Master of International Affairs   Master of Public Policy   Master of Data Science for Public Policy  

Emissions pricing

This is an advanced course on emissions trading and taxation. It covers conceptual basics, design options, price formation in cap-and-trade schemes. We also discuss the many pitfalls when designing robust emission pricing systems: Carbon leakage, linking, winners and losers, politics.

Climate change is caused by greenhouse gases (carbon dioxide, methane and others) being emitted into the atmosphere. The fact that such emissions are not priced is “the greatest market failure that the world has seen”, as Lord Nicholas Stern put it. In addition, emissions of local pollutants (SOX, NOx, particular matter) rank high on the list of most pressing policy problems in many parts of the world, in particular in many of the megacities in fast-growing developing and emerging economies. Economists have long advocated for putting a price tag on emissions as an efficient means to address emissions. However, putting emissions pricing into practice has turned out to be difficult. The purpose of this class is to understand why, and how robust emission pricing policies ought to be designed.

This course is for 2nd year MIA, MPP and MDS students only.