Economics of Energy and the Environment
Econ 3391.01
Tuesday / Thursday 9 AM
Gasson Hall 304
Instructor: Richard Sweeney
Office: Maloney Hall 385A
Office hours:
Tuesday – Thursday 10:30 – 11:30 AM in Maloney 385A.
Please sign up at https://richard-sweeney.youcanbook.me/.
Email: sweeneri@bc.edu
Graduate Assistant: Jean-Francois Gauthier
Email: gauthija@bc.edu
Course website: All materials will be placed on Canvas.
Overview:
Energy is essential to modern life. Yet energy markets are often characterized by two classic market
failures: imperfect competition and environmental externalities. Given this, economists believe that we
can improve welfare by coming up with policy and business solutions that correct these failures. This
class is about understanding and quantifying these solutions. After reviewing the basics of electricity,
petroleum and natural gas markets, we will spend the bulk of our time reading recent empirical economic
scholarship on these markets. Emphasis will be placed on the way in which economists identify questions
of policy and business importance and then attempt to answer them with data. As such, the course will be
as much about learning how to use modern empirical tools to answer policy questions as it is about the
details of energy markets.
Prerequisites:
Microeconomic Theory (ECON2201 or ECON2203) and Econometric Methods (ECON2228) are
prerequisites for this course. I will assume that you remember all important concepts from both courses,
although we will do a quick overview of econometrics during the first two weeks of class.
Environmental economics is recommended but not required.
Everyone must fill out a survey at http://goo.gl/forms/AUbtxFTYDv
Textbook:
There is no textbook for this course. The material will consist of lecture notes and academic articles
which will be posted on Canvas.
Optional texts:
For a concise (affordable) introduction of environmental economics and policy, see “Markets and
the Environment”, by Nathaniel Keohane and Sheila Olmstead.
For a more formal treatment of environmental economics, checkout (less math) “The Economics
of the Environment”, by Peter Berck and Gloria Helfand, or (more math) “Environmental Economics,” by
Charles Kolstad.
For a fantastic (affordable) introduction to the econometric methods we will use in this class, I
highly recommend “Mastering 'Metrics: The Path from Cause to Effect,” by Joshua D. Angrist and JörnSteffen Pischke.
All of the empirical tools used are also covered in “Introductory Econometrics: A Modern
Approach,” by Jeffrey Wooldridge.
Readings:
There will be one or two required readings for each class (tentative list below). It is essential that you
complete these readings before class in order to contribute to and benefit from the discussion. To facilitate
this, students are required to submit answers to one or two short questions about the readings the
night before each class. Failure to submit answers by midnight will reduce your participation grade.
Questions will be listed on Canvas along with the posted reading for each class. On some days,
the readings will be divided up amongst the class. Please make sure you read each Canvas assignment
carefully to avoid extra work.
Important policies
Attendance policy:
Attendance is mandatory. 3 absences will be allowed (for any reason). Beyond that, additional absences
will reduce your participation grade. If you do not think you will be able to attend lecture, do not take this
course.
Seating policy:
To facilitate attendance taking and classroom discussion, students will be required to sit in the same seats
every class. Seats will be set on the third class (January 26).
Laptop policy: Unless presenting, the use of laptops will not be allowed in class. If you need to use a
laptop for medical reasons, please come speak to me after class.
Academic integrity:
Students are advised to carefully review and abide by the university’s policies on academic integrity. Any
instances of cheating or plagiarism will be reported to the Dean’s office without exception.
Lecture slides: will be posted on the course website prior to each class. I strongly suggest you print them
out and take notes on them during class.
Grading
Problem sets – 20 percent
 There will be 4 problem sets.
 All problem sets must be submitted through Canvas before class on the due date. Solutions
will be posted at the start of class, and, as a result, late problem sets will not be accepted.
 You are allowed to work in groups, but each person must hand in their own problem set.
 The problems sets will involve using Stata. Students must submit their (own) Stata code as well
as a separate document writing up their answers to the problems.
Paper presentation – 10 percent
Each student will lead the class in discussion of one empirical energy paper. These dates are marked with
an * in the reading list below. Working in pairs of two, students must prepare slides and plan to talk for
15-20 minutes.
Discussion posts – 5 percent
This class is about using economics to understand real world energy and environmental problems. As part
of this, students will be encouraged to read relevant news articles and blog about issues they find
interesting. In two short discussion entries on Canvas, each student will link to an article from one of
these sources, provide a brief summary, and list at least one research question that emerged.
Entries should be posted to the Discussions section of Canvas so that other students can join in
the (constructive) conversation. Although this should be seen as an ongoing assignment, I have posted
two due dates by which you should plan to have your first and second entries in. They are frontloaded
because the hope is that one of your blog entries may turn into a paper topic.
Participation – 15 percent
Students are expected to be engaged in class. If I feel that this is not happening I will resort to cold calling
and quizzes gauge preparedness.
Final paper – 50 percent
Working in groups of two or three, students must write a research paper on an energy or environmental
issue of their choosing. This will be discussed in detail in class, but please note the paper related dates
below.
Schedule & Reading List^
Econ 3391.01, Spring 2016
Class Date
1
1/19
2
1/21
3
1/26
4
1/28
5
2/2
6
2/4
7
2/9
8
2/11
9
2/16
10
2/18
11
2/23
12
2/25
13
3/1
14
3/3
3/8
3/10
15
3/15
16
3/17
17
3/22
3/24
18
3/29
19
3/31
20
4/5
21
4/7
22
4/12
23
4/14
24
4/19
25
4/21
26
4/26
27
4/28
28
5/3
29
5/5
5/8
Assignments
PS1 due
Blog 1 due
PS2 due
Paper group due
Blog 2 due
Paper topic due
PS3 due
PS4 due
Module
Intro
Methods I
Methods II
How to read a paper
Intro to electricity markets
Electricity demand
Deregulation
Taxing Carbon
Energy efficiency overview
Appliances
Buildings
Weatherization wars
Behavioral econ & EE
Renewables - Wind
No class
No class
Renewables - Solar
Oil/ transportation intro
Keystone & Oil Export ban
No class
Gasoline demand elasticity
Gasoline competition
Behavioral econ & cars
Electric vehicles
Intro to natural gas markets
Regulating natural gas
Fracking overview
Fracking costs
Fracking costs II
Student presentations
Student presentations
Student presentations
Required Readings
CEA 2015 - Chapter 6
Greenstone & Gayer 2009
NJS 1999
Borenstein 2002; B&B 2015
Allcott (2011); Rapson & Jessoe
* Wolfram & Davis ; Cicala
RFF; Meng; Cullen & Mansur
Allcott & Greenstone
* Coolers; Labels; Water Heaters
Levinsohn
NYTimes; GFW
* Allcott Opower
Borenstein 2012; AGS 2015
vBGS; Gillingham & Bollinger
Knittel (2012)
* CRS 2014; Borenstein & Kellogg
* HKS; Davis & Killian; LLM
* Hastings 2004; 2008; 2009
* Allcott & Wozny; BKZ
Mansur et al
Joskow
Davis & Muehlegger
TBD
Timmins
TBD
Paper due
* Indicates student paper presentation days
^ Reading list tentative and subject to change. Check Canvas each class for required readings!