Publications

2020
Konisky, D. (Ed.). (2020). Pricing Pollution through Market-based Instruments. In The Handbook on U.S. Environmental Policy . Edward Elgar Publishing. Full Text
2019
Aldy, J., Kotchen, M., Evans, M., Fowlie, M., Levinson, A., & Palmer, K. (2019). Report on the Proposed Changes to the Federal Mercury and Air Toxics Standards (pp. 39) . External Environmental Economics Advisory Committee. Final Report
Aldy, J. E. (2019). Evaluating Development Given Our Obligation to Future Generations. The Environmental Forum , (Nov/Dec 2019), 17. Full Text
Aldy, J. E. (2019). Can a Carbon Tax Be Designed to Benefit Low-Income Households? The Environmental Forum , (Sept/Oct 2019), 15. Full Text
Aldy, J. E. (2019). More Study Needed of the Overall Impact of Rules on American Society. The Environmental Forum , (July/August 2019), 15. Full Text
Aldy, J. E., & Gianfrate, G. (2019). Future-Proof Your Climate Strategy. Harvard Business Review , (May/June 2019), 86-97. Full Text
Aldy, J. E. (2019). Benefits Are Benefits — Regardless of How They Are Legally Obtained. Environmental Law Forum , (May/June 2019), 15. Full Text
Aldy, J. E. (2019). Birds of a Feather: Estimating the Value of Statistical Life from dual-earner families. Journal of Risk and Uncertainty. Full Text
Aldy, J. E. (2019). A Few Keys to Saving the Planet Cost-effectively. The Environmental Forum , (March/April 2019), 50. Full Text
2018
Aldy, J. E. (2018). Improving Regulatory Transparency Through Retrospective Analysis. The Regulatory Review. Full Text
Aldy, J. E. (2018). Trade Shifts Pollution More than Regs Shift Trade. The Environmental Forum , (Sept/Oct 2018), pp. 52. Full Text
Houde, S., & Aldy, J. E. (2018). Consumers' Response to State Energy Efficient Appliance Rebate Programs. Cato Research Briefs in Economic Policy. Full Paper.pdf
2017
Aldy, J. E. (2017). Real world headwinds for Trump climate change policy. Bulletin of the Atomic Scientists , 1-6.Abstract
It has now been 12 months since Donald J. Trump was elected President of the United States, a man who as a candidate for the job called the scientific evidence for climate change “a hoax,” vowed to deregulate the American economy from what he considered to be onerous oversight, and bring back jobs that he claimed were lost as a result of the effort to combat the rise in global atmospheric temperatures. So, now is a good time to examine the president’s words and deeds regarding climate change – a sort of first-year job performance review or report card. What has he been able to accomplish? Has he laid a foundation for a successful agenda? And what are the most significant challenges to his energy and climate policy objectives?
Full_Paper.pdf
Aldy, J. E., Hafstead, M., Metcalf, G. E., Murray, B. C., Pizer, W. A., Reichert, C., & III., R. C. W. (2017). Resolving the Inherent Uncertainty of Carbon Taxes: Introduction. Harvard Environmental Law Review Forum , 41, 1-13. Full_Paper.pdf
Aldy, J. E. (2017). Congressional Testimony to United States House Committee on Energy and Commerce, Subcommittee on Energy, hearing on "Federal Energy Related Tax Policy and Its Effects on Markets, Prices, and Consumers". Full Testimony.pdf
Aldy, J. E. (2017). How the United States could Benefit from Eliminating Ineffective Fossil Fuel Subsidies. Scholars Strategy Network. Full TextAbstract

For more than a century, the U.S. federal government has subsidized the production of fossil fuels through the tax code. These tax expenditures – amounting to de facto government spending – lower the cost of investment and increase the revenues from fossil fuel production. However, research shows that the subsidies do very little to increase U.S. fossil fuel production, because the impact of subsidy use on investment decisions depends on other factors such as technological improvements in oil and gas drilling, shifts in energy demand in the global energy market, production decisions by the Organization of the Petroleum Exporting Countries, and unsettling political events in the Middle East. Without achieving much, if any, useful economic impact, fossil fuel subsidies are transferring about $4 billion annually from the pockets of taxpayers into those of fossil fuel producers.

Aldy, J. E. (2017). Waiving Environmental Regulations in Response to Fuel Market Disruptions. Kleinman Center for Energy Policy. Full Text
Aldy, J. E. (2017). Designing and Updating a US Carbon Tax in an Uncertain World. Harvard Environmental Law Review Forum , 41, 28-40.Abstract

A carbon tax provides certainty about the price of emissions, but it does so in a context characterized by uncertainty about its environmental benefits, economic costs, and international relations implications. Given current knowledge, suppose that the government sets a carbon tax schedule. In the future, a higher (lower) carbon tax could be justified by the resolution of uncertainty along the following ways: climate change turns out to be worse (better) than current projections; the economic costs of a carbon tax are lower (higher) than expected; other major economies implement more (less) ambitious carbon mitigation programs. This paper describes the design of a predictable process for updating the carbon tax in light of new information. Under this “structured discretion” approach, every five years the president would recommend an adjustment to the carbon tax based on analyses by the Environmental Protection Agency, the Department of the Treasury, and the Department of State on the environmental, economic, and diplomatic dimensions of climate policy. Similar to the expedited, streamlined consideration of regulations under the Congressional Review Act and trade deals under trade promotion authority, Congress would vote up or down on the presidential recommendation for a carbon tax adjustment, without the prospect of filibuster or amendment. This process could be synchronized with the timing of updating of nationally determined contributions under the Paris Agreement in a manner to leverage greater emissions mitigation ambition by other countries in future pledging rounds. The communication of guiding information and the latest data and analysis could serve as “forward guidance” for carbon tax adjustments, akin to the Federal Reserve Board’s communication strategy.

Full_Paper.pdf
Houde, S., & Aldy, J. E. (2017). Consumers' Response to State Energy Efficient Appliance Rebate Programs. American Economic Journal - Economic Policy , 9 (4), 227-255.Abstract

Through an evaluation of the 2009 Recovery Act’s State Energy Efficient Appliance Rebate Program, this paper examines consumers’ response to energy efficiency rebates. The analysis shows that 70 percent of consumers claiming a rebate were inframarginal and an additional 15 percent–20 percent of consumers simply delayed their purchases by a few weeks. Consumers responded to rebates by upgrading to higher quality, but less energy-efficient models. Overall the impact of the program on long-term energy demand is likely to be small. Measures of government expenditure per unit of energy saved are an order of magnitude higher than estimates for other energy efficiency programs.

Full Paper.pdf
Aldy, J. E. (2017). Frameworks for Evaluating Policy Approaches to Address the Competitiveness Concerns of Mitigating Greenhouse Gas Emissions. National Tax Journal , 70 (2), 395-420.Abstract

Domestic carbon pricing policies may impose adverse competitiveness risks on energy-intensive firms competing with foreign firms that may bear a lower carbon price. The risks of competitiveness effects include adverse economic and environmental outcomes, which can undermine political support for carbon pricing. Competitiveness policies, such as border tax adjustments, output-based tax credits, and related policies, also carry potential risks: unfavorable distributional outcomes, less cost-effective, and harming international trade and climate negotiations. This paper reviews the theoretical and empirical research on competitiveness risks and the risks posed by competitiveness policies, and presents two alternative frameworks for evaluating competitiveness policy options.

Full_Paper.pdf

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