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DRPS : Course Catalogue : School of Economics : Economics

Postgraduate Course: Carbon Economics (ECNM11034)

Course Outline
SchoolSchool of Economics CollegeCollege of Arts, Humanities and Social Sciences
Credit level (Normal year taken)SCQF Level 11 (Postgraduate) AvailabilityAvailable to all students
SCQF Credits20 ECTS Credits10
SummaryCarbon Economics (CEcon) is one of the core courses toward the degree of MSc in Carbon Management. The course intends to provide students with strong understanding of the economic theories and analytical frameworks that are applied in the literature of environmental economics in general and climate change economics in particular. Bearing in mind that the course is targeted at students with little or no economics background, it will start with an introduction to the concepts of markets, markets¿ mechanisms and the efficient allocation of scarce resources. This part of the course constitutes the foundation for most of the subsequent topics. Then we will challenge this market¿s framework by introducing the concepts of externalities and markets failure, which are essentially the starting point of extending the standard economic analyses when it comes to environmental issues such as climate change. The course then moves to cover various topics from optimal policy choice (carbon taxes versus carbon markets versus hybrid mechanisms), to environmental valuation techniques and cost-benefit analysis. For the remainder of the course we will covers specialised topics such as interactions between climate change and technology policies as well as international climate change cooperation. The course then moves to cover contemporary topics related to recent science, economics and policy debates. For instance we will look at Prof. William Nordhaus¿ contribution to the literature (namely DICE model) for which he co-won the 2018 Economics Nobel Prize, and most importantly we will look at the criticism for his contribution. Other topics we shall address include Climate Change Discounting and Stern-Nordhaus discounting debate, the Economics of 1.5°C Climate Change, the Economics of Net Zero Emissions and the UK¿s potential carbon policy options post-Brexit. Finally, we will look at some contributions in ecological economics, the framework of which challenges the analytical framework currently dominant in the literature of environmental economics.
Despite the fact that the second half of the course is highly technical by nature, the approach followed in the class focuses on understanding the intuition of the models without looking at the maths, and most importantly building students¿ ability to think critically about various methodologies and models approaches and their shortcomings.
Overall, throughout the course we will mix economic theory and practical applications. By the end of the course, students should have strong understanding of all topics discussed, as well as be well equipped to explore new topics in the literature later in their careers or further studies.
Course description Broad Aims
To provide students with an in-depth understanding of:
- The concepts of markets, markets failure, externalities, public goods and property rights applied on environmental issues
- Regulatory measures and policy instruments available to control environmental degradation resulting from economic activities
- Cost-benefit analysis applied on environmental policies and projects
- Environmental valuation techniques
- a number of emerging and recent issues in the literature of the economics of climate change

Topics Covered
May vary from year to year, are likely to be drawn from:
1. Introduction to the concepts of markets and their mechanisms
2. Welfare economics and the environment
3. Public goods and externalities
4. Property rights and Coase theorem
5. Environmental regulations
6. Policy instruments (Pigovian taxes, subsidies and permit trading) in details
7. Cost-benefit analysis
8. Environmental valuation: Reveal preferences techniques
9. Environmental valuation: Stated preferences techniques
10. Climate Change Agreements
11. Technological Transfers and Direct Technical Change
12. Climate Change Discounting: The Stern Review and its critiques
13. Climate Change and Non-markets Impacts
14. Climate Change Modelling: Computable General Equilibrium Models (CGM), Integrated Assessment Models (IAMs), etc.
15. The Economics of Limiting Global Warming to 1.5°C
16. The Economics of Catastrophes, Fat Tails and the Dismal Theorem
17. Sustainable Growth
18. Climate and Energy Policy Interaction
19. The Economics of Market Stability Reserve in the EU ETS
20. Integrating Carbon Markets
21. The Economics of Emission Removal Technologies and Geoengineering

The exact topics covered each year will be published at the beginning of the course with the possibility of some changes during the course. Notice that only 5-7 topics will be covered. Such approach will give us the flexibility to adjust the lectures pace as we go along in order to ensure students understanding of the material. The focus here is on quality of understanding, rather than quantity of topics.
Entry Requirements (not applicable to Visiting Students)
Pre-requisites Co-requisites
Prohibited Combinations Other requirements This course is only available to students on MSc Carbon Management, MSc Carbon Capture and Storage or with the permission of the course instructor.
Information for Visiting Students
High Demand Course? Yes
Course Delivery Information
Not being delivered
Learning Outcomes
On completion of this course, the student will be able to:
  1. analyse and assess the implications of using various environmental regulatory measures and policy instruments
  2. assess the costs and benefits of undertaking pollution control projects, a skill that is applicable to a wide range of social projects in different contexts
  3. have a strong knowledge and understanding of recent and ongoing research contributions to the climate change economics literature
  4. think independently and coherently about climate change policies as well as judge and advise on their implications
Learning Resources
Resource Lists
The designated CEcon Resource Lists webpage is:
You can (or might be better off) access the list through ¿Resource Lists¿ link on the top left panel of the CEcon Learn page. For guidelines on how to use Resource Lists or contact info for further help or questions:
Related Academic Journals
Journal of Environmental Economics & Management
Environmental and Resource Economics
Resource and Energy Economics
Review of Environmental Economics & Policy
Environment and Development Economics
Climate Policy
Oxford Review of Economic Policy
Nature - Climate Change
Energy Economics
Energy Policy
Additional Information
Graduate Attributes and Skills Not entered
Additional Class Delivery Information 2 hours weekly lecture, plus tutorials
KeywordsNot entered
Course organiserDr Alaa Al Khourdajie
Course secretaryMiss Sophie Bryan
Tel: (0131 6)50 9905
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