Advanced Energy Economics
- Univ.-Prof. Dr. rer. soc. oec. Reinhard Madlener
Ever-expanding demand and limited supply will ensure the eventual collapse of the non-renewable fossil fuel economy upon which the modern world is built. At the same time, unrestricted energy use, whether through fossil or bio- fuels, is a significant contributor to escalating levels of CO2 and other pollutants. Research and investment in alternative sources of energy is growing rapidly, but informed opinion is sceptical of the possibility that we will transition to an economic system built on renewable energy in the near future. Given these adverse trends, a deep and critical understanding of energy and how it impacts our national and global economies becomes more important with every passing day. This course has been designed to facilitate the development of that understanding. It will contain four basic modules, described below. 1. The first module explores the dominant theoretical and empirical perspectives on energy and its supply and demand. Students will be introduced to discounting and the standard models of renewable and non-renewable resource extraction. 2. The second module focuses on the negative consequences of energy use. Linkages between energy and climate change will be explored. We also look at the problem of pollution and how it can be controlled by economic mechanisms. These mechanisms include energy taxes and tradable permit markets, such as those permitted under the Kyoto Protocol (Article 12). 3. The third module focuses on individual sources of energy. We will look at salient aspects of the oil, natural gas, coal, nuclear, biofuel and other alternative energy sectors. There will also be some discussion of energy security, transmission and distribution of electricity and deregulation of the electricity sector. 4. The final module explores risk management in the energy space and familiarizes students with real options modelling, futures markets and derivatives. It concludes with some discussion of energy policies and how they might affect outcomes in the sector.
Recommended texts for the course are:
- Erdmann, G. and P. Zweifel, 2007, Energieökonomik - Theorie und Anwendungen, 1. Aufl., Springer-Verlag, Berlin/Wien/New York.
- Pindyck, R. and D. Rubinfeld, 2005, Microeconomics, 6th ed., Upper Saddle River, NJ: Prentice Hall.
- Mulder, P., 2005. The Economics of Technology Diffusion and Energy Efficiency, Edward Elgar, Cheltenham/UK and Northampton/Mass.
- Keppler, J.H., R. Bourbonnais and J.-M. Chevalier (Eds.), 2007, The Econometrics of Energy Systems, Palgrave Macmillan, New York.