Course Outline for Special Topics Course: ECON 434/710. Climate Change: Science, Technology, Economics, Policy. Professor C. Green: Winter 2016

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1 Course Outline for Special Topics Course: ECON 434/710 Climate Change: Science, Technology, Economics, Policy Professor C. Green: Winter 2016 Office: Leacock 534 W:1:30-3:00 ECON 434-ECON 710, a current economic problems/special topics course, will take up the climate change issue covering science, energy technology, economics and climate policy. The course is only for students with a serious interest in all facets of the climate change issue and willing to think deeply as well as put a lot of hard work into understanding what is a demanding literature and a much more difficult problem to resolve than many have made it out to be. The topic is one on which I have worked for 28 years. My impression is that not much has been achieved on the climate change/policy fronts in that time---and the recently concluded Paris 2015 (COP-21), despite appearances and some hopeful signs, does not intrinsically alter the picture. I am using the opportunity of teaching the course to present my own thinking, and then to both get feedback from students and engage students in thinking about what sort of policy framework might actually succeed in starting the process of substantially cutting greenhouse gas emissions at the global level. As will become clear below the course places important demands on each student. It is NOT a course for those who are seeking 3-credits by doing a minimum of work and attending only when it is convenient. The course will be run as a combination lecture/seminar style, meeting once a week for three hours (Fridays 11:30-2:30). During the first 10 weeks, ~ 1.5 hours will be devoted to lectures followed by a class discussion of one or two key reading (~ 1+ hours). There will a minute break between the lecture and the class discussion. Each week 2 or 3 students will be assigned to make a make a presentation of the key reading(s) and lead the discussion that follows. The last 2-3 weeks will be devoted to graduate student presentations of their work. Each of the meetings of the course call on student participation in one form or another---and students who do not attend regularly are not participating. In addition to participation and presentation, all students will write a short 4 page (maximum double spaced) essay on William Nordhaus Climate Clubs article (AER 2015). The climate clubs essay is due Monday March 7 (at the very latest). Students will also undertake a research paper---an in-depth analysis of a welldefined topic. The research paper is due no later than Friday April 8, The research paper should be no more than 10 pages (maximum) double spaced, not including bibliography, tables, and figures. In order to carry out her/his research each student will provide me by March 9, 2016 (at the very latest) with a research proposal including a preliminary set of references on which her/his research is based. Marks for the course are based on the following: Class participation (15%); presentation (15%); essay (20%) and research paper (50%). Because a premium is placed on class participation regular attendance is imperative (and will be noted). Students who do not plan to regularly attend the class should withdraw from the course immediately, as well as should students who do not do the assigned reading prior to each class. Grades for participation will be pass-fail with a fail = zero points. 1

2 McGill University values Academic Integrity. Therefore all students must understand the meaning and consequences of cheating, plagiarism and other academic offences under the code of student conduct and disciplinary procedures (see for more information). In accord with McGill University s Charter of Student Rights, students in this course have the right to submit in English or in French any written work that is to be graded. Outline: Topics covered in the course are indicated below along with the dates on which they are taken up. Each topic is accompanied by a set of power point slides. All of the key readings/articles are uploaded to My Courses. [Undergraduate students are advised to peruse the readings now to determine whether to continue with or to drop the course.] WEEK 1: Course Organization and Overview (January 8, 2016) WEEK 2: Science of Climate Change (January 15, 2016) (a) GHG Emissions, atmospheric concentration and changes in the world s energy balance (b) Equations for - Radiative forcing - Global average temperature change - feedback effects - Climate sensitivity (c) The cascade of uncertainty (regarding physical impacts (oceans and ice); biospheric impacts (flora and fauna) and human impacts (d) Global warming, the incidence of extreme weather events, and the matter of attribution (e) roles of resilience, vulnerability, and adaptation Paper for discussion: M. Previdi et al, (2013) Climate Sensitivity in the Anthropocene, Quarterly Journal of Royal Meteorological Society, July: Week 3: Impacts and Costs of Climate Change (January 22, 2016) (a) impacts and climate change risks (b) climate change damages (c) adaptation and vulnerabilities (d) estimates of climate change costs (e) social cost of carbon and the discount rate 2

3 Paper for discussion: M. Burke et al, (2015) Nature, v. 527 Nov. ( ) [Other: R. Tol (2009), The Economic Effects of Climate Change, Journal of Economic Perspectives, Spring: 29-52] Week 4: Climate Policy to Date: What it is and what it will do. January 29, 2016) (a) UNFCCC 1992 (b) Kyoto 1997 (c) Copenhagen 2009 (d) Paris 2015 Papers for Discussion: G Peter s et al (2015) Measuring a Fair and Ambitious Climate Agreement Using Cumulative Emissions, Environmental Research Letters, v.10, October and A. Fawcett, et al (2015), Can Paris Pledges Avert Severe Climate Change?, Science, v.350, Dec. 4: WEEK 5: The Magnitude of the Problem in Emission and Technology Terms (February 5, 2016) (a) Emission Scenarios (b) Technology gaps (c) Why the emission and technology challenges have been (grossly) under-estimated (d) Implications for estimates of economic cost of emission abatement Papers for discussion: M. Hoffert et al (1998), Nature v. 395: ; and S. Baksi and C. Green (2007), Energy Policy v 35: ,.[Other papers: J. Edmonds et al (2012), Energy and Technology Lessons since Rio, Energy Economics v.34:s7-14; C. Green, S. Baksi, M. Dilmaghani (2007), Challenges to a climate Stabilizing Energy Future, Energy Policy, v. 35: ; R. Pielke, T. Wigley, C. Green (2008), Dangerous Assumptions, Nature, v. 452: ] WEEK 6: Integrated Assessment Models (IAMs) (February 12, 2016) (a) What they are (b) Nordhaus pioneering environment-economy model (Science 1992) (c) The use of IAMs in economic analysis of climate change (d) Benefit-cost analysis in IAMs: the role of the discount rate (e) Thick tails (f) Shortcomings of IAMs Paper for discussion: W. Nordhaus (2014), Journal of Association of Environmental and Resource Economists (JAERE), v 1 Spring/Summer: : (It may be easier to begin by reading: W. Nordhaus (1992), An Optimal Transition Path for Controlling Greenhouse Gases Science, v. 258, 20 Nov: ); [Other paper: R. Pindyck (2013) Climate change Policy: What do the Models Tell US?, Journal of Economic Literature. V.51: ] 3

4 WEEK 7: Carbon Pricing (February 19, 2016) (a) Methods: carbon taxes vs tradable emission permits (b) Applications to date (c) Carbon shifting and leakage (d) Superiority of a carbon price (tax) to quantity-based tradable emission permits (e) Is carbon pricing sufficient? Necessary? Paper for discussion: Weitzman (2014), Can negotiating a Uniform Carbon Price Help to Internalize the Global warming Externality?, JAERE, v. 1 Spring-Summer: 29-49; [Other paper: W. Nordhaus (2011), Designing a Friendly Space for Technological Change to Slow Global Warming, Energy Economics, 33: ] WEEK 8: Carbon Pricing Doubts (March 11, 2015) (a) Emission reduction progress to date (b) Why virtually no progress -Superiority of fossil fuels in providing energy services - political opposition to leveling the playing field by artificially raising the price of superior energy sources (c) Weak features of the induced technology mechanism (d) Large reserves of fossil fuel wealth (e) Long-lived fossil fuel infrastructure and committed emissions (f) City construction/expansion and fossil fuel use: the case of China Papers for Discussion: C. McGlade and P. Elkins (2015), The Geographical Distribution of Fossil Fuels Unused when Limiting Global Warming to 2 C Nature, v 517, 8 Jan: ; S. Davis and R. Socolow (2014), Commitment Accounting for CO 2 Emissions, Environmental Research Letters, v.9: Week 9: Climate Clubs: A Carbon Pricing Proposal: (February 26, 2016) Round Table Discussion: Nordhaus Climate Clubs (2015) American Economic Review April: ; [Other paper: J. Buchanan (1965), An Economic Theory of Clubs, Economica, February: WEEK 10: Paris 2015: Weighing the Cost of Brute Force Climate Policies Against a Technology-led Climate Policy (March 18, 2015) (a) Limitations of non-hydro renewable energies - Case study of wind energy on Orkney Islands - Progress or lack of it in battery technology (b) Limitations of Energy Efficiency Improvement 4

5 (c) Should biomass and biofuels be treated as carbon-neutral? Pulp Fiction and all that (c) Technology transfer: Estimates of how much China can gain (d) In absence of a technology Revolution (e) Carbon pricing re-visited (f) Why climate policy should be technology-led? Papers for discussion: Chapter 6 of IPPC AR5 WG III (2014); I. Galiana and C. Green (2009), Let the Technology Race Begin, Nature, v 462,. 3 Dec: Weeks 11-12: Graduate Student presentations (April 1 and 8, 2016) Friday April 8: Deadline for students to turn in their term (research) paper Week 13: Roundtable on a Workable Climate Policy Consistent with Global Requirements 5