so we don’t have to get into the weeds on rest 20%, you need some changes. Firstly, the transmission system is just not robust enough to use these technologies economically. It’s very windy along a band that goes from Canada down into Texas, a terrific wind resource – the wind generators that are in Iowa, in parts of Missouri and the Dakotas, they get very high capacity factors. If there’s no one there to consume the electricity and there’s no transmission capacity to move it east, it’s just not worth as much as you would like.
And similarly for solar – for better or for worse, it’s sunnier in Texas and Florida than it is in Maine. And if you have a transmission system that allows you to move power around anywhere in the United States, you can use these technologies very economically. If you don’t, you end up getting them stuck in the areas where they exhaust the demand for them. So, I think a major investment transmission is really necessary to exploit these technologies economically.
Second, storage is important. They're intermittent generating technologies, even in sunny parts of the country, you can get a week when it’s not sunny. The wind varies fairly dramatically. Grid based storage or interpretable demand on the demand side or even behind the meter storage I think has to be part of the mix. So, I think it’s going to get challenging -- it’s challenging to get these high percentages -- whether it’s 70 or 80 or 90 or 100. And I think we’re going to be living with backup generation for quite a while. Expanding the transmission capacity of the nation is A, expensive and B, a political nightmare. And the storage technology, well, it’s moving along and there’s nice examples. It’s still pretty far away from --
Jason Bordoff: Especially for seasonal.
Paul Jascow: Yes, for storage. Yes – I think the discussion of storage has been -- doesn’t appreciate the different time dimensions you have to think about. It’s not just moving solar from 7 o’clock to 9 o’clock by storing some of that during the day. You’ve got to think about moving it for a week that whether maybe relatively a little sun. And there’s seasonally variations you have to think about. So, it’s a more complicated problem. And the way I like to think about it is that, I think of a high dam like Hoover dam, what kinds of services does it provide, it’s really a storage, it’s storing energy. That’s what's in the water.
And it provides frequency; that is every second, it provides spinning reserves, it provides week to week storage, it provides seasonal storage. How are we going to reproduce that to take full advantage of wind and solar? And I think you could force it into the system without making those changes. But it will be very expensive and you’d still need the backup generation.
Jason Bordoff: Do you think the rise of renewable and natural gas create reliability or resilience problems that justify government support of – we can-- I was going to base load. But we have to first define what base load means. But obviously there’s a proposal now from the Secretary of Energy to FERC to support coal and nuclear in the name of reliability. What is your evaluation of that?
Paul Jascow: Well, first of all, I think you can build the system. As long as you have back up generation and it’s gas and you have the big gas pipeline capacity or local storage you need, you can build a system with gas turbines, gas combined cycle, renewable; even with the current system. There are some problem areas like New England where the pipeline capacity is problematic. But you could certainly do it.
From my perspective, I think about the coal and nuclear quite differently. I don’t buy the arguments for coal. It’s providing a particular resilient resource that couldn’t be provided by natural gas combined cycle or peaking turbines. I believe that carbon dioxide is a problem and that we should price it one way or the other. I see no reason to subsidize coal at the very least. I think it should pay an emission tax.
Nuclear, I think is a little bit different. I think there’s more of a questions where the markets are working properly in areas where you have submersion nuclear generators. I think the reason for me to focus on nuclear and I should – for full disclosure, I’m a director of a company that owns 20 plus nuclear power plants.
Jason Bordoff: Exelon.
Paul Jascow: Exelon. But it’s a carbon free resource. And it’s 20% of our electricity now roughly, maybe 19% now. So, it’s around three times more than renewables. All these plants are going to close. They’ll either close when their lives are over, their license lives by 2050 or 2052, or they’ll close early. And do you really want that? And to me, the answer is probably no.
Jason Bordoff: So, New York just kind of kept open some nuclear plants with government support, justified with custom carbon, with the value of from a climate standpoint. What do you think of the approach New York took?
Paul Jascow: Without going to the details of the approach, I think we should price carbon and I think that would be a good thing for all carbon free resources including nuclear power. And if they can’t make it with setting an appropriate price on carbon, I think they should -- they should close. And so, I think the spirit of what New York is doing, whether it was the right – best mechanism or not, I’m not sure. I think it would’ve been better if we’d had a universally applied carbon price of some kind.
Jason Bordoff: Let me – I going to shift now and just ask you as – we have a few minutes left and as you step down from 10 years at the Sloan Foundation, talk about the Sloan Foundation. And in particular the role of philanthropic organizations and foundations in research and advocacy on climate change, where – and do you think that’s – and I should say energy in the environment more broadly not just climate change. What models do you think are more effective? What did you – any lessons learned from kind of what you’ve seen in your time at Sloan, where do you think the NGO and foundation community can be doing a better job?
Paul Joskow: One of my colleagues said to me early on, if you’ve see in one foundation, you’ve seen foundation, so we’re all kind of different. The Sloan Foundation is historically focused on supporting research and education. And, we continue to do that, we don’t support advocacy in the more direct advocacy sense, but we do support research on – now on energy and the environment. And, I think it’s an important complement to the research funds available from private sources, from the government, because I think there are questions that need to be answered.
So, I talked a minute ago that we got to price carbon, well, what's the right price? And, that has to do with knowing something about the social cost of carbon, the damages that carbon cause and that was political decisions, do we look with this globally, we work with this just in United States. And, I think that requires non partition research and that’s we try to support. Early on we supported research on Shale gas, that pretty early on, before people realized it was the next big thing, but we had a diversified portfolio, we looked at the resource, the composition of the resource, how much was there, what price, we looked at the environmental consequences, we looked at methane leaks, we looked at the effects on local communities. I say we, the found guarantees who worked on these things to try to provide a complete picture –
Jason Bordoff: I think, we have a book coming out through the Columbia University book series by Daniel Raimi, which kind of tries to look at a dispassionate look at what the [crosstalk] [00:32:36] --
Paul Joskow: It was just reviewed science as we –
Jason Bordoff: That’s right, and I think he was a recipient of one of those.
Paul Joskow: Yes, he was. Yes. And all of our grants are outside review, depending on how big it is, anywhere from three to 12 outside reviewers, we’re non partition, we try to give a complete picture of thing. So, we’ve done that in Shale gas, we’ve been funding a lot of work on energy efficiency and program evaluation, we’ve been trying to fund centers like yours both for research and education, and that’s kind of what we do, and I think we’re pretty good at it.
Jason Bordoff: You are doing – it seems to me you are doing that in a period in which the debate of energy is only becoming more driven by hyperbole and polarization, advocacy, rhetoric and do you see any ability to kind of bring people together and try to focus more on fact based analysis to understanding the right solutions to these things?
Paul Joskow: Well, yes we believe strongly in fact based analysis, and our public understanding of science and technology program is which supports movies, television, radio, books, new media, place, we try to educate the public about these things in a non partition way, but we live in a difficult year of partnership right now, and we see it in all kinds of environmental issues. And, unfortunately the value of facts has – I won’t say it’s completely disappeared, but it’s really been put on the backburner and I think that’s problematic. I hope the Sloan Foundation continues to promote fact based scientific analysis without saying what you do with it necessarily. So, we are –
Jason Bordoff: Can you talk about – I mean one of the things we are -- our mission at the Energy Center Columbia is very focused on how do you take insights from world-class academic research, but engage outside of academia with people with the capital to deploy the policymakers who can make decisions that can really move the needle. You’re seeing this from many perspectives, what do you – do you think academics are doing a good enough job? And, what do you think academics could be doing to make sure that the extraordinary amount of work they’re putting into this kind of analysis, impacts, decisions in the real world?
Paul Joskow: So, most academics are not, they’re trained to communicate with each other, they’re not trained to communicate with the public, I think the key is to get academics to work with people who are used to communicating with the public. So, for example, we support NOVA on public broadcasting, but – and we support the American experience on public broadcasting which is more about the history of technology.
But we always required that they have a scientific advisory committee which are made up of academics, so the academics can make sure that they get the science, right, but they can actually try to package in a way that’s appeals to the public. And one of the programs we are supporting with your center on educating journalist is that I think an important way of doing this, it’s not just the education they are getting when they come to your sessions, I think it’s the context they make and people they can call if a question comes up.
So, I think focusing on translation of research whether it’s economic research or technology research or science research, into language that the public can understand is extremely important and there just are variety of ways of doing that, there are films, there are TV programs, there are books, people still do read, there are radio programs, radio is by the way – public radio is one of the most cost effective ways of reaching the public, Science Friday a program we supported for years is, very, very popular, not only in real time, but now with Podcast, a radio lab which we support from the beginning is very, very popular.
So, it’s a range to different media. I think the kinds of programming you’re doing through the exchange, I think can be very important getting people who or a little bit more experienced and professional looking at these issues. I think on climate change I like to think the current administration is on the wrong side of history. And that this is may be the vast gas of mindless opposition to doing something about climate change.
And for no other reason than you can already start to see it faster than people -- than people thought and because the states -- a significant number of states are continuing with their -- with their programs. And significant number of companies are continuing with their programs to deal with climate change. And from a corporate perspective multinational companies can't have one set of policies just for the U.S and a completely different set of policies for the rest of the world.
So, I'm trying to be optimistic and thinking that we’re going through a bad patch year starting at the top from fact based policy making to down to particulars including climate change, environmental consequences and for the last year and I hope my successor does the same thing. We want to keep people who are interested in these subjects going during a period of time when it appears the federal government sort of doesn’t want to hear from them and wants them to go away because it’s coming back and one of the things I remember going back to when we wrote markets were power, when the regular administration came into our office.
There was also a big effort to cut budgets and to reduce research expanding and so on and one of the challenges was to keep people interested in these issues they still needed to be -- to get supported in some way, where they when often did other things. I worked in healthy economics for a while, maybe I’ll go back and work in healthy economics again, I don’t know but at the end academics are going to on average migrate to where the money is --
Jason Bordoff: Hopefully you can make me more optimistic because I guess the only observation I would have is even if the administration were different in the U.S with administration that had a different view of climate change. I think it’s little fair to say that the gap between the ambition and the rhetoric of many governments not – and certainly not just the U.S. it’s still very large between the ambition and the rhetoric and the actual pace of transition we see around the world.
Paul Joskow: Well I agree, I completely agree with that, but to me the Paris Accords the actual commitments to me were not very meaningful because they were -- they weren’t backed up with any enforcement in many cases not even with any analysis, but the fact that you could actually get 200 countries to agree the climate change was an important problem I think it was a major step forward.
The first thing I get people to say is yeah, yeah, I see this is a problem what’s now are you – have bigger problem, what the right -- what the right price should be on carbon? How we’re going to distribute the burdens of policies to deal with this, but you’ve got to get him on the same page in terms of agreeing that this is a problem and 200 countries, I'm not sure before that if you say could you get them all to agree that A, B, C was the first -- were the first three letters of the alphabet correcting for language differences.
I would say probably not, some would object to that but so, I think that was more of an agreement and now they’re going to have to move forward and rhetoric is going to have to be changed into policies and that’s going to be hard. Now, I would say what I’m not optimistic about is that we can hit the two degree target. I’ll be generous 20% that we can hit the two degree target, probably we can hit it.
But that suggest to me that we also have to do more work on adaptation and maybe more work on engineering of various kinds on storage extraction, medium term responses may be long term responses to reduce, to extract and sequester carbon – carbon-dioxide and also to try to slow down the warming in the earth. I personally -- I think many of these new engineering solutions aren’t solutions because you can have -- you can put lots of particulars into the upper atmosphere you can in principle reduce the warming, but what you can't do is reduce the acidification of the oceans and lakes and other effects of accumulation to CO2.
But it may delay some of the worst effects but yeah I’m – I've always been intrigued by carbon capture and sequestration and in various flavors. I know it’s expensive but maybe the right price is going to be a very high price for me when we start thinking about what the impacts will be and I’m optimistic that we can find solutions once countries are willing to really get serious about putting polices.
Jason Bordoff: And in the area though there’s a lot of research including many of my colleagues of Columbia in carbon utilization, on mineralization and all sorts of things.
Paul Joskow: Yeah, the mineralization projects, I really like.
Jason Bordoff: And obviously this is all important to us. I mean it’s why we do what we do every day the importance of academic research of then engaging with policy makers people in the private sector to drive real change and then supporting all of that with philanthropy and you in an extraordinary career done all of those things.
Paul Joskow: Well, I appreciate that.
Jason Bordoff: So, thanks for everything you’ve done at Sloan and then MIT and elsewhere and thanks for joining us today on Columbia energy exchange.
Paul Joskow: Well, thank you. I’ll try to stay in the game.
Jason Bordoff: For more information about Columbia energy exchange in the centre on global energy policy please visit us online at energypolicy.columbia.edu or follow us on social media at Columbia U energy, I'm Jason Bordoff, we’ll see you next week.