Iga-410 Syllabus Energy Policy: Technologies, Systems, and Markets

Fall 2016

Faculty Assistant, Natalie Rios, Belfer 302, 617-495-8850, natalie_rios@hks.harvard.edu

Teaching Fellow, Rahul Srinivasan, Rahul_Srinivasan@hks17.harvard.edu

Course Assistant, Bobby Kim, Bobby_Kim@hks17.harvard.edu

Aims and structure of the course; links between energy and important dimensions of human well-being: energy & economy (development, growth, jobs, trade); energy & environment; energy & international security; survey of tools and approaches for the study of energy issues.

(R = REQUIRED, O = OPTIONAL; assignments to be read before the indicated class):

• 
  R: GEA, 2012: Global Energy Assessment – Toward a Sustainable Future, Cambridge University Press, 2012, Chapter 1, p. 103-140, http://www.iiasa.ac.at/web/home/research/Flagship-Projects/Global-Energy-Assessment/Chapter1.en.html
  

Will review demands on capital and labor, patterns of energy use, elasticity, tariff setting, and trade impacts; introduction to market failures (excessive concentration of market power, lack of information, externalities, public goods, and inequality). This class aims to familiarize students with the basic economic concepts that we will use to assess the effectiveness of energy policies in subsequent classes.

• 
  R: Tom Tietenberg, Environment and Natural Resource Economics, Addison Wesley, sixth edition, 2003, pp. 151-165.
  

• 
  R: Global Energy Assessment – Towards a Sustainable Future – Cambridge University Press, 2012, ch. 6.1-6.5, p. 389-407, http://www.iiasa.ac.at/web/home/research/Flagship-Projects/Global-Energy-Assessment/GEA_Chapter6_economy_lowres.pdf
  

The science of energy-related global climate-change and climate-change impacts; strategies for reducing the risks of energy-related climate change; the IPCC Report and the implications of recent scientific studies.

• 
  R: Daniel Schrag Videos (under Course Videos on Canvas)
  

1. 
   Lonnie Thompson and Tropical Ice Sheets-HD
   
2. 
   Driving Forces Behind CO2 Emissions-HD
   
3. 
   Carbon Wedges and Cumulative Emissions-HD
   
4. 
   Anthropogenic Changes in the Radiation Budget-HD
   
5. 
   Overview Earths Radiation Budget-HD
   
6. 
   The Physics of Planetary Energy Balance-HD
   
7. 
   David Archer and the Long Tail of the Carbon Cycle
   

Where are oil and gas resources and reserves found, the economics of oil exploration, production and refining, how oil and gas markets work, and the politics of oil and gas, both domestic and international. What are the political and security implications of world patterns of oil and gas supply and demand? Students should explore the data in the oil section of the BP statistical review and be prepared to identify and discuss recent and future trends.

• 
  R: BP Statistical Review 2015 (explore oil section), http://www.bp.com/content/dam/bp/pdf/Energy-economics/statistical-review-2015/bp-statistical-review-of-world-energy-2015-full-report.pdf p. 6-19.
  

• 
  R: Leonardo Maugeri, Beyond the Age of Oil: The Myths, Realities, and Future of Fossil Fuels and Their Alternatives. (2012) pp. 3-36.
  

• 
  R: International Energy Agency: World Energy Outlook 2015, OECD. Chapter 3, page 111-151. http://www.oecd-ilibrary.org.ezp-prod1.hul.harvard.edu/docserver/download/6115271e.pdf?expires=1472158101&id=id&accname=ocid195670&checksum=A851B7833065357876B0E5BC5882E404
  

• 
  O: William Leffler, Petroleum Refining for the Non-Technical Person. (PennWell, 1979) Chapters 2 & 3 pp. 13-25.
  

• 
  O: Suzanne Maloney “Energy Security in the Persian Gulf: Opportunities and Challenges” in Carlos Pascual and Jonathan Elkind, ed. Energy Security (Brookings Press, 2010) p. 37-58.
  

This class will introduce students to how natural gas markets work. Students will be introduced to both domestic and international markets including pipeline gas and LNG. Will Europe continue to rely heavily on Russian gas? Students should be prepared to identify and discuss trends covered in the natural gas segments of the BP Statistical Review.

• 
  R: Tim Boersma. Natural Gas in the United States in 2016: Problem child and poster child (Brookings, Policy Brief July 2016: 16-02) https://www.brookings.edu/wp-content/uploads/2016/07/natural_gas_united_states_2016_boersma.pdf
  

• 
  R: BP Statistical Review 2015, (explore Natural Gas sections, p. 20-29.) http://www.bp.com/content/dam/bp/pdf/energy-economics/statistical-review-2016/bp-statistical-review-of-world-energy-2016-natural-gas.pdf
  

• 
  R: Tim Boersma and Geert Greving, Why Russian Natural Gas Will Dominate European Markets, Brookings, February 24, 2014, http://www.brookings.edu/research/opinions/2014/02/24-russian-natural-gas-european-markets-boersma-greving
  

• 
  R: Lee, Henry, Slides
  

This class will discuss the implications of shale oil and gas resources in the U.S. Will the U.S. become a net exporter of both oil and gas? Is this revolution exportable to other parts of the world?

• 
  R: Leonardo Maugeri, “The Shale Oil Boom: A U.S. Phenomenon” (Belfer Center for Science and International Affairs, June 2013), http://belfercenter.ksg.harvard.edu/files/The%20US%20Shale%20Oil%20Boom%20Web.pdf
  

• 
  R: Krupp, Fred, Don't Just Drill, Baby -- Drill Carefully, Foreign Affairs, May/June 2014 Issue, https://www.foreignaffairs.com/articles/2014-04-17/dont-just-drill-baby-drill-carefully
  

• 
  R: Morse, Edward, Welcome to the Revolution: Why Shale Is the Next Shale, Foreign Affairs, May/June 2014 Issue, http://www.heinonline.org.ezp-prod1.hul.harvard.edu/HOL/Page?handle=hein.journals/fora93&size=2&id=491 or in PDF form on Canvas
  

• 
  O: Philipp M. Richter, From Boom to Bust: A Critical Look at US Shale Gas Projections, German Institute for Economic Research DIW Berlin, 2013, http://www.diw.de/documents/publikationen/73/diw_01.c.432228.de/dp1338.pdf
  

• 
  O: David G. Victor and Linda Yueh, The New Energy Order: Managing Insecurities in the Twenty-first Century, Foreign Affairs, January/February 2010 Issue, https://www.foreignaffairs.com/articles/2009-12-21/new-energy-order
  

Coal is the most plentiful energy resource in the US, China and India, but it is also among the most carbon-intensive. Class will cover supply and consumption patterns, environmental effects, liquefaction, and carbon capture sequestration technologies.

• 
  R: MIT Interdisciplinary Study, “Future of Coal”, MIT, 2007, Executive Summary, Chapter 2 and 3, http://web.mit.edu/coal/The_Future_of_Coal.pdf
  

• 
  R: Lee, Henry, slides.
  

• 
  R: Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use, National Academic Press, 2010, Summary, pages 3-21, http://www.nap.edu/read/12794/chapter/2#3
  

• 
  R: Look at Canvas – read postings on climate, cities, and air pollution.
  

This class will focus on the factors that will affect global oil supply and demand over the next three decades. Can the world continue to use fossil fuels to meet its needs to promote economic growth and poverty alleviation without accelerating the rate of climate change? If the answer is no, then are there government interventions that can reduce the forecasted rate of fossil fuel consumption? Students will present opposing arguments to questions that the instructor will distribute by mid-September. (Additional details will be handed out in class).

• 
  R: Thomas Covert, Michael Greenstone, and Christopher R. Knittel. Will we ever stop using fossil fuels? Journal of Economic Perspectives, Volume 30, Number 1. Winter 2016. Page 117-138. https://www.aeaweb.org/articles?id=10.1257/jep.30.1.117
  

Methodologies for evaluating and comparing the costs of energy projects. This class will provide the analytical methods for comparing different electricity generation options and sets the stage for the classes on electricity options that follow.

• 
  R: William D. Nordhaus. The Climate Casino: Risk, Uncertainty, and Economics for a Warming World. Yale University Press. October 2013. Chapter 16: Discounting and the Value of Time.
  

• 
  R: Robert S. Pindyck, Microeconomics [7th edition], Upper Saddle River: Prentice Hall, 2009. "Investment, Time, and Capital Markets," pp. 573-577.
  

• 
  R: Congressional Budget Office, “The Economics of Climate Change: A Primer,” US Congress, Washington, DC. April 2003, pp. 23-34.
  

• 
  R: Edith Stokey and Richard Zeckhauser, A Primer for Policy Analysis, Norton, Chapter 10, pp. 159-176.
  

The economics of electricity markets and their component parts, models for competitive pricing at the wholesale and retail level, transmission pricing and sitting, and the new role for regulation.

• 
  R: Timothy Brennan, et. al. Alternating Currents: Electricity Markets and Public Policy, Washington DC: Resources for the Future, 2002, pp. 1-12, 33-45, 81-91.
  

• 
  R: United States Department of Energy, “Electricity 101”, http://energy.gov/oe/information-center/educational-resources/electricity-101
  

• 
  How Electricity Works (20 minutes)
  
• 
  Working of a Coal Fuel Power Plant (4 minutes)
  

This class will focus on the California electricity crisis. What went wrong and what could California officials have done differently? What lessons can one take away from the restructuring reforms that swept the globe in the late 90s and early part of the last decade?

• 
  R: “Disaster by Design: California’s Experience with Electricity Restructuring“, HKS Case Study A & B, CR 14-01 1632, CR 14-01 1633.
  

• 
  R: Paul Joskow, “Lessons Learned from Electricity Market Liberalization,” Energy Journal: Special Issue on the Future of Electricity 2008, pp. 9-42, http://ezp-prod1.hul.harvard.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=45388868&site=ehost-live&scope=site
  

• 
  R: Borenstein, Severin. July 2016. “Who is Stranded Now” Energy Institute at HAAS. Business School, University of California. https://energyathaas.wordpress.com/2016/07/18/whos-stranded-now/
  

(Guest Speaker: Matthew Bunn)

This class will focus on nuclear power - its potential and the risks inherent in expanding its development.
Reading:

• 
  R: Video: How a Nuclear Power Plant Works: http://www.youtube.com/watch?v=VJfIbBDR3e8
  

• 
  R: Read this summary and review of the film "Pandora's Promise" http://blogs.scientificamerican.com/observations/2013/06/04/pandoras-promise-the-triumph-of-hope-over-fear-in-nuclear-power/
  

• 
  R: "Hold on a moment" perspective (critiquing the film "Pandora's Promise," from different perspectives:  http://allthingsnuclear.org/movie-review-put-pandoras-promise-back-in-the-box/ or http://www.npolicy.org/article.php?aid=1219&rtid=1
  

• 
  R: Bunn, "Making Nuclear Energy Suitable for More of the World's Energy Supply: Issues and Prospects" (Dec. 2010) http://belfercenter.ksg.harvard.edu/files/Making-Nuclear-Energy-Suitable-for-More-of-the-Worlds-Energy-Supply-Issues-and-Prospects.pdf
  

• 
  R: James Bushnell. “Is U.S. Climate Policy Killing Nuclear Power?” Energy Institute at HAAS Business School, May 31, 2016. https://energyathaas.wordpress.com/2016/05/31/is-us-climate-policy-killing-nuclear-power/
  

• 
  O: Arab Environment 6, Sustainable Energy: Prospects, Challenges, Opportunities. 2013 Report of the Arab Forum for Environment and Development, Chapter 4, Nuclear Power Option, Hans-Holger Rogner, Adnan Shihab Eldin, 2013, http://www.afedonline.org/report2013/ENGLISH/4-Eng.pdf
  

This class will introduce students to the challenges of implementing electricity market reforms, including transmission and generation. It will explore the challenges of siting and pricing transmission using the experiences of what happened in NYC as a case.

• 
  R: Case on NY Transmission – The New York Independent System Operation (A): Wholesale Energy and Capacity Markets.
  

• 
  R: William Hogan, A Competitive Electricity Market Model, Harvard Electricity Policy Group, October 9, 1993, http://www.hks.harvard.edu/fs/whogan/transvis.pdf
  

This class starts a three class segment on renewable energy with an overview of key renewable technologies, including wind, solar, biomass and geothermal energy. The subsequent two classes will explore the policy challenges confronting wind and solar energy options.

• 
  R: MIT, The Future of Solar Energy, May, 2015. Executive Summary and p. 19-42, http://energy.mit.edu/publication/future-solar-energy/
  

• 
  R: David J.C. Mackey, Sustainable Energy – Without the Hot Air, UIT Cambridge, 2009:
  

pp. 38-49: http://www.inference.phy.cam.ac.uk/withouthotair/c6/page_38.shtml

pp. 50: http://www.inference.phy.cam.ac.uk/withouthotair/c7/page_50.shtml

pp. 81-87: http://www.inference.phy.cam.ac.uk/withouthotair/c14/page_81.shtm l

pp. 88: http://www.inference.phy.cam.ac.uk/withouthotair/c15/page_88.shtml

pp. 186-201: http://www.inference.phy.cam.ac.uk/withouthotair/c26/page_186.shtml

• 
  R: John Decicco, Why Pushing Alternate Fuels Makes for Bad Public Policy, Environment 360, 22 Aug 2013, http://e360.yale.edu/feature/why_pushing_alternate_fuels__makes_for_bad_public_policy/2682/
  

• 
  R: Video: Komp, Richard: How do solar panels work? TedEd: 5 minute video: https://www.youtube.com/watch?v=xKxrkht7CpY
  

This class will look at the strengths and weaknesses of various policies to promote solar energy options—including feed-in tariffs and renewable portfolio standards.

• 
  R: Leah Stokes and Henry Lee, Gainesville Regional Utilities’ Feed-In Tariff, HKS Case 1963.0.
  

• 
  R: MIT, The Future of Solar Energy, May, 2015. Executive Summary and p. 209-230, http://energy.mit.edu/publication/future-solar-energy/
  

• 
  R: Renewable portfolio Standards by the National Renewable Energy Lab: http://www.nrel.gov/tech_deployment/state_local_governments/basics_portfolio_standards.html
  

• 
  R: Glen Barbose Slides from the Lawrence Berkely Lab in 2013: http://www.cesa.org/assets/2012-Files/RPS/RPS-SummitDec2012Barbose.pdf
  

This class will explore the potential of distributed generation – is it a workable alternative to the centralized grid? Will it serve as a significant step to a lower carbon future?

• 
  R: M.A. Cohen, P.A. Kauzmann, D.S. Callaway: Economic Effects of Distributed PV Generation on California's Distribution System. Energy Institute at Haas, Working Paper 260, June, 2015. http://ei.haas.berkeley.edu/research/papers/WP260.pdf
  

• 
  R: MIT: The Future of Solar Energy: An Interdisciplinary MIT Study led by the MIT Energy Initiative, May 5, 2015. Chapter 7, p. 153-172. http://energy.mit.edu/publication/future-solar-energy/
  

• 
  O: Cossent, R.; Gómez, T.; Frías, P.; "Towards a future with large penetration of distributed generation: Is the current regulation of electricity distribution ready? Regulatory recommendations under a European perspective", Energy Policy, vol.37, no.3, pp.1145-1155. March, 2009. http://www.sciencedirect.com/science/article/pii/S0301421508007039#
  

Should Iceland provide low cash renewable power at below cost tariffs to the proposed Helguvík smelter? Should it consider building a wind farm to sell power to the UK? What information would you need to answer the last question? Will storage of power potentially change the structure of electric grids and how or will natural gas save many of the same functions at much lower prices? Should government favor one as opposed to the other?

• 
  R: Iceland’s Energy Policy: Finding the Right Path Forward – Case Study - Halla Hrund Logadóttir and Henry Lee, Harvard Kennedy School, Case Number 1968.0.
  

• 
  R: VIDEO - How a Wind Turbine Works - http://www.youtube.com/watch?v=LNXTm7aHvWc
  

• 
  R: David J.C. Mackey, Sustainable Energy – Without the Hot Air, UIT Cambridge, 2009:
  

http://www.inference.phy.cam.ac.uk/withouthotair/cC/page_269.shtml, pp. 269

• 
  R: Boaz Moselle, “Renewable Generation and Security of Supply”, Harnessing Renewable Energy in Electric Power Systems, pp. 51-68.
  

This class will discuss domestic policy options to address climate change including carbon tax, cap and trade and compulsory regulation of power plants and other sources of greenhouse gas emissions.

• 
  R: William D. Nordhaus. The Climate Casino: Risk, Uncertainty, and Economics for a Warming World. Yale University Press. October 2013. Chapter 20: Climate-Change Policies at the National Level.
  

• 
  R: Pricing Carbon: The Birth of British Columbia’s Carbon Tax Case, Anjani Datla and Henry Lee, HKS Case, 2015.
  

• 
  R: Ian Parry, Fiscal instruments for Climate Finance (in Handbook on Energy and Climate Change) Roger Fouquet (2013), p. 377-402.
  

• 
  R: Ian W.H. Parry and William A. Pizer, Emissions Trading versus CO2 Taxes versus Standards, RFF: Resources for the Future, http://www.rff.org/files/sharepoint/WorkImages/Download/CPF_7_IssueBrief_5.pdf
  

• 
  O: Harvard Magazine, Time to Tax Carbon: Enhancing environmental quality and economic growth. September-October 2014. http://harvardmagazine.com/2014/09/time-to-tax-carbon
  

• 
  O: Designing Climate Mitigation Policy. Journal of Economic Literature 48(4): 903-934, with Alan J. Krupnick, Richard G. Newell, Ian W.H. Parry, and William A. Pizer, 2010.  http://www.nber.org/papers/w15022.pdf?new_window=1
  

This class will look at key questions surrounding the role of government in designing adaptation programs using Miami Dade County in Florida as a case study.

• 
  R: Miami Dade Water and Sewerage System Case Study (will be posted the week prior to the class).
  

• 
  R: Jane C. S. Long and Jeffery Greenblatt. The 80% Solution: Radical Carbon Emission Cuts for California. ISSUES IN SCIENCE AND TECHNOLOGY. Spring, 2012. http://issues.org/28-3/long-3/
  

This class will examine the innovation process that takes energy technologies from invention to commercialization. It will focus specifically on the institutions and policies that are critical to the development of a new menu of energy technologies. This class will look at the factors contributing to technological innovation in context of the problems facing 1366 Technologies, a local solar startup company.

• 
  R: Joseph Lassiter, et.al. “1366 Technologies” Harvard Business School 9-810-005 (Cambridge, Mass, 2010)
  

• 
  R: Venkatesh Narayanamurti, et al. Transforming the Energy Economy: Options for Accelerating the Commercialization of Advanced Energy Technologies. Energy Technology Innovation Policy research group, Belfer Center for Science and International Affairs, Harvard Kennedy School, February 2011, http://belfercenter.ksg.harvard.edu/files/ETIP_Workshop_Report_Feb_2011_2.pdf
  

There are over 800 million vehicles on the road today with the prospect of significant growth in India, China, and many areas of the developing world. The transportation system is almost entirely fueled by fossil fuels. What can be done to reduce the carbon footprint of these sectors?

• 
  R: Lucas Davis. New CAFE Standards: The Good, the Bad, and the Ugly (Energy Institute of HAAS Business School, January 2016). https://energyathaas.wordpress.com/2016/01/25/new-cafe-standards-the-good-the-bad-and-the-ugly/
  

• 
  R: Soren Anderson, Ian Perry et.al.  Automobile Fuel Economy Standards: Impacts, Efficiency and Alternatives--Review of Economics and Policy, winter 2011, p. 89-108. http://reep.oxfordjournals.org/content/early/2011/06/18/reep.req021.short
  

• 
  R: Paris Process on Mobility and Climate: Renewable Energy and Transportation, Decarbonizing Fuel in the Transportation Sector. PPMC 2015. http://ppmc-cop21.org/wp-content/uploads/2015/08/Renewable-Energy-and-Transport-Decarbonising-Fuel-in-the-Transport-Sector.pdf
  

Approximately 70% of oil consumed in the U.S. is consumed in the transportation sector. The U.S. and other countries are aggressively assessing a portfolio of possible alternative options to conventionally fueled vehicles – including electric vehicles, methanol, hybrid cars, CNG vehicles and biofuels. This class will ask students what role governments should play in promoting deployment of alternatively fueled vehicles and what criteria will determine if these or any alternatives will significantly penetrate the market.

• 
  R: Transportation Research Board, “Policy Options for Reducing Energy Use and Greenhouse Gas Emissions from U.S. Transportation,” (Washington, D.C. 2011). Ch. 5, pp. 97-124, http://onlinepubs.trb.org/onlinepubs/sr/sr307.pdf
  

• 
  R: NREL Alternative Fuel Infrastructure Expansion: Costs, Resources, Production Capacity, and Retail Availability for Low-Carbon Scenarios, April 2013, p. 7-25, http://www.nrel.gov/docs/fy13osti/55640.pdf
  

• 
  O: Kelly Sims Gallagher, et. al. “Policy Options for Reducing Oil Consumption and Greenhouse-Gas Emissions from the U.S. Transportation Sector,” HKS Discussion Paper, July 27, 2007, http://belfercenter.ksg.harvard.edu/files/policy_options_oil_climate_transport_final.pdf  
  

• 
  O: Smithsonian Institute – Fuel Cell Basics, 2008, http://americanhistory.si.edu/fuelcells/basics.htm
  

24. 
    11/28 MON India’s Energy Policy – Student Presentations 4
    

• 
  International Energy Agency, World Energy Outlook 2015 (OECD/ICA 2015). Chapter 11, Page 427-462. http://www.oecd-ilibrary.org.ezp-prod1.hul.harvard.edu/docserver/download/6115271e.pdf?expires=1472158101&id=id&accname=ocid195670&checksum=A851B7833065357876B0E5BC5882E404
  

• 
  Hari Pulakkat. “A Tough To-Do List for India from Paris COP 21 Climate Summit”. The Times of India. December 22, 2015. http://economictimes.indiatimes.com/news/politics-and-nation/a-tough-to-do-list-for-india-from-paris-cop21-climate-summit/articleshow/50275588.cms
  

China is the fastest growing economy in the world. This class will focus on China’s energy use and the driving force that shapes its energy policies.

• 
  R: Fredrich Kahrl, et al., Challenges to China's transition to a low carbon electricity system, Energy Policy, Volume 39, Issue 7, July 2011, Pages 4032–4041, http://www.sciencedirect.com/science/article/pii/S0301421511000413
  

• 
  R: Damien Ma, China Answers the Call for Rebalancing in the Next Decade, The Atlantic, March 17, 2011, http://www.theatlantic.com/international/archive/2011/03/how-should-china-solve-its-energy-problems/72716/
  

• 
  O: Yuyu Chen, et al., Evidence on the impact of sustained exposure to air pollution on life expectancy from China’s Huai River policy, doi: 10.1073/pnas.1300018110, PNAS July 8, 2013, http://www.pnas.org/content/early/2013/07/03/1300018110.full.pdf+html