Prof. Charles D. Kolstad is an energy and environmental economist with a research focus on the economics of climate change. He is, also, involved in research on energy markets, fossil fuels being largely responsible for greenhouse gases in the atmosphere. Kolstad has been a Lead Author and a Convening Lead Author for the Intergovernmental Panel on Climate Change, co-recipient of the 2007 Nobel Peace Prize, is a founding Co-Editor of the University of Chicago Press journal Review of Environmental Economics & Policy and has served on many advisory boards. He is a former president of the Association of Environmental and Resource Economists (AERE). At Stanford, Prof. Kolstad is the co-faculty director of the Bits & Watts Initiative. In addition to his affiliation with the Department of Economics, Prof. Kolstad holds senior fellow appointments in the Precourt Institute for Energy (PIthe) Stanford Institute for Economic Policy Research (SIEPR) and the Woods Institute for the Environment.
Companies that invest in digital and sustainability are – according to a research by Accenture – 2.5 times more likely than others to emerge from the crisis. In the “new normal”, what kind of investments will be a priority for energy companies?
Being ahead of the curve on investments is often considered a sign of a progressive company. Often stock valuations are higher for such companies, with investors viewing progressive actions in the energy arena as signals of a well-run company, with good relations with customers and employees, which may or may not be true! With regard to electricity generators, developing innovating ways of integrating consumer decision- making with that of suppliers will be a positive step not matter what the future brings. Moving consumers to electrify energy demand and figuring out how to simply move consumer demand around in time and intensity will be a win-win.
To what extent are the decarbonization goals really achievable in light of the current structure of the current world energy markets?
Decarbonization of the electric grid, or should I say dramatic reduction in the carbon content of grid electricity, is certainly attainable in many countries. India is in a less advantageous position because of a lack of natural gas and a great deal of coal. The series of virtual decarbonization workshops, sponsored by Stanford University’s Bits and Watts initiative has explored many of the dimensions of decarbonizing the grid. Decarbonizing fossil fuel use will be tougher. Coal is not so hard in most places. But oil requires transportation to be electrified. Gas is needed, even in electric power, as a backup.
In your opinion, which countries in the world invest and will invest more in technologies for the energy transition?
The US, the EU and China. China, in part, because of its high savings rate. Ironically, China will help bring down the cost of storage and renewables as well as end use electricity powered demand (heat pumps, electric vehicles). China itself has said it intends to decarbonize but their demand for electricity is so strong that may be difficult. But it will help others.
Again about recovery, what kind of fiscal and / or financial measures and policies could come to help energy technological innovation?
Certainly disincentives for carbon emissions (such as a carbon emission fee) would be an important action for any country. Beyond that, measures to address the country-specific obstacles to decarbonization should be addressed. Finally, rewards for intellectual property develop can pay off strongly. These different measures will vary from one country to another. The world is a big place.
