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DRPS : Course Catalogue : School of Economics : Economics

Postgraduate Course: Carbon Economics (ECNM11034)

Course Outline
SchoolSchool of Economics CollegeCollege of Humanities and Social Science
Credit level (Normal year taken)SCQF Level 11 (Postgraduate) AvailabilityAvailable to all students
SCQF Credits20 ECTS Credits10
SummaryCarbon Economics (CEcon) is one of the core courses toward the degree of MSc in Carbon Management. The course intends to provide students with strong understanding of the economic theories and analytical frameworks that are applied in the literature of environmental economics in general and climate change economics in particular. Bearing in mind that the course is targeted at students with little or no economics background, it will start at the beginning of the first semester with an introduction to the concepts of markets, markets┐ mechanisms and the efficient allocation of scarce resources. This part of the course constitutes the foundation for most of the subsequent topics. Then we will challenge this market┐s framework by introducing the concepts of externalities and markets failure, which are essentially the starting point of extending the standard economic analyses when it comes to environmental issues such as climate change. For the remainder of the first semester and the beginning of second semester, we discuss and analyse in details the possible regulatory measures and policy instruments available to correct such market failures yielding what might be the socially optimal level of pollution. We will also introduce various environmental valuation techniques that help identifying the costs and benefits of controlling environmental externalities. Finally, we will discuss various topics that may serve as extensions to the analysis frameworks presented thus far.

In the majority of the second semester will address in details a wide range of contemporary topics in the literature of climate change economics. We will also attempt to discuss some of the new and emerging issues in the literature and policy arena. This part of the course will provide insights into recent research and policy in this topical and important field. Overall, throughout the course we will mix economic theory and practical applications. By the end of the course, students should have strong understanding of all topics discussed, as well as be well equipped to explore new topics in the literature later in their careers or further studies.
Course description Broad Aims
To provide students with an in-depth understanding of:
- The concepts of markets, markets failure, externalities, public goods and property rights applied on environmental issues
- Regulatory measures and policy instruments available to control environmental degradation resulting from economic activities
- Cost-benefit analysis applied on environmental policies and projects
- Environmental valuation techniques
- a number of emerging and recent issues in the literature of the economics of climate change

Topics Covered
Semester 1
1. Introduction to the concepts of markets and their mechanisms
2. Welfare economics and the environment
3. Public goods and externalities
4. Property rights and Coase theorem
5. Environmental regulations
6. Policy instruments (Pigovian taxes, subsidies and permit trading) in details
7. Cost-benefit analysis
8. Environmental valuation: Reveal preferences techniques
9. Environmental valuation: Stated preferences techniques

During semester 2 topics covered, which may vary from year to year, are likely to be drawn from:
10. Extensions such as: sustainable growth, risk, uncertainty and irreversibility.
11. Climate Change Agreements and Stability of the Coalitions Modelling
12. Technological Transfers and Direct Technical Change
13. Climate Change Discounting: The Stern Review and its critiques
14. Climate Change and Non-markets Impacts
15. The Economics of Catastrophes, Fat Tails and the Dismal Theorem
16. Climate Change Modelling: Computable General Equilibrium Models (CGM), Integrated Assessment Models (IAMs), etc.
17. Experimental Economics and Climate Change Policy
18. Behavioural Economics and Climate Change Policy
19. Climate and Energy Policy Interaction
20. The Economics of Market Stability Reserve in the EU ETS
21. Integrating Carbon Markets
22. Regulating Risk with Liability
23. Enforcement Mechanisms
24. The Economics of Emission Removal Technologies and Geoengineering
25. The Economics of Limiting Global Warming to 1.5░C

The exact topics covered each year will be published at the beginning of the course with the possibility of some changes during the course. Notice that only 5-7 topics will be covered. Such approach will give us the flexibility to adjust the lectures pace as we go along in order to ensure students understanding of the material. The focus here is on quality of understanding, rather than quantity of topics.
Entry Requirements (not applicable to Visiting Students)
Pre-requisites Co-requisites
Prohibited Combinations Other requirements This course is only available to students on MSc Carbon Management, MSc Carbon Capture and Storage or with the permission of the course instructor.
Information for Visiting Students
High Demand Course? Yes
Course Delivery Information
Academic year 2018/19, Available to all students (SV1) Quota:  47
Course Start Full Year
Timetable Timetable
Learning and Teaching activities (Further Info) Total Hours: 200 ( Lecture Hours 40, Seminar/Tutorial Hours 10, Programme Level Learning and Teaching Hours 4, Directed Learning and Independent Learning Hours 146 )
Assessment (Further Info) Written Exam 70 %, Coursework 0 %, Practical Exam 30 %
Additional Information (Assessment) Group presentation (30%)
2 hour internally arranged exam in week 10 of semester 2 (70%)
Feedback Not entered
No Exam Information
Learning Outcomes
On completion of this course, the student will be able to:
  1. analyse and assess the implications of using various environmental regulatory measures and policy instruments
  2. assess the costs and benefits of undertaking pollution control projects, a skill that is applicable to a wide range of social projects in different contexts
  3. have a strong knowledge and understanding of recent and ongoing research contributions to the climate change economics literature
  4. think independently and coherently about climate change policies as well as judge and advise on their implications
Reading List
Resource Lists

An extensive draft reading list is available on the designated CEcon Resource Lists webpage:
You can (or might be better off) access the list through ┐Resource Lists┐ link on the middle left panel of the CEcon Learn page. For guidelines on how to use Resource Lists or contact info for further help or questions:
Note that while all efforts are being made to finalise the list as soon as possible, the final reading list for each week will be available in the last slide of the updated lecture notes as well as reflected on the Resource Lists webpage after the lecture. Despite the potential changes during the course, variation from the draft list are going to be minimal.

Related Academic Journals

Journal of Environmental Economics & Management
Environmental and Resource Economics
Resource and Energy Economics
Review of Environmental Economics & Policy
Environment and Development Economics
Climate Policy
Oxford Review of Economic Policy
Nature - Climate Change
Energy Economics
Energy Policy
Additional Information
Graduate Attributes and Skills Not entered
Additional Class Delivery Information 2 hours weekly lecture, plus tutorials
KeywordsNot entered
Course organiserMr Alaa Al Khourdajie
Course secretaryMiss Sophie Bryan
Tel: (0131 6)50 9905
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