Models are lenses. They are instruments with which we view, interpret, and give meaning to data. In this course, students will be exposed to and do work in all phases of the modeling life-cycle, including model design and specification, model construction (including data gathering and testing), extraction of information from models during post-solution analysis, and creation of studies that use modeling results to support conclusions for scientific or decision making purposes. In addition, the course will cover critical assessments of fielded models and studies using them. The course will focus broadly on models pertaining to energy and sustainability. This is not only an inherently interesting and important area, but it is very much a public one. In consequence, models, data, and studies using them are publicly and profusely available, as is excellent journalism, which facilitates introductions to specific topics. The course covers selected topics in energy and sustainability. Essential background will be presented as needed, but the course is not a comprehensive overview of energy and sustainability. Modeling in the area of energy and sustainability analytics is rife with uncertainty, and yet decisions must be made. Uncertainty, and how to deal with it in model-based decision making, is an overarching theme of the course. We will focus on energy and sustainability, but that area is hardly unique in being beset with deep and vexing uncertainties. The lessons we learn will generalize. The overall aim of the course is to teach facility with modeling and to use real-world data, models, and studies in doing so. In addition, students with interests in investment or policy analysis in the energy sphere will find the course’s subject area focus useful. OIDD 3250 is not a prerequisite for this course, but it’s helpful if you have already taken it.
Over the last several decades, energy markets have become some of the most dynamic markets of the world economy. Traditional fossil fuel and electricity markets have been seen a partial shift from heavy regulation to market-driven incentives, while rising environmental concerns have led to a wide array of new regulations and “environmental markets”. The growth of renewable energy could be another source of rapid change, but brings with it a whole new set of technological and policy challenges. This changing energy landscape requires quick adaptation from energy companies, but also offers opportunities to turn regulations into new business. The objective of this course is to provide students with the economist’s perspective on a broad range of topics that professionals in the energy industry will encounter. Topics include the effect of competition, market power and scarcity on energy prices, the impact of deregulation on electricity and fossil fuel markets, extraction and pricing of oil and gas, geopolitical uncertainty and risk in hydrocarbon investments, the environmental impact and policies related to the energy sector, environmental cap-and-trade markets, energy efficiency, the economics and finance of renewable energy, and recent developments in the transportation sector.
This course examines environmental and energy issues from an economist’s perspective. Over the last several decades, energy markets have become some of the most dynamic markets of the world economy, as they experienced a shift from heavy regulation to market-driven incentives. First, we look at scarcity pricing and market power in electricity and gasoline markets. We then study oil and gas markets, with an emphasis on optimal extraction and pricing, and geopolitical risks that investors in hydrocarbon resources face. We then shift gears to the sources of environmental problems, and how policy makers can intervene to solve some of these problems. We talk about the economic rationale for a broad range of possible policies: environmental taxes, subsidies, performance standards and cap-and-trade. In doing so, we discuss fundamental concepts in environmental economics, such as externalities, valuation of the environment and the challenge of designing international agreements. At the end of the course, there will be special attention for the economics and finance of renewable energy and policies to foster its growth. Finally, we discuss the transportation sector, and analyze heavily debated policies such as fuel-economy standards and subsidies for green vehicles. Prerequisites: An introductory microeconomics course (ECON1, or another course approved by the instructor) will be sufficient in most cases; BEPP 250 or an equivalent intermediate microeconomics course is recommended.