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What’s a university to do about climate change?

Severin Borenstein, professor of business | December 8, 2014

About a year ago, I blogged about the fossil-fuel divestment movement at universities, arguing that it is unlikely to have any effect, and that even if it did it would be to raise fuel prices, which we could do more directly with a carbon tax.  I said that those of us at the University of California (and other top universities) should fight climate change by researching the science and policy changes that could make a real difference.

graph of UCB emissions

UC Berkeley’s greenhouse-gas emissions over two decades (Click image for source)

In the last year, I’ve changed my mind. Not on divestment, but on what a university can do. I owe my enlightenment to Frank Wolak, my colleague, friend and sometimes co-author at that other top university in the bay area that I will not name. Frank wrote an excellent op-ed for the Los Angeles Times last May and has since co-authored a longer policy paper, both arguing that university action against climate change should start at home, with a campus carbon tax.

All expenditures by campus units would be assessed a tax based on the GHG emissions associated with whatever they are buying or activity they are supporting. Of course, that raises issues like how large the tax should be and who should get the money, which I return to below.

The idea is brilliant. First, it avoids the hypocritical appearance of the divestment movement, marking fossil-fuel producers as evil polluters while happily continuing to consume their product.

pie chart of UCB 2012 carbon footprint

Estimates of UC Berkeley’s 2012 carbon footprint (click image for source)

Second, it puts real incentives in place to reduce GHG emissions and sets a price against which reduction strategies can be compared.

Third, and probably most valuable, it makes the campus grapple with all the difficult real-world issues that come with trying to implement cost-effective national or global policy for carbon reduction. In doing so, it creates teachable moments that could fill many courses and inter-disciplinary research projects.

The standard knock on divestment is that it is pure symbolism, with no real effect on oil or coal companies. But in an important way, I think it may be worse than that. The symbolism is likely to be counter-productive if the divesting university takes no broad-based action to reduce its own carbon footprint.

To an outsider it may sound like “Shame on fossil fuel companies for producing their products. Oh, and we have no credible plan to reduce our dependence on those fuels.”  I’m among the many – at least from the reactions to divestment I’ve read – who thinks that divestment is just cheap talk, because it requires no sacrifice by the divesting organization.

The analogy to the South Africa divestment movement is inapt in many ways, but in any case the South Africa divestment movement was accompanied by a boycott of South African goods.

A campus carbon tax skips the moral judgment distraction and gets right to demonstrating a plan for change, a market mechanism that rewards reductions in GHG emissions. By putting a price on emissions, it also confronts a reality that is too often sidestepped: reducing emissions is costly, and not all strategies for reduction are worthwhile.  If you work on climate change issues at a university, you have seen plenty of shiny campus plans for alternative energy or energy efficiency that are never clear on the cost per ton of emissions reduction. A campus carbon tax would set a marker and naturally point the analysis towards cost effectiveness.

Finally, the complexity of instituting a campus carbon tax is actually its strength. The campus – and countless student seminars and senior theses – would confront the challenges of real-world issues in GHG reduction:

  • What GHG emissions count? Just emissions on campus or also from upstream?
  • How far upstream?
  • Practically, how will GHG emissions be measured? This is a particular challenge for the upstream emissions for goods and services coming from places with no GHG monitoring.
  • Does the tax just cover GHGs from fossil fuels? What about agricultural products?
  • How big should the tax be? A starting point might be California’s cap-and-trade price around $12/ton or the U.S. government’s estimate of the “social cost of carbon” (i.e.,  GHG emissions), which is now commonly cited as $37/ton.  In any case, a lively debate on the right tax level would be educational for all.
  • Should a unit on campus be allowed to buy offsets in order to reduce its tax liability? How would the campus determine if the offsets really reduce world GHGs (i.e., are really additional)?
  • Some departments or faculty are more carbon-intensive than others, perhaps due to different energy usage (a chemistry lab versus English literature research) or different travel needs (an international diplomacy scholar versus a professor who focuses on the local urban economy). Should there be some compensation for those hit hardest by the tax?  How to design that compensation without distorting incentives to reduce?
  • What should be done with the tax revenues? Should they be redistributed to all faculty research funds on a per-capita basis, or used for scholarships or tuition reduction, or invested in energy efficiency and alternative energy projects?
  • How would this affect the competitiveness of the university? Would it make it harder to excel in energy-intensive fields?  Would it help make the school a leader in alternative energy research?  Would it strengthen the school’s brand?
campus power plant

The Berkeley campus’s combined heat and power plant. (Click image for more info and source)

The beauty is that these are the same issues that come up in any broad-based scheme for GHG reduction whether at the city, county, state or national level.  Doing it at the campus level would bring a deeper understanding of the challenge that we face in reducing GHGs and could lead to new insights about how to overcome those challenges.  Students coming out of such an experience would be far more prepared to work in the companies, governments and non-governmental organizations that are grappling with climate change policy within all the constraints of the real world.

Though Frank Wolak proposed the campus carbon tax, Stanford shows no signs of adopting it, though Yale, Harvard and MIT, among others, are discussing it.  Stanford divested its (practically non-existent) coal investments last year and there was a lot of back-patting, that is, until it came out that they are deepening investment in oil and natural gas.

It is time for UC Berkeley to adopt its traditional leadership role on environmental issues and get ahead of other universities on the campus carbon tax. Just the process of establishing and implementing the tax would be an immense learning experience for students, staff, faculty and administrators. And it would show that we take climate change so seriously that we are willing to adopt Stanford’s best ideas to address it.

Cross-posted from the blog of the Energy Institute at Haas.

Comments to “What’s a university to do about climate change?

  1. I completely agree with Bill Hilton’s comment.

    It is not hypocritical to divest from fossil fuels when we have no choice right now about the energy system we live in. We are trying to change that system and have a voice in politics. Divestment will make that voice better heard. In fact it is hypocritical to profit from fossil fuel companies while you are trying to use less of their product in order to reduce campus emissions.

    Why is it an either/or decision? Why can’t every university divest from fossil fuels and continue making campus more energy efficient and implement a carbon tax? We need radical measures in this time that we are faced with a very radical problem: Climate Change.

    • RIGHT ON, to you commenters.

      Here is another example, of a narcissistic academic prodigy player not good enough, to sit, at Berkeley.

      YOU DIVEST FOSSIL FUELS BECAUSE THEY ARE POISON, AND THEIR MANAGERS ARE CORRUPTORS, OF ALL CAPITAL AND PROCESS, Professor.

      WHERE IS YOUR BIODIESEL OR YOUR LEGAL REFORM, TO CAUSE SOFT-LANDING, OF CLIMATE CHANGE? We need the legal reform, to minimize carbon footprints, of rampant, riotous corruption, related, to criminal misconduct and related profiteering.

      This article shows insufficient old-school media, for Old Blues. I’d be on the case, for NO TENURE, in the case, of academic review.

  2. This opinion piece makes good sense to me, except for the notion that divestment is hypocritical while continuing to use oil and gas (as far as I can tell I don’t use coal).

    I use oil and gas because, practically speaking, I haven’t any good alternatives — yet. I may buy an EV when I need to replace my current hybrid, but creating “unnecessary” demand for an EV that requires a lot of energy in its manufacture, when I don’t need to replace my current car, seems to be the opposite of reducing carbon pollution.

    When possible, I commute via CalTrain, bicycle and a shuttle service operated by that other top university in the Bay Area. My house, an Eichler built in 1967, is entirely double-glazed; its roof and walls are insulated. Triple-glazing or adding insulation in roof or walls is not cost-effective–yet. The 2.5Kw PV system has resulted in owing nothing to PG&E for 6 years except the connection fee.

    I might be able to reduce my carbon pollution if the city of Sunnyvale, where I live, were to create a municipal utility similar to Palo Alto (I guess I’m allowed to mention the city of that other top university) and Santa Clara, and then purchase juice generated from renewables.

    Meanwhile I have divested our portfolio and urged my congregation and denomination to do so, because I want very much to alter the lobbying pressures in Washington DC and Sacramento. Just one of hundreds of examples is the continuing unlimited fracking in our state in the midst of a 3-year drought. The oil and gas industries have a broken and IMO immoral business model that currently pays for rampant lobbying.

    It may be that divestment at my level may not have much influence, but if UC were to cease using my tax money and yours to continue supporting the fossil fuels through investments in carbon which must not be burned, a lot of folks in government and the industry would likely notice.

    Where is the hypocrisy in trying to save life on this planet? It will take efforts in many, many channels to moderate the risks of climate change. Singular solutions such as a carbon tax, if not combined with many others, just are not going to cut it.

  3. As a long time advocate of divestment for any number of institutions I find your suggestion extremely practical. I will however, continue to divest from carbon in my portfolio.

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