Dr Joëlle Noailly, Senior Lecturer in the Department of International Economics, was quoted in the 2024 Economic Report of the President, due to the influence of her project on “Financing Cleantech”, a study on the incertitudes surrounding the impacts of politics on the climate and investments in clean energy, notably in the wake of the Trump presidency and the multiple backwards steps taken due to his environmental policies, including the withdrawal of the United States from the Paris Agreement in 2017.
What does it mean to be cited by 2024 Economic Report of the President?
It means that the US President finds our work useful for formulating policies for the world’s largest economy. The 2024 Economic Report of the US President presents the overview of the US’s economic progress over 2023 and makes the case for the Biden-Harris administration economic priorities. The Council of Economic Advisors, who writes the report, is an agency within the Executive Office of the White House and bases its recommendation and analysis by reviewing economic research and empirical evidence. It is thus very inspiring and a true honour to hear that our research has important and concrete application to today’s US and international policy!
What is the significance for your research on Clean Tech? Will this recognition allow for progress to be made in the Clean Energy transition?
Our work has been cited in Chapter 6 on Accelerating the Clean Energy Transition. The chapter presents results from economic research on policies that can help building an innovative US economy provided by cheap, reliable and secure clean energy. In our paper entitled "Does environmental policy uncertainty hinders investments towards a low carbon economy?” (NBER Working Paper No 30361), we use supervised machine learning algorithms applied to newspapers to construct a new index of policy uncertainty in US environmental and climate regulations over the 1990-2019 period. We find that uncertainty about environmental and climate policy is pervasive in the history of US environmental policy. A major spike took place during the Trump administration, which not only announced its withdrawal from the Paris climate agreement but also conducted a comprehensive review of many federal environmental regulations. In our empirical analysis, we find that environmental and climate policy uncertainty is associated with a reduced probability of investments in the low-carbon economy, such as lower venture capital for cleantech startups. Investors typically want to know which regulations will be valid for their projects over the next decades and policy certainty is key to provide the right conditions for long-term investment and innovation.
The 2024 Economic Report of the US President clearly acknowledges this result when citing our work: "The absence of policy certainty will lead to underinvestment if potential entrants become unsure of the subsidies or taxes they may encounter years down the road" (p.24).
I was particularly pleased to see that when discussing the Inflation Reduction Act policies established under the Biden-Harris Administration, the Council of Economic Advisors emphasises that the duration of tax credits for household adoption of electric vehicles, renewable energy generation and heat pumps is meant to boost demand for clean energy technologies over longer time horizons sufficient for enabling learning-by-doing. (p31).
So, yes, I’m proud that our work can modestly contribute to make progress towards better and robust policies for the clean energy transition.
Did you submit your research to the White House? How was your research picked up by the President’s team?
No, we didn’t submit our research to the White House and we do not know how they found it. Our research was funded by the National Research Program "Sustainable Economy" (NRP73) from the Swiss Science Foundation. NRPs are specific programs promoting research projects that contribute to solving societal challenges of national and international importance, so we did extra efforts to make our results accessible to Swiss and international policymakers. We published a podcast, wrote a VoxEu column, and posted blog posts.
Most importantly, our paper has been published as a NBER Working Paper which is a US-based platform aiming to disseminate results from economic research, so it is very likely that the Council of Economic Advisors found the paper there.
