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‘Consumers understand climate science better now — their ecological choices are shaped by peers, visibilit

Kenneth Gillingham teaches economics at Yale University. Speaking to Srijana Mitra Das, he discusses upcoming energy transitions, what shapes consumers’ ecological behaviour — and what’s driving the US administration’s environmental thrust:

What transitions are most likely by 2030 in a fossil fuel-intensive sector like transport?
The technology for electrifying transport has improved enormously over the last decade. Battery prices have seen major cost declines, from $1,200 to about $100 per kWh. Most large automakers are pushing forward very quickly now — General Motors has said by 2035, all their vehicles will be electric while Volkswagen has said they will stop producing combustion


by 2026. There will be very quick electrification of transport, with lower emissions creating a much lower carbon economy. But the health gains will far outweigh the climate benefits in the short run. There will be sharp drops in pollution — the evidence is unassailable that if you breathe in high levels of particulate matter, the health impacts are serious. So, these transitions will reduce premature mortality for millions of people globally.

You worked in the White House Council of Economic Advisers in 2015-16. Have ecological understandings from then shaped the current US administration’s environmental urgency?
The Obama administration both performed actual actions to address climate change and laid the groundwork for future action by supporting scientists and forming inf luential analyses. For instance, it demonstrated how the Recovery Act of 2009 in clean energy investments influenced the growth of this industry. The Council of Economic Advisers also put out a report on the costs of delaying action on climate change. All these steps played a role. But the bigger factor influencing the thrust now is a much more widespread understanding among people around climate change. Scientists have accumulated unarguable evidence. One way has been through attribution studies where you can attribute a hurricane to climate change or say that a tropical cyclone was one and a half times worse due to this. This has greatly helped make the public case for climate action.

Do you foresee a carbon tax on US industry soon?
I’d like to — but honestly, I don’t see it happening soon. I can imagine something similar to a carbon tax on electricity, like the clean energy standard (CES). I can also imagine a carbon tax-like mechanism being applied to transport. But industry is the last place this would likely be applied, due to concerns about international competitiveness and companies moving out of the country causing job losses. The possibility of a carbon tax on industry will increase only if this is applied together in several places around the world.

You’ve studied incentives that can change consumers’ environmental behaviour — can you share some insights?
I’ve found that consumers’ perceptions of a pro-environmental activity, like setting up rooftop solar panels for electricity or modifying one’s front yard design to save water, can change based on the information they’re provided — this comes often from their peers, their own observations and information via messages and mail.

In terms of peers, there’s a very strong contagion effect — if you’ve installed solar, it makes it more likely that your neighbour will do so too. The effect is stronger when the pro-environment activity is visible to people — you can see my solar panels if you walk by my house. They look quite good and seeing them, other people have said, ‘That looks nice, maybe we can do it too’, and many actually have. I’ve also studied how different messages reach different groups of customers. Wealthier folk often responded more to messaging telling them how much they’d save by installing solar. Low-income households responded to a community-based outreach discussing how solar power would help everybody. On installing solar, these communities reported higher satisfaction because they had a different motivation.

If you make pro-environment activities something you can talk to your neighbours about, if it’s visible and the messages are designed to match the group you’re trying to reach, you can effectively change consumer behaviour.

With climate change now intensifying heatwaves, increasing energy demand and thereby emissions, are we heading into a vicious cycle of warming?
There is evidence of a vicious cycle with air conditioning notably. Its use grows with people getting wealthier but heatwaves are exacerbating this. British Columbia in Canada recently reached 125 °F — the hottest they’ve ever seen. Such heat impacts are dangerous and will lead more people to get air conditioning even in Vancouver. But we can decarbonise electricity, develop more efficient air conditioning and reduce electricity use with better designed appliances. I’m optimistic that despite the extra electricity load, with air conditioning and electrifying transport, this can be developed in a more low carbon way.