Advanced Energy Economics

 

Advanced Energy Economics (Madlener, V2/Ü2, SS, economics competency, in English)

The increasing energy demand and the finite supply of fossil fuels will inevitably lead to the collapse of the fossil fuel economy, upon which our modern world is built. At the same time, unrestricted energy use, whether based on fossil or on renewable energy sources, is a significant contributor to increasing levels of CO2 and other pollutants. Although research activities and investments in alternative sources of energy are growing rapidly, it remains doubtful as to whether in the near future a transition to an economic system that is based on renewable energy will be feasible. Given these challenges, a deep and critical understanding of modern energy economics and how they impact our national and global economies is becoming increasingly important. This course addresses selected current topics in energy economics and has been designed in order to facilitate the development of that understanding at an advanced level.

Syllabus

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 biofuels, 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. In this course we deal with the use of economic theory, policy instruments and modeling to better understand energy markets, and their salient aspects, and on developing a critical understanding of energy and how it impacts our national and global economies.

Objectives

1) Develop awareness of the role of energy in the functioning of today's global economy
2) Explore the dominant theoretical and empirical perspectives on the extraction, use and impacts of energy, especially through demand and supply interactions
3) Acquaint students with common tools used to analyze energy problems. We focus on formal frameworks for static and dynamic analysis.
4) Learn about the pollution problems associated with energy use, as well as the common economic and non-economic instruments used to tackle the problems (energy taxes, tradable permits, green certificates etc.).
5) Introduction to common mechanisms for managing risks related to energy extraction, transport, trading and consumption. These include real options modelling for irreversible investments under uncertainty, forward and futures markets, and derivative products.

Prerequisites

Basic knowledge in Economics (Micro/Macro) and Energy Economics

Examination

Successful examination (100%, graded, 60 min.) or, if no. of participants is <12, alternatively an oral examination in groups of 3-4; (100%, graded, 60min.)