Syllabus

LEARNING OUTCOMES

The objective is to develop understanding of the basic problems in environmental, resource and energy economics. Tools developed for analyzing market failures and instruments for solving them. Familiarize the student with the main challenges in the energy sector, including those related to the environment.

Credits: 6

Schedule: 19.04.2022 - 03.06.2022

Teacher in charge (valid for whole curriculum period):

Teacher in charge (applies in this implementation): Iivo Vehviläinen

Contact information for the course (applies in this implementation):

iivo.vehvilainen@aalto.fi

CEFR level (valid for whole curriculum period):

Language of instruction and studies (applies in this implementation):

Teaching language: English. Languages of study attainment: English

CONTENT, ASSESSMENT AND WORKLOAD

Content

• valid for whole curriculum period:

  Common pool resource use in theory and practice; description and analysis of resource and energy commodity markets; pollution control in theory and practice, with particular emphasis on climate change, energy and environmental policy. Main empirical cases include: investments in nuclear power; emissions trading; pricing and investments in the electricity sector.

Assessment Methods and Criteria

• valid for whole curriculum period:

  Exercises: 3 home exercises passed, Group work: 3 topics passed, Case study: scoring 0-5, 40 % of the grading, Exam: scoring 0-5, 60 % of the grading

• applies in this implementation

  Due to the ongoing special arrangements in 2022, the above assessment methods and criteria are adjusted as follows. There is going to be a part of the course which is graded on the basis of your work in a small team, 2-3 persons and then an exam that you do independently. Total grade, 0 to 5, is based on the grade from the case study and the exam, you need to have 1 to pass.

  Team work

  • Team formed and case study topic selected.
  • 5 returned (and passed) Reading assignments mandatory. Passing an assignment requires having at least half of the answers correct.
  • 5 returned (and passed) Electricity market games mandatory. Passing a round requires having at least half of the answers correct.
  • Case study returned, 60 % of the grade 
  Individual work
  
  • • Exam, 40 % of the grade

  
  
  

Workload

• valid for whole curriculum period:

  The course has 4 learning elements: lectures, exercises, reading assignments, and case study.

  Lectures (24 h)
  Conceptual background
  Main empirical cases

  Reading assignments (30 h)
  Readings and own source search
  3-5 questions to be analyzed
  Presenting and debating the outcome in the class

  Problem sets (24 h)
  Learning methods for analysis
  Introduced and discussed in groups during the class
  3 x 1 compulsory home exercises, returned next week

  Case study (66 h)
  Analyze a case in the energy and environment field
  Write a 5-10-page report

DETAILS

Study Material

• applies in this implementation

  Lecture slides are available in MyCourses. For some of the lectures, there are also lectures notes that contain more in-depth material.

  Earlier Lectures will be offered through Panopto, see link from MyCourses.

  Reading assignments are an integral part of the course material.
  

  
  

Substitutes for Courses

• valid for whole curriculum period:

  Substitutes for Courses

Prerequisites

• valid for whole curriculum period:

  Prerequisites

SDG: Sustainable Development Goals

8 Decent Work and Economic Growth

FURTHER INFORMATION

Further Information

• valid for whole curriculum period:

  Teaching Language : English

  Teaching Period : 2022-2023 Spring V
  2023-2024 Spring V

• applies in this implementation

  The 2022 edition of the course will be lectured in person. Being at the live lectures is the preferred mode of participation.

  If you are unable to be physically present to the lectures, they will be broadcasted via Zoom. These sessions will not be recorded.

  If you are unable to participate to the lectures at all there is a backup option: lectures from Covid time. I make no guarantees that these will cover exactly the same topics that we do in class nor that they will cover everything in the exam. However, they cover most things and give sufficient alternative for the lectures for passing.

Details on the schedule

• applies in this implementation

  ––– Week 1 ––––––––––––––––––––

  Lecture 1     PERFECT COMPETITION 

  • Perfect market benchmark 

  Lecture 2     ELECTRICITY MARKETS 

  • Market institutions 

  • How does the available generation shape the supply curve 

  ––– Week 2 ––––––––––––––––––––

  Lecture 3     EXTERNALITIES 

  • Pigou and Coase, strategic behavior 

  Lecture 4     COSTS VS. BENEFITS 

  • Measuring externalities, cost-benefit analysis 

  ––– Week 3 ––––––––––––––––––––

  Lecture 5     POLICY PRINCIPLES 

  • Policy menu 

  • Best choices: Prices vs. Quantities  

  Lecture 6     POLLUTION TRADING 

  • EU Emission Trading Scheme 

  ––– Week 4 ––––––––––––––––––––

  Lecture 7     RENEWABLE ENERGY SUBSIDIES 

  • Renewable energy subsidies 

  Lecture 8     INVESTMENTS 

  • Basics of investment analysis 
    

  ––– Week 5  ––––––––––––––––––––

  Lecture 9     STORAGE AND EXHAUSTIBLE RESOURCES 

  • Storage and time dynamics 

  • Exhaustible resource theory, hotelling rule 

  Lecture 10   CLIMATE CHANGE ECONOMICS 

  • Social cost of carbon 

  • Integrated assessment models 

  ––– Week 6 ––––––––––––––––––––

  Lecture 11   CONSUMER BEHAVIOR 

  • Policy impacts on consumer choice 

  Lecture 12   NEW TECHNOLOGIES 

  • Innovations 

  
  
  

Description