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DRPS : Course Catalogue : Business School : Common Courses (Management School)

Postgraduate Course: Energy and Environmental Markets (CMSE11492)

Course Outline
SchoolBusiness School CollegeCollege of Arts, Humanities and Social Sciences
Credit level (Normal year taken)SCQF Level 11 (Postgraduate) AvailabilityNot available to visiting students
SCQF Credits10 ECTS Credits5
SummaryThe energy industries feature a complex mix of regulation and market-driven incentives. Deregulation initiatives, environmental regulations introduced to reduce greenhouse gases and innovations in renewable energies are disrupting what used to be a conservative industry.

Drawing on the tools of economics and finance discussed in the first semester, the course aims to provide students with an understanding of the issues that these changes have raised in energy markets and the newly emerging environmental markets. Students will come away from the course with an in-depth understanding of the functioning of energy and environmental markets, and the skills to assess the impact of regulation on these markets.
Course description The course provides an overview of the design of electricity systems and markets: from natural monopolies, to the regulation of energy markets, to the liberalisation of energy markets and the emergence of various energy-related products. The course then explores the effect of the integration of renewable energy sources and the future of energy markets. The course provides the basic theoretical knowledge necessary for the understanding of the rationale behind newly created environmental markets like carbon allowances, renewable energy certificates and payment for ecosystems.

The course also involves a number of guest lectures to discuss the practice of energy and environmental markets. Guest lectures are arranged each year to provide up-to-date content, and may include organisations such as Wood Mackenzie, EEX, ICIS Nord Pool, REF-E, or Vivid Economics.

The course complements the Energy Finance and Policy course in the Finance MSc, covering aspects like energy and environmental products. The course also complements the Climate Policy and Sustainable Finance courses in the Carbon Finance MSc, examining the impact of environmental and market regulation on the energy industry.

Outline Content:

1. Energy production and energy sources- the macro trends
2. The design of electricity systems and markets
3. The future of energy markets - renewable integrations and environmental challenges
4. The design of environmental markets
5. The case of carbon markets - from theory to practice
6. International carbon markets, modelling carbon prices and market behaviour
7. Centralised energy and environmental exchanges and related products

Student Learning Experience:

The course includes a number of guest speakers, either in person or via Skype for overseas speakers. This provides useful real-world insights alongside the more theoretical aspects of the course.

The course will be taught through weekly lectures and will generally include a group exercise or other interactive discussion component.
Entry Requirements (not applicable to Visiting Students)
Pre-requisites Co-requisites
Prohibited Combinations Other requirements None
Course Delivery Information
Not being delivered
Learning Outcomes
On completion of this course, the student will be able to:
  1. Critically understand the economics of energy and environmental systems.
  2. Describe and critically evaluate the design of energy and environmental markets.
  3. Critically evaluate the effect and impact of renewable energy sources on energy markets.
  4. Describe the likely future trends in energy and environmental markets.
Reading List
Indicative Reading List

Creti, A. and Fontini, F. (2019) 'Economics of Electricity: Markets, Competition and Rules', Cambridge University Press.

Phaneuf, D.J. and Requate T. (2017) 'A Course in Environmental Economics: Theory, Policy and Practice', Cambridge University Press.

Cramton, P. (2017) `Electricity Market Design', Oxford Review of Economic Policy, 33(4), pp. 589-612.

Schamalensee, R. and Stavins, R. (2017) 'The Design of Environmental Markets: What have we Learned from Experience with Cap and Trade', Oxford Review of Economic Policy, 33(4), pp. 572-588.

Stavins, R. (2015). 'Linkage of Regional, National, and Sub-National Policies in a Future International Climate Agreement', in Towards a Workable and Effecive Climate Regime, 283-296, UK Center for Economic Policy Research.

Bielen, D. Burtraw, D., Palmer, K., Steinberg, D. (2017) `The future of power markets in a low marginal cost world', Resources for the Future Working Paper.
Additional Information
Graduate Attributes and Skills Knowledge and Understanding

After completing this course, students should have:
- An understanding of the nature of modern energy and environmental markets.
- An understanding of the factors contributing to the development of market regulations.
- A critical understanding of the role of renewable energies in their impact on the energy business model.

Practice: Applied Knowledge, Skills and Understanding:

After completing this course, students should be able to:
- Critically evaluate the influence of regulations and policies on energy and environmental markets.
- Think analytically about the financial and strategic implications of low-carbon and renewable energy sources.

Cognitive Skills

After completing this course, students should be able to:
- Critically evaluate and synthesize new and complex ideas.
- Offer creative solutions and insights on complex issues.

Communication, ICT, and Numeracy Skills

After completing this course, students should be able to:
- Comprehend, speak and write the language of energy and environmental markets.
- Communicate technical, conceptual and critical information clearly and concisely.

Autonomy, Accountability and Working with Others

After completing this course, students should be able to:
- Provide and receive peer-feedback.
- Cooperate with others from different professional, educational and cultural backgrounds.
KeywordsNot entered
Course organiserDr Luca Taschini
Course secretaryMrs Kelly-Ann De Wet
Tel: (0131 6)50 8071
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