Climate Change Economics

This course covers the trends in current and future climate change and their effects on economic and social outcomes. The lectures cover the following topics: 1. Introduction to the Basic Science of Climate Change - The students will learn about the scientific themes of global climate change and the economic dimension of the phenomenon. 2. Basic Economics - The students will learn how a market economy can be efficient and socially optimal as well as about the prospects of externality. 3. Optimal Emission Levels - The students will learn of the optimal abatement path and its uncertainty with respect to damages as well as Integrated Assessment Models (IAMs). 4. Intra-generational equity in climate policy - The students will learn about how to account for equity across space (intergenerational equity) when deriving optimal emission levels. 5. International Environmental Agreements - The students will learn about the dynamics behind common strategies towards achieving some form of optimal emission level. 6. Policy Instruments - The students will learn about diverse instruments such as quality-based approach and Pigouvian Tax. 7. Regulation via Prices vs. Quantities - The students will learn what circumstances will a regulator prefer prices over quantities and vice versa. 8. Credit-based Mechanisms - The students will learn about how to deal with countries that do not want to commit but have a high potential for low-cost reductions. 9. German Climate Policy - The students will learn about German Climate Action - strategies and policies 10. European Union Emission Trading Scheme - EU ETS

After successfully completing the module, students are able to: • Evaluate economic models related to climate change. • Understand theoretical models of climate change regulations as well as policies that affect emission levels. • Comprehend the complexity, uncertainty and possibilities associated with optimal emission level. • Analyze appropriate instruments for emission levels that are efficient and cost-effective. • Understand different forms of climate agreements and climate action strategies that are currently being implemented

There will be a written exam (Klausur) of 90 minutes at the end of the semester. The students will be asked to demonstrate, within the stipulated amount of time using predefined methods and resources, their ability to outline the challenges climate change poses to regulators, propose pragmatic solutions and strategies as well as ways of implementing them. This will be based on the competencies acquired from the relevant literature of economic modeling, theories of climate change, and their understanding of the course content. The written exam is an appropriate assessment method to evaluate the degree to which the students understand the theoretical framework of climate change implications as well as provides an opportunity for them to put forward arguments based on existing theory. In addition, there is the option of taking a voluntary mid-term assignments as course work in accordance with APSO §6, 5. For this, a presentation (15 min) has to be given. The module grade can be improved by 0.3 by passing the course work if this better characterises the student's performance level on the basis of the overall impression and the deviation has no influence on passing the examination. No repeat date is offered for the mid-term performance. When retaking a failed module examination at the next possible examination date, successfully passed mid-term assignments will be taken into account.

Basic knowledge: • Micro Economics (Welfare Economics) • Environmental Economics • Resource Economics

The course consists of lectures (2 SWS) and seminars (2 SWS). The lecture forms the basis for the subsequent discussion within the seminar on climate change issues from an economic perspective. The content of the module is expected to be transferred to the students in an interactive learning manner (including discussions in the lectures but especially intensive discussions in the seminar) where, among others, emission reduction instruments are scrutinized. This encourages the students to independently and self-reliantly study the literature guided by a structured framework.