ENVIRONMENTAL AND ENERGY ECONOMICS

Understanding the challenges of and the solutions for climate change requires an in-depth analysis of the connections between the economy and our energy system. Starting from the economic principles used in climate change and environmental economics, this course will focus on the energy systems and their relationships with the economy and with climate change. The course will explain what are energy systems, how they work, their role in the climate change crisis, as well as in the energy transition to achieve the targets that are being submitted by countries within the Paris Agreement. It will also explain why energy is essential for economic development and for adapting to climate change.

Understand the relationship between energy, the economy, and the environment
Acquire a basic energy literacy and understand the energy systems
Understand the basics dynamics behind energy markets
Basic knowledge of the history of environmental policy
Understand the advantages and disadvantages of neoclassical economic approaches
Understand alternative approaches, from behavioral economics and institutional economics
Learn how to work with data on energy, emissions, the economy with excel, R, STATA, GAMS

Microeconomics, Mathematics, English B2

Week 1 – Energy, the economy, and climate change
1. Brief history of environmental economics, energy, and climate change economics. Stylized facts about energy, the environment, and climate change. The role of additional economic fields. 2. Growth and environment. Decoupling. Understanding emission drivers through the Kaya identity. 3. Neoclassical economic approaches to externalities and market failures with and without perfect competition.
Lab 1: Hands on the Kaya identity and the Environmental Kuznet Curve. This lab will use R

Week 2 – Natural resource exploitation and price dynamics
1. Price setting, price discrimination, rent-seeking, energy market dynamics, price elasticities. 2. Introduction to dynamic models for the efficient and optimal use of natural resources. 3. Policies in a dynamic context and the green paradox. Role and dynamics of energy prices in climate policy and innovation.
Lab 2: Emission calculation from electricity load data

Week 3 – Climate econometrics: applications in the energy field
1. Introduction to the economics of climate change adaptation and climate econometrics; 2. Focus on the energy sector, market failures in the energy sector and the role of energy policies (e.g energy subsidies and taxes); 3. Distributional implications of climate and energy policies and effective carbon pricing.
Lab 4: Hands on energy demand estimates and price elasticities. This lab will use STATA or R.

Week 4 – Energy modelling, energy scenarios, and the energy transition
1. Introduction to energy-economy and integrated assessment models; 2. Introduction to GAMS; 3. The use of models the IPCC scenarios; the social cost of carbon; European scenarios and energy policies.
Lab 3: Hands on Integrated Assessment Models. This lab will use GAMS.

Week 5 – Energy poverty and energy policies
1. Introduction to the concept and metrics of energy poverty; 2. Energy poverty, climate action, and sustainable development; 3. Wrap up of the course and discussion of the lab activities.
Lab 5: Hands on energy poverty calculation and energy subsidies. This lab will use STATA or R.

Main textbooks
Grubb, M. Planetary Economics, Available at BEC, Chapters 1, 2, 4, 5, 6, 8.
Perman R., Ma Y., McGilvray J. and Common M., (2003), Natural Resource and Environmental Economics, Pearson, Available in Moodle, Chapters 5, 14, 15, 16.
The Core Economy – Available at https://core-econ.org/the-economy/book/ , Chapters 7, 8, 11, 12, 13, 14

Additional readings will be listed on the moodle page

Participation in the 5 hands-on sessions: weight 0.3
at least 5 labs, 3 points, at least 3 labs 2 points, at least 2 lab 1 point.

Final written exam with open questions and exercises: weight 0.7

Frontal lectures, hands-on sessions, team work

English

written and oral

This subject deals with topics related to the macro-area "Climate change and energy" and contributes to the achievement of one or more goals of U. N. Agenda for Sustainable Development