US

Subsidizing Green Technology

Question A:

Government subsidies for investment in green technologies are justified by substantial benefits coming from reducing unpriced carbon emissions and generating positive R&D spillovers.

Responses weighted by each expert's confidence

Question B:

Using subsidies for green technologies instead of full carbon prices will lead to substantially more rent-seeking and hence substantially higher costs to achieve a given reduction in emissions.

Responses weighted by each expert's confidence

Question A Participant Responses

Participant University Vote Confidence Bio/Vote History
Acemoglu
Daron Acemoglu
MIT
Strongly Agree
8
Bio/Vote History
This is true even when there are carbon prices. The view that policy should set the right carbon price and the market can do the rest is invalid. R&D generates uninternalized spillovers, so there is a first-order need to redirect innovation even when there are carbon prices.
-see background information here
-see background information here
Altonji
Joseph Altonji
Yale
Strongly Agree
7
Bio/Vote History
Auerbach
Alan Auerbach
Berkeley
Agree
5
Bio/Vote History
Autor
David Autor
MIT
Strongly Agree
8
Bio/Vote History
Banerjee
Abhijit Banerjee
MIT
Agree
5
Bio/Vote History
Bertrand
Marianne Bertrand
Chicago
Agree
4
Bio/Vote History
Brunnermeier
Markus Brunnermeier
Princeton
Agree
7
Bio/Vote History
Chetty
Raj Chetty
Harvard Did Not Answer Bio/Vote History
Chevalier
Judith Chevalier
Yale Did Not Answer Bio/Vote History
Cutler
David Cutler
Harvard
Strongly Agree
5
Bio/Vote History
Deaton
Angus Deaton
Princeton
Agree
6
Bio/Vote History
Duffie
Darrell Duffie
Stanford
Disagree
3
Bio/Vote History
Compared to the direct application of carbon taxes or permit markets, subsidizing green tech (although perhaps better than nothing) probably has a big negative value. It will be costly to monitor for efficacy and waste. If there are good spillovers, where is the market failure?
Edlin
Aaron Edlin
Berkeley Did Not Answer Bio/Vote History
Eichengreen
Barry Eichengreen
Berkeley
Uncertain
5
Bio/Vote History
Better would be to correct the underpricing of carbon emissions. Not clear that subsidizing this sector's R&D is preferable to subsidizing R&D with spillovers more generally.
Einav
Liran Einav
Stanford
Uncertain
1
Bio/Vote History
Fair
Ray Fair
Yale
Agree
5
Bio/Vote History
Finkelstein
Amy Finkelstein
MIT Did Not Answer Bio/Vote History
Goldberg
Pinelopi Goldberg
Yale
Agree
7
Bio/Vote History
Greenstone
Michael Greenstone
University of Chicago
Strongly Agree
8
Bio/Vote History
Hall
Robert Hall
Stanford Did Not Answer Bio/Vote History
Hart
Oliver Hart
Harvard
Agree
7
Bio/Vote History
I would prefer carbon taxes but these seem politically challenging.
Holmström
Bengt Holmström
MIT
Strongly Agree
6
Bio/Vote History
Hoxby
Caroline Hoxby
Stanford
Uncertain
7
Bio/Vote History
Hoynes
Hilary Hoynes
Berkeley
Agree
8
Bio/Vote History
Judd
Kenneth Judd
Stanford
Disagree
7
Bio/Vote History
Some subsidies may be justified but not large ones. "Green tech" should include any tech that reduces CO2 emissions, not just the popular ones.
Kaplan
Steven Kaplan
Chicago Booth
Uncertain
4
Bio/Vote History
Kashyap
Anil Kashyap
Chicago Booth
Uncertain
1
Bio/Vote History
Klenow
Pete Klenow
Stanford
Strongly Agree
5
Bio/Vote History
Levin
Jonathan Levin
Stanford
Agree
5
Bio/Vote History
Maskin
Eric Maskin
Harvard
Agree
7
Bio/Vote History
Nordhaus
William Nordhaus
Yale
Agree
8
Bio/Vote History
This is theoretical. The calculations of the appropriate subsidy are difficult and almost never made.
Obstfeld
Maurice Obstfeld
Berkeley
Agree
8
Bio/Vote History
Saez
Emmanuel Saez
Berkeley Did Not Answer Bio/Vote History
Samuelson
Larry Samuelson
Yale
Agree
8
Bio/Vote History
Externalities and a lack of prices justify intervention, though other tools would be more effective than subsidies.
Scheinkman
José Scheinkman
Columbia University
Agree
8
Bio/Vote History
Schmalensee
Richard Schmalensee
MIT
Agree
5
Bio/Vote History
Only because carbon emissions are unpriced.
Shapiro
Carl Shapiro
Berkeley
Strongly Agree
10
Bio/Vote History
Shimer
Robert Shimer
University of Chicago
Agree
2
Bio/Vote History
Stock
James Stock
Harvard
Strongly Agree
9
Bio/Vote History
In theory, yes if the benefit exceeds the cost. For the subsidies to wind, solar and EVs in the IRA, the cost per ton is well less than the EPA’s estimate of the Social Cost of Carbon. Other subsidies can be less cost effective, for example some energy efficiency subsidies.
-see background information here
-see background information here
Thaler
Richard Thaler
Chicago Booth
No Opinion
Bio/Vote History
Impossible to answer as posed. A subsidy *can* be just a negative tax or also a distortion. Not a well-posed question.
Udry
Christopher Udry
Northwestern
Strongly Agree
7
Bio/Vote History
Subsidies for technological innovation are part of the solution

Question B Participant Responses

Participant University Vote Confidence Bio/Vote History
Acemoglu
Daron Acemoglu
MIT
Disagree
6
Bio/Vote History
There is no evidence that subsidies to green innovation lead to more wastage than any other type of innovation subsidies or R&D tax credits (which are ubiquitous throughout the industrialized world).
Altonji
Joseph Altonji
Yale
Agree
7
Bio/Vote History
Full carbon pricing is a tough, tough sell. There is scope for subsidizing R&D and initial investments in green technology even with carbon pricing
Auerbach
Alan Auerbach
Berkeley
Strongly Agree
7
Bio/Vote History
Autor
David Autor
MIT
Disagree
6
Bio/Vote History
The question presumes these are substitutes and I disagree. Even full carbon pricing is not sufficient to create the efficient level of directed technical change. We require both carbon pricing _and_ subsidies.
-see background information here
Banerjee
Abhijit Banerjee
MIT
Uncertain
3
Bio/Vote History
The right carbon tax may be an unrealistic counterfactual. Governments seem to find it politically challenging to implement them.
Bertrand
Marianne Bertrand
Chicago
Agree
5
Bio/Vote History
Brunnermeier
Markus Brunnermeier
Princeton
Strongly Agree
8
Bio/Vote History
Chetty
Raj Chetty
Harvard Did Not Answer Bio/Vote History
Chevalier
Judith Chevalier
Yale Did Not Answer Bio/Vote History
Cutler
David Cutler
Harvard
Uncertain
5
Bio/Vote History
Deaton
Angus Deaton
Princeton
Disagree
6
Bio/Vote History
Duffie
Darrell Duffie
Stanford
Strongly Agree
3
Bio/Vote History
Edlin
Aaron Edlin
Berkeley Did Not Answer Bio/Vote History
Eichengreen
Barry Eichengreen
Berkeley
Agree
1
Bio/Vote History
Low confidence owing to the word "substantially".
Einav
Liran Einav
Stanford
Uncertain
1
Bio/Vote History
Fair
Ray Fair
Yale
Agree
5
Bio/Vote History
Finkelstein
Amy Finkelstein
MIT Did Not Answer Bio/Vote History
Goldberg
Pinelopi Goldberg
Yale
Uncertain
7
Bio/Vote History
Full carbon prices are not politically feasible in many settings, incl. the United States. Green subsidies are politically viable.
Greenstone
Michael Greenstone
University of Chicago
Strongly Agree
8
Bio/Vote History
Hall
Robert Hall
Stanford Did Not Answer Bio/Vote History
Hart
Oliver Hart
Harvard
Agree
8
Bio/Vote History
I'm not sure about the rent-seeking but the costs will be higher.
Holmström
Bengt Holmström
MIT
Disagree
6
Bio/Vote History
We should use full range of instruments. Both subsidies for investment and of course carbon prices.
Hoxby
Caroline Hoxby
Stanford
Strongly Agree
10
Bio/Vote History
Hoynes
Hilary Hoynes
Berkeley
Agree
5
Bio/Vote History
Judd
Kenneth Judd
Stanford
Agree
8
Bio/Vote History
Carbon taxes go after the real problem efficiently. They raise revenues instead of increasing debt. Green subsidies are difficult to efficiently implement.
Kaplan
Steven Kaplan
Chicago Booth
Agree
8
Bio/Vote History
Kashyap
Anil Kashyap
Chicago Booth
Agree
3
Bio/Vote History
Klenow
Pete Klenow
Stanford
Disagree
3
Bio/Vote History
Levin
Jonathan Levin
Stanford
Uncertain
3
Bio/Vote History
Maskin
Eric Maskin
Harvard
Agree
6
Bio/Vote History
Nordhaus
William Nordhaus
Yale
Strongly Agree
9
Bio/Vote History
The first theorem of public finance is tax bad don't subsidize disparate goods.
Obstfeld
Maurice Obstfeld
Berkeley
Uncertain
4
Bio/Vote History
Saez
Emmanuel Saez
Berkeley Did Not Answer Bio/Vote History
Samuelson
Larry Samuelson
Yale
Agree
6
Bio/Vote History
Scheinkman
José Scheinkman
Columbia University
Agree
6
Bio/Vote History
However, while one of the major political parties spouses "flat-earth" theories on climate change, there is no hope of passing carbon pricing.
Schmalensee
Richard Schmalensee
MIT
Strongly Agree
8
Bio/Vote History
Rent-seeking is not the major problem. Alternative ways of reducing carbon emissions are not treated equally, so costs would be substantially higher than necessary even without rent-seeking.
Shapiro
Carl Shapiro
Berkeley
Agree
8
Bio/Vote History
Shimer
Robert Shimer
University of Chicago
Strongly Agree
8
Bio/Vote History
Stock
James Stock
Harvard
Disagree
7
Bio/Vote History
Disagree b/c rent seeking is only one channel and not the most important. Multiple externalities so efficiency of subsidies depends on case. R&D subsidies can be efficient for green innovation, but subsidies for deploying wind & solar are less efficient than carbon tax.
-see background information here
-see background information here
Thaler
Richard Thaler
Chicago Booth
No Opinion
Bio/Vote History
Ditto
Udry
Christopher Udry
Northwestern
Agree
8
Bio/Vote History
Full pricing of emissions is much more important than subsidizing new tech, but both are called for. Subsidies can address externalities from learning and networks