Your intrepid hosts enter the exotic glamorous world of Benefit Cost Analysis, where footloose Biden Administration Kevin Bacons shock uptight traditionalists by prioritising welfare over efficiency.
We begin with the highs and lows of the International Energy Agency’s updated 1.5 Degrees Scenario, which notes fast progress on scaleup of key technologies that is - just - compensating for slow progress on emissions reductions. IEA reckon 1.5 degrees is still possible without immense reliance on overshoot and net negative emissions; but there’s a big gap between what would be needed to achieve that and most economies’ current plans.
Our main paper
Benefit-cost analysis informs - and sometimes dictates - a lot of policy decisions about climate and energy, and how the sums are done really matters. In “Efficiency vs. Welfare in Benefit-Cost Analysis: The Case of Government Funding”, law professors and frequent Democratic administration officials Zachary Liscow and Cass Sunstein (coauthor of policy pageturner “Nudge”!) explain what’s up with a major Biden Administration rewrite of key guidance to public agencies.
The new approach will re-target benefit cost analysis from prioritising economic efficiency to prizing overall welfare. This means either weighting costs and benefits by the incomes of the affected communities (since an extra dollar creates more welfare improvement for a poor person than a rich one), or averaging values across broader regions.
Critics from the Society for Benefit Cost Analysis hate it! Liscow and Sunstein reckon it’s a great start that can produce much fairer and better decisions - including about climate adaptation.
Will Australia end up taking these ideas on board? Will they survive the next US Administration? Why do our hosts disagree about rivers? Listen to find out!
One more things
Alison’s One More Thing is Margaret Cook’s history of floods in Brisbane, “A River With A City Problem”, soon due for a new edition covering all-new floods!
Tennant’s One More Thing is the commencement of the EU’s path-breaking (for sure), WTO-respecting (they say) and delightfully kawaii (contested) Carbon Border Adjustment Mechanism.
Luke’s One More Thing is a speech by AEMC Chair Anna Collyer that highlights the role of Consumer Energy Resources and of regulators in unlocking it - and maybe ripostes the critique of Ron Ben-David?
Don’t weigh any costs or benefits before sending your thoughts and paper suggestions to mailbag@letmesumup.net or @LukeMenzel, @TennantReed, @alison_reeve (or @tennantreed.bsky.social and @reevealison.bsky.social for hipsters) and @FrankieMuskovic.