Skip to main content Skip to secondary navigation
Main content start

Rethinking environmental policy and energy markets for a changing world

Hunt Allcott explores how new environmental solutions can be made as effective, sustainable, and equitable as possible.

As told to Beth Jensen

Hunt Allcott
Hunt Allcott, Professor in the Stanford Doerr School of Sustainability's Social Sciences Division and a Senior Fellow at the Stanford Institute for Economic Policy Research (SIEPR)

I grew up in a Quaker family in Eugene, Oregon. My mom is a retired psychologist and my dad is a physician, and both have always valued serving people in need. In our home I always felt the importance of social justice and care for the environment, but my parents’ work also gave me a strong sense of practicality. With that kind of a background, engineering and economics just seemed like natural career paths.

I’ve been drawn to environmental economics since I was an undergraduate, particularly as a tool to answer questions about energy efficiency and the factors that influence companies’ and consumers’ everyday energy choices. Over time, those of us studying these questions have developed mathematical frameworks and statistical approaches to help us understand whether consumers making decisions on issues of energy efficiency – such as whether to buy a gas-guzzling car - are acting in their own best interests, whether government regulation could improve their well-being, and how best to design policies in that area. 

Some of these frameworks are also useful in understanding different economic questions, and we’ve also applied them to questions involving payday lending, soda taxes, lotteries, and, most recently, to thinking about whether we’re using too much social media relative to what would be best for us. But these techniques began with an interest in environmental economics and energy efficiency.  

At the Stanford Environmental and Energy Policy Analysis Center (SEEPAC), where I’m a director, we’re developing a lab that will support development of domestic environmental policy, improved energy market design, and the evolution of corporate environmental policy. There’s never been a more important or fascinating time to do this. The auto industry is being completely reshaped to transition to electric vehicles over the next decade, and the electric power industry will add significant amounts of solar and wind energy on the grid over the next 20 years. These transitions will require not only new technology, but also different incentive structures and market designs. 

We’re asking questions like “How do we design electricity markets in a world with more renewables?”; “How are the electric vehicle subsidies in the Inflation Reduction Act impacting vehicle markets?” and “How do you sell ‘greener’ products in a way that appeals to consumers and is both environmentally and financially sustainable from the company’s perspective?” There are many ways for society to decarbonize, but with each of these ideas we have to understand if this is the efficient and cost-effective way to achieve our goals. 

I’m confident the world will rise to the challenge of combating climate change, but it remains to be seen whether this energy transition will be fast enough, low-cost, or equitable. Economics has a powerful role to play in providing data-driven assessments to policymakers about how we can make the energy transition faster, cheaper, and more equitable. It’s exciting to be part of that.

Explore More