Oil and Gas Markets versus Clean Energy: who owns the future? 

 

Course Description

Energy is something that makes all human activities possible. Without current energy system, a student cannot charge her phone or travel to her semester-abroad destination. The electricity in the first case could be generated by burning natural gas, and the vehicle is fuelled by processed oil. HOW does natural gas and oil / oil products reach their destination – a power station or a gas fuelling station? This is essentially what we will be looking at within this course.

The way the trade in energy resources is organised is referred to as energy markets. There is a number of reasons (political, economic, societal, technical, financial), which constantly affect the organisation of energy markets, causing its change. Within the course, the lecturers will explain the main forces driving energy markets – both in historical and contemporary perspective. Together with students, we will seek an answer to the question whether energy markets are moving towards more open, competitive and globalized structures.

We will mainly be discussing oil and natural gas within this course, and refer to markets for other primary energy sources when necessary. During the course, students will learn about the several stages of energy market development, illustrated by the development of sales contracts and pricing principles. How did the current system of oil trade come about? What role does financialisation of the oil market play in oil price volatility? Is it possible to forecast the price of oil? Will the gas markets follow the same track as oil markets did in the second half of the 20^th century, with decreasing share of long-term contracts and increasing role of financial instruments such as futures and options increase? Another very important issue in understanding the market is financial and capital investment related to energy markets.

By the end of this course, students will have developed an understanding of how international oil and gas markets function, and their current trajectories of development.

The course aims:

1. To familiarise the students with the evolution of oil and gas markets in terms of space, market structure, pricing mechanism.
2. To familiarise the students with the relevant for energy markets forms of financial market instruments.
3. To enable the students to analyse current trends in oil and gas markets and forecast on this basis the likely future developments in both markets.
4. To familiarise the students with the main forms of investment protection in energy markets.

 

Teaching method

Lectures and seminars. Seminars aim at strengthening the theoretical knowledge that students acquired during the lectures part. Each seminar will be organized in the following manner:

1. Presentation based on the reading. Students will be assigned with their readings in advance and will have time before the seminar to prepare their presentations (the use of PowerPoint is encouraged).
2. Peer-review of the presentation – any student from the class will be asked to review the presentation based on the following criteria:
   1. Has the presenter succeeded to communicate the main message of the article?
   2. Has the presenter succeeded to place the article in the wider scientific discourse?
3. Free discussion on the topic

 

Deadlines

Regular deadlines for VIU spring semester apply.

 

Seminar Instructors: Contact Details

Week 1-6: Irina Mironova (imironova@eu.spb.ru)
Week 7-12: Maxim Titov (mtitov@eu.spb.ru)

 

Student Requirements & Evaluation

After completion of the course, the students are expected to:

1. Understand the development logic of the major trends in oil and gas markets;
2. Understand the major financial tools used on the energy markets, their relevance for investment decisions and market development;
3. Understand problems related to investments in energy markets, mechanisms of investment protection.

The distribution of weights in the overall assessment is as follows:

Class participation  20%
Presentation 30%
In-class tests 50%

The evaluation process will be handled jointly by the instructors of the course. Presentations will be graded by the instructor in charge of conducting the respective seminar.

 

Course Schedule & Readings

Week 1: Evolution of the oil market (1850s-1960s): organization of the market, contract structures, pricing mechanisms

This session introduces the course, its structure, and its aims. It will define the methods of examination, and the expectations of students’ self-study. It will also provide reading lists and sources of information relevant to each of the subsequent topics and give students advice on using internet resources as a tool of study.
This session will give a basic introduction to oil and natural gas as fuels, by explaining their fundamental characteristics and their uses. Then we will proceed to the first step in the development of the oil market: the birth of the oil industry in North America; the rise of Rockefeller’s ‘Standard Oil’, and the breaking up of that company’s monopoly into smaller oil companies that we recognise today; expansion of American and European companies into South America and the Middle East as they sought access to new resources.

Questions for the seminar:
1. What are the physical characteristics of crude oil and natural gas, and how are they different?
2. What are the main uses of crude oil and natural gas, and with which fuels do they compete?
3. How has the use of these fuels changed in recent decades?
4. How did Standard Oil create its monopoly position in the United States, and why did the US government want to break that monopoly?
5. What is a ‘Concession Agreement’?
6. Who were the ‘Seven Sisters’, and why were they able to negotiate such favourable concession agreements with host governments in South America and the Middle East?

Core Reading:
1. Fouquet R., 2011. Chapter 1: A Brief History of Energy. In: J. Evans and L.C. Hunt (eds). International Handbook on the Economics of Energy. Cheltenham: Edward Elgar. pp.1-19.
2. Downey, M., 2009. Oil 101. Wooden Table Press. (Read Chapter 1, pages 1-12).
3. Dahl, C., 2015. International Energy Markets: Understanding Pricing, Policies, and Profits. PennWell Corporation. (Chapter 7, pp.165-167).

Further Reading:
Smil, V., 2006. Energy: A Beginner’s Guide. Oxford: OneWorld. (Read Chapter 4: ‘Energy in the modern world: fossil-fuelled civilisation’, pp.85-127).
Maugeri, L., 2006. The Age of Oil: The Mythology, History, and Future of the World’s Most Controversial Resource. Westport, CT: Prager. (Chapters 1-7, pp.3-91)
Yergin, D., 1990. The Prize. New York: Simon & Schuster. (Parts I-IV, pp.1-560). (The Prize is also documentary film, available at: https://www.youtube.com/watch?v=n1stQW6i1Ko)
Van de Linde, C., 1991. Dynamic International Oil Markets: Oil Market Developments and Structure 1860-1990. Springer. (Read Chapters 2-4, pp.45-144)
 
Week 2: Oil market shocks: The rise of OPEC, oil supplies and the crises of 1973 and 1979

In the 1970s, the ‘golden age of oil’ came to an end, as the ‘Seven Sisters’ were toppled from their prominent position by the Organisation of Petroleum Exporting Countries (OPEC). This session explains the rise of OPEC, and what caused the oil price shocks of 1973 and 1979. This session concludes by examining the reasons behind the decline in oil prices in the first half of the 1980s. Overall, this twenty-year period from the late-1960s to the late-1980s marked the birth of the modern era of volatile oil prices, and the influence of geopolitical events on those prices.

Questions for the seminar:
1. What is OPEC, and why was it formed?
2. What caused the oil price shocks of 1973 and 1979?
3. Why did oil prices fall in the first half of the 1980s, and what was the impact of this?

Core Reading:
1. Matthews, M., 1976. The Growth and Development of the Organization of Petroleum Exporting Countries 1959-1976. Humboldt Journal of Social Relations, 3(2), 17-24.
2. Licklider, R., 1982. The failure of the Arab oil weapon in 1973–1974. Comparative Strategy, 3(4), 365-380

Further Reading:
Carollo, S., 2012. Understanding Oil Prices: A Guide to What Drives the Price of Oil in Today’s Markets. Chichester: Wiley. (Read Chapter 3: Evolution of the Price of Crude Oil from the 1960s up to 1999, pp.29-44).
Maugeri, L., 2006. The Age of Oil: The Mythology, History, and Future of the World’s Most Controversial Resource. Westport, CT: Prager. (Chapters 8-10, pp.93-131)
McNally, R., 2017. Crude Volatility: The History and Future of Boom-Bust Oil Prices. Columbia University Press (E-Book). (Read chapters 5-8, pp.115-169).
Øystein, N., 2007. Crude Power: Politics and the Oil Market. London/New York: I.B.Tauris. (Read Chapter 4: The Political Economy of Oil Prices, pp.152-186.
Parra, 2004. Oil Politics: A Modern History of Petroleum. London/New York: I.B. Tauris. (Chapters 5-11, pp.89-239)
Yergin, D., 1990. The Prize. New York: Simon & Schuster. (Part V, pp.561-768)

 
Week 3: Oil market shocks: Financialisaton; the paper oil market, and the shock of 2008; volatility of oil prices 2010-2017

Until the 1980s, oil was mostly sold under long-term contracts, with prices determined by the cost of production and negotiations between the two parties. From the 1980s onwards, oil began to be traded on exchanges between multiple buyers and sellers. This, in turn, led to speculation over oil prices. This session examines how such speculation developed, and how financial speculation played a key role in the oil price shock of 2008. The session further examines the volatility in oil prices between 2010 and 2017, when oil prices recovered from the shock of 2008 only to fall dramatically again in the second half of 2014. Specifically, this session explains how ‘fundamentals’ (factors of supply and demand) on a flexible global market contributed to that price volatility. We conclude by identifying current trends that will influence international oil prices in the medium-term future to 2020.

Questions for the seminar:
1. What is the difference between the ‘physical’ and ‘paper’ oil markets?
2. What are ‘futures’ contracts, and how are they used for speculation?
3. How was the oil price shock of 2008 linked to the broader financial crisis of 2008?
4. Why did oil prices recover so quickly in 2009-2010, and remain high from 2011 to 2014, unlike in the ‘post-crisis’ period of the 1980s-1990s?
5. Was the oil price decline of 2014-15 simply a repeat of 2008? How was it different?
6. What role do OPEC and non-conventional oil production play in current pricing trends?
7. What are the major trends that will influence international oil prices in the medium-term future to 2020?

Core Reading:
1. Smith, J., 2009. World Oil: Market or Mayhem? Journal of Economic Perspectives, 23: 3, 145-164.
2. Baffes, J., and Kshirsagar, V., 2016. Sources of volatility during four oil price crashes. Applied Economics Letters, 23(6), 402-406.
3. Büyükşahin, B., Ellwanger, R., Mo, K., and Zmitrowicz, K., 2016. Low for Longer? Why the Global Oil Market in 2014 is Not Like 1986. Bank of Canada Staff Analytical Note (July 2016). [pdf] Available at: http://www.bankofcanada.ca/wp-content/uploads/2016/07/san2016-11.pdf (pp.1-7)
4. Demirbas, A., Al-Sasi, B.O., & Nizami, A.S., 2017. Recent volatility in the price of crude oil. Energy Sources, Part B: Economics, Planning, and Policy, 12(5), 408-414.

Further Reading:
Banks, F., 2000. Energy Economics: A Modern Introduction. Boston/Dordrecht/London: Kluwer. (Read Chapter 6. Energy Derivatives: Futures, Options, Swaps, pp.137-170).

Economou, A., Fattouh, B., Agnolucci, P., and De Lipsis, V., 2017. Oil Price Paths in 2017: Is a Sustained Recovery of the Oil Price Looming? Oxford Institute for Energy Studies. [pdf] Available at: https://www.oxfordenergy.org/wpcms/wp-content/uploads/2017/01/Oil-Price-Paths-in-2017-Is-a-Sustained-Recovery-of-the-Oil-Price-Looming-OIES-Energy-Insight.pdf (pp.1-15)

Fattouh, B., 2016. Adjustment in the Oil Market: Structural, Cyclical or Both? Oxford Institute for Energy Studies. [pdf] Available at: https://www.oxfordenergy.org/wpcms/wp-content/uploads/2016/05/Adjustment-in-the-Oil-Market-Structural-Cyclical-or-Both.pdf  

Fattouh, B., Kilian., L., and Mahadeva, L., 2012. The Role of Speculation in Oil Markets: What Have We Learned So Far? Oxford Institute for Energy Studies. (Read pages 3-19).

Fattouh, B., and Mahadeva, L., 2013. OPEC: What Difference Has It Made? Oxford Institute for Energy Studies. [pdf] Available at: https://www.oxfordenergy.org/publications/opec-what-difference-has-it-made/ (Read pages 2-21).
 
Week 4: The evolution of gas markets: North America

This is the first session devoted to the issue of natural gas trade. After refreshing the fundamentals that were discussed during Week 1, we will look at the regional dynamics of natural gas trade and define core regions. The subject of this week’s discussion will be one of these three core regions for natural gas trade – North America. The questions to be discussed include historical stages in regional market development; the links between UK oil and natural gas industries; the history of market deregulation; current and future role of the US in international natural gas trade. An important part of the story is, of course, the Shale Revolution, which has affected global trade flows and outlooks. Perspectives of such dramatic changes in upstream sectors the US and Canada will also be discussed.

Questions for the seminar:
1. Where are the main gas-producing regions in the United States?
2. How is shale gas production different to conventional natural gas production?
3. What are the environmental costs & benefits of increased shale gas production in the US?
4. What are possible implications of LNG exports for the domestic US energy markets, and the global gas market?

Core Reading:
1. American Petroleum Institute, 2014. Understanding Natural Gas Markets. [pdf] Available at: http://www.api.org/~/media/Files/Oil-and-Natural-Gas/Natural-Gas-primer/Understanding-Natural-Gas-Markets-Primer-High.pdf (pp.1-20)

Further Reading
Energy Charter Secretariat, 2007. Putting A Price on Energy: International Pricing Mechanisms for Oil and Gas. Brussels, Energy Charter Secretariat. [pdf] Available at: http://www.energycharter.org/fileadmin/DocumentsMedia/Thematic/Oil_and_Gas_Pricing_2007_en.pdf (Read Chapter 4: Gas Pricing, Section 4.2: North America, pp.103-125).

IEA, 2008. Development of Competitive Gas Trading in Continental Europe. Paris: IEA. [pdf] Available at: https://www.iea.org/publications/freepublications/publication/gas_trading.pdf (Chapter 3, Part 1: The North American Example of a Competitive Gas Market, pp.61-73).

IEA, 2014. Energy Policies of IEA Countries: The United States. Paris: IEA. Available at: https://www.iea.org/publications/freepublications/publication/USA_2014.pdf (Chapter 9: Natural Gas, pp.199-227).

IEA, 2015. World Energy Outlook. Paris: IEA. [pdf] Available at: http://www.worldenergyoutlook.org/weo2015/ (Chapter 6. Outlook for Unconventional Gas).

Global revolution or North American phenomenon? Read the following: Highlights, p.229; A multi-speed revolution, pp.229-231; Defining unconventional gas, p.230; Inside the US shale storm, pp.237-245).

Levi, M., 2012. Think Again: The American Energy Boom. Foreign Policy, 194 (July/August), 55-59. [online] Available at: http://foreignpolicy.com/2012/06/18/think-again-the-americanenergy-boom/  

Makarov A.A., Mitrova, T., Grigoriev L.M., and Filippov, S.P., eds, 2013. Global and Russian Energy Outlook to 2040. Moscow: ERIRAS. [pdf] Available at: https://www.eriras.ru/files/Global_and_Russian_energy_outlook_up_to_2040.pdf (Read sections ‘Shale Breakthrough’ and ‘Shale Failure’, pp.65-75).
 
Week 5: The evolution of gas markets: Europe

During this session, we will discuss gas reserves, the starting phase of market development, initial cross-border gas flows in Continental Europe; the development of large-scale infrastructure. Based on the discussion on Week 4 (the experience of gas market deregulation in North America), we will continue to see how the process of market liberalization has evolved in the UK. Further, the EU market liberalization efforts (including the ‘Energy packages’ and the GTM) will be discussed. We will conclude the lecture by discussing the impact that the change in trading principles had on the European natural gas flows, and on the position of the non-EU suppliers.

Questions for the seminar:
1. To what extent did imports from the Soviet Union provide the basis for the current gas market in Europe?
2. What was the role of the Netherlands in the initial stage of the European gas market development?
3. What were the key elements in traditional long-term gas supply contracts?
4. Which principles of market organization, employed in the liberalized market of the UK, were used for planning a natural gas market reform in the EU?
5. What are the ‘Energy packages’ and gas market integration?
6. What is a natural gas trading hub, and what role do hubs play in the European gas market?

Core Reading:
1. IEA, 2008. Development of Competitive Gas Trading in Continental Europe. Paris: IEA. [pdf] Available at: https://www.iea.org/publications/freepublications/publication/gas_trading.pdf 
a. Chapter 1: The Past. Evolution of European Gas Markets 1960 to 2008, pp.9-35.
2. Stern, J., and Rogers, H., 2014. The Dynamics of a Liberalised European Gas Market: Key determinants of hub prices, and roles and risks of major players. Oxford Institute for Energy Studies. [pdf] Available at: https://www.oxfordenergy.org/wpcms/wp-content/uploads/2014/12/NG-94.pdf
a. Chapter 1.3: The Arrival of Hub Pricing, pp.11-20
b. Chapter 2.2: European Union Legislation and Regulation, pp.53-57
c. Chapter 2.3: The Impact of Regulation and Competition on Market Structures and the Roles of Market Players, pp.58-63

Further Reading:
Correljé A., Van der Linde C., Westerwoudt T., 2003. Natural Gas in the Netherlands: From Cooperation to Competition? Amsterdam: Oranje-Nassau Groep. [pdf] Available at: http://www.clingendaelenergy.com/inc/upload/files/Book_Natural_Gas_in_the_Netherlands.pdf (Chapter 3: The Market for Gas, pp. 52-71).

Energy Charter Secretariat, 2007. Putting A Price on Energy: International Pricing Mechanisms for Oil and Gas. Brussels, Energy Charter Secretariat. [pdf] Available at: http://www.energycharter.org/fileadmin/DocumentsMedia/Thematic/Oil_and_Gas_Pricing_2007_en.pdf (Read Chapter 4: Gas Pricing, Section 4.4: Continental Europe, pp.143-174).

Heather, P., 2010. The Evolution and Functioning of the Traded Gas Market in Britain. Oxford Institute for Energy Studies. [pdf] Available at: https://www.oxfordenergy.org/wpcms/wp-content/uploads/2010/11/NG44-TheEvolutionandFunctioningOfTheTradedGasMarketInBritain-PatrickHeather-2010.pdf (Chapters 1-4, pp.1-12).

Heather, P., 2015. The Evolution of European Traded Gas Hubs. Oxford Institute for Energy Studies. [pdf] Available at: https://www.oxfordenergy.org/wpcms/wp-content/uploads/2016/02/NG-104.pdf (Section 5: The development and functioning of the European gas hubs, pp.15-34).
 
Week 6: The evolution of gas markets: The Asia Pacific region

This session examines the development of the Asia-Pacific regional gas market. While the North American and European gas markets experienced historical development based on pipeline supplies, later supplemented by liquefied natural gas (LNG) imports, the Asia-Pacific market was, from the beginning, based almost entirely on the trade in LNG. Like the European market, the Asia-Pacific market was traditionally predicated on long-term contracts with oil-indexed prices. However, the market is now following the European path in becoming more flexible and is experiencing the emergence of hub-trading.

Questions to guide the reading:
1. Which countries in the Asia-Pacific region are the largest importers and exporters of LNG? Are those countries set to retain their prominent positions in the coming decade?
2. What features make the Asian market different from the European market?
3. To what extent is the Asia-Pacific market integrating into the global market, and experiencing price convergence with the European and North American gas markets?

Core Reading:
1. EIA, 2017. Perspectives on the Development of LNG Market Hubs in the Asia-Pacific Region. Washington DC: Energy Information Administration. [pdf] Available at: https://www.eia.gov/analysis/studies/lng/asia/pdf/lngasia.pdf (Chapters 6 & 7, pp.28-52).

Further Reading:
Energy Charter Secretariat, 2007. Putting A Price on Energy: International Pricing Mechanisms for Oil and Gas. Brussels, Energy Charter Secretariat. [pdf] Available at: http://www.energycharter.org/fileadmin/DocumentsMedia/Thematic/Oil_and_Gas_Pricing_2007_en.pdf (Read Chapter 4: Gas Pricing, Section 4.5: LNG, pp.175-202).

IEA, 2014. The Asian Quest for LNG in a Globalising Market. Paris: IEA. [pdf] Available at: http://www.iea.org/publications/freepublications/publication/PartnerCountrySeriesTheAsianQuestforLNGinaGlobalisingMarket.pdf (140 pages)

Mironova, I., 2015. Natural Gas Pricing in the Asia Pacific Regional Market: Problems and Prospects. Vestnik of Saint Petersburg State University, 5(4), 66-85. [pdf] Available at: http://vestnik.spbu.ru/html15/s05/s05v4/03.pdf  

Rogers, H., 2016. Asian LNG Demand: Key Drivers and Outlook. Oxford Institute for Energy Studies. [pdf] Available at: https://www.oxfordenergy.org/wpcms/wp-content/uploads/2016/04/Asian-LNG-Demand-NG-106.pdf (pp.1-73)

Stern, J., 2016. The New Japanese LNG Strategy: A Major Step Towards Hub-Based Gas Pricing in Asia. Oxford Institute for Energy Studies. [pdf] Available at: https://www.oxfordenergy.org/wpcms/wp-content/uploads/2016/06/The-new-Japanese-LNG-strategy-a-major-step-towards-hub-based-gas-pricing-in-Asia.pdf (pp.1-4)

Ten Kate W., Varró L., Corbeau A.-S., 2013. Developing a Natural Gas Trading Hub in Asia: Obstacles and Opportunities. Paris: IEA. [pdf] Available at: https://www.iea.org/publications/freepublications/publication/AsianGasHub_FINAL_WEB.pdf (Section 2. The Asian-Pacific Natural Gas Market, pp.20-31; Section 3. Creating a liquid natural gas trading hub, pp.32-50).

Week 7. Introduction to Russian energy sector. Energy efficiency in Russia: Untapped reserves

This session will focus on Russia’s energy sector development. The lecture will provide the background information about oil; natural gas; coal; electricity sectors in Russia from the point of view of existing reserves / links to external markets; challenges and opportunities. We will then overview key documents on Russia’s energy sector development and try to answer the question whether strategic documents effectively address the challenges. The question of Russia’s energy sector development in the conditions of sanctions and low energy prices will also be discussed.

Questions for the seminar:
1. What is the role of each of the sectors (oil, natural gas, coal) for Russia’s economy?
2. What is the role of the oil prices for the Russian economy?
3. What are the main problems that exist in the Russian energy sector?
4. What sanctions were imposed by the US and EU on Russia in 2014, and how did they affect the Russian energy sector?
5. What is ‘Energy efficiency’?
6. How do you assess perspectives of energy efficiency improvement in Russia?

Core Reading:
1. World Bank, 2007. Energy Efficiency in Russia: untapped reserves. [pdf] Available at: http://www.ifc.org/wps/wcm/connect/de1e58804aababd79797d79e0dc67fc6/IFC+EE+in+Russia+Untapped+Potential.pdf?MOD=AJPERES  
2. IFC, 2008. On the road to energy efficiency. IFC (World Bank Group). [pdf] Available at: http://www.ifc.org/wps/wcm/connect/f35728804b5f68d48c39bd6eac26e1c2/Survey_English_text.pdf?MOD=AJPERES  
3. IEA, 2014. Energy Policies Beyond IEA Countries: Russia. Paris: IEA. [pdf] Available at: https://www.iea.org/publications/freepublications/publication/Russia_2014.pdf (Chapter 1: General Energy Policy, pp.17-44).

Further Reading
Henderson J., Pirani S., eds, 2014. The Russian Gas Matrix: How Markets are Driving Change. (Read Chapter 1: The Political and Economic Importance of Gas in Russia, pp. 6-38).

Makarov A.A., Mitrova, T., and Grigoriev L.M., eds, 2014. Global and Russian Energy Outlook to 2040. Moscow: ERIRAS. [pdf] Available at: https://www.eriras.ru/files/2014/forecast_2040_en.pdf (Read Part 3: Russian Energy, pp.111-

152)
Mironova I., 2014. Russia: Still-Life Under Sanctions. European Energy Review, 20 November. [online] Available at: https://www.elektormagazine.com/news/Russia--Still-life-Under-Sanctions

Makarov A.A., Mitrova, T., and Grigoriev L.M., eds, 2016. Global and Russian Energy Outlook to 2040. Moscow: ERIRAS. [pdf] Available at: https://www.eriras.ru/files/forecast_2016.pdf (Read Part 3: Scenario Forecast for the Development of Energy in Russia, pp.149-173).

Malova, A., and Van de Ploeg, F., 2016. Consequences of Lower Oil Prices and Stranded Assets for Russia's Sustainable Fiscal Stance. Energy Policy, 105 (June), 27-40.

Boute, A., and Willems, P., 2012. RUSTEC: Greening Europe’s energy supply by developing Russia’s renewable energy potential. Energy Policy, 51, 618-629. 

Week 8: Paris Climate Agreement: Political and economic overview. Russian perspective

This lecture discusses Russia’s position concerning the Paris Climate Agreement, which entered into force in 2016. After introducing key elements of the Agreement, key points in Russia’s position, the lecture will focus on actors in Russia driving the climate agenda. We will discuss Prospects of Russia’s climate policy; Business perspectives on climate policy (including energy- and resource efficiency investment potential); opportunities to develop renewables; and reasons to change behaviour or to continue business as usual. Media and NGOs. Message delivered or lost in translation?

Questions for the seminar:
• What makes researchers believe that oil and gas markets could follow similar paths of development? What makes oil and natural gas markets different?
• What is the role of the energy sector in causing, and fighting against, climate change?
• The Paris Agreement on climate change entered into force in 2016, building on the previous United Nations Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol. What are the likely outcomes for global energy system?

Core readings:
1. IEA, 2015. World Energy Outlook 2015: Special Report on Energy and Climate Change. Paris: IEA. [pdf] Available at: http://www.iea.org/publications/freepublications/publication/WEO2015SpecialReportonEnergyandClimateChange.pdf  
a. Executive Summary, pp.11-15.
2. IEA, 2016. CO2 Emissions from Fuel Combustion (Free Excerpts). Paris: IEA. [pdf] Available at:
a. CO2 Emissions Overview (pp. 9-20)
b. Understanding the IEA CO2 Emissions Estimates (pp. 21-27)
3. Stern, Nicholas. The Economics of Climate Change. The American Economic Review. Vol. 98, No. 2, pp. 1-37.

Further reading:
IEA, 2017. World Energy Outlook 2017: Executive Summary. Paris: IEA. [pdf] Available at: http://www.iea.org/Textbase/npsum/weo2017SUM.pdf (pp.1-8)

Stern Review: The Economics of Climate Change.

COP 21: Putin's full speech on Russia climate change reform https://www.youtube.com/watch?v=Y4R28THutKI

Presidential Advisor on climate change: Russian climate policy in the global scale http://climaterussia.org/policy-and-finance/presidential-advisor-on-climatechange-russian-climate-policy-in-the-global-scale  

Russia at COP21: An Opportunity to Reengage with the West http://russiancouncil.ru/en/inner/?id_4=6910#top-content  
 
Week 9: Decarbonization: What is it? What are the challenges? What role for natural gas?

The term ‘decarbonization’ became very popular in the past years, especially after the entry into force of the Paris Climate Agreement. Decarbonization assumes the decline of greenhouse gases emissions. This concern about greenhouse gases, and CO2 primarily, is connected with the effect of global warming which is attributed to the increase of CO2 concentration in atmosphere. The concentration levels are closely linked to human activity and have sharply increased since the start of the Industrial revolution. The concept of decarbonization suggests coordinated effort aimed at decrease if greenhouse gases emissions, which in turn should lead to decreased pollution load. The process is controversial; besides clear environmental benefits it poses a number of challenges to the economy and energy systems. Decarbonization does not mean single-step phase out of fossil fuels. The main question for this lecture will be to what extent the policy of decarbonization can be reconciled with stability of existing energy systems.

Questions for the seminar:
• Are there any international arrangements dealing with climate change, besides the Paris Agreement that we discussed last week?
• Please explain the concept of fuel switching and illustrate it with examples.
• What will be the effect of decarbonization policies on the oil and gas industries? What challenges will it present to these industries, and what new opportunities?
• What instruments on decarbonization can be used? Please demonstrate with the example of Germany’s ‘Energiewende’.
• Some researchers conclude that despite the fact that natural gas is a fossil fuel, it deserves to be part of ‘green economy’. Do you agree or disagree with this statement?
• What is ‘Net-Zero Emissions’?
• What is ‘Carbon budget’?

Core reading:
1. Dickel R. The New German Energy Policy: What Role for Gas in a De-Carbonization Policy? Oxford: OIES, 2014.
o Chapter 1.2.2. ‘Instruments’, pp. 37-40.
o Chapter 3.5. ‘Elements to improve the role of gas for the de-carbonization’, pp. 113-118.
2. Stern, J., 2017. The Future of Gas in Decarbonising European Energy Markets. Oxford Institute for Energy Studies. [pdf] Available at: https://www.oxfordenergy.org/wpcms/wp-content/uploads/2017/01/The-Future-of-Gas-in-Decarbonising-European-Energy-Markets-the-need-for-a-new-approach-NG-116.pdf (pp.1-26)

Further reading:
Ferrier J. Future of transport: Decarbonizing growth. Natural gas and LNG: a part of the solution. World Energy Congress 2013. http://www.igu.org/sites/default/files/node-page-field_file/wec-13-17-10-2013-v2-slides.pdf  

Rhys J. Current German Energy Policy – the “Energiewende”: a UK and climate change perspective. Oxford Energy Comment, April 2013. https://www.oxfordenergy.org/publications/current-german-energy-policy-the-energiewende-a-uk-and-climate-change-perspective/  

A Better Life with a Healthy Planet: Pathways to Net-Zero Emissions. Shell, 2016. http://www.shell.com/energy-and-innovation/the-energy-future/scenarios/a-better-life-with-a-healthy-planet.html   

Week 10: Green finance instruments: international and Russian experience

This session examines a variety of approaches to finance projects with strong environmental component. We will consider the term “green finance” and how it is being evolved over last two decades, including impact of Kyoto Protocol and Paris Climate Agreement.

Questions for the seminar:
1. What is the role of international organisations - World Bank, UN, EBRD, and national development institutions - AFD, KFW, in financing green economy projects?
2. Why private sector investors are more and more active in green finance? what kind of instruments they use?
3. How do you think Norvegian Pension fund withdraw from investment in coal mining projects is affecting the green finance market?
4. What is the potential market size of the green economy currently according to the World Bank estimations?
5. How do you think about green finance potential in Russia - as a major oil&gas market player?

Core reading:
1. IFC 2015. Insights from our partners in Sustainable Energy Finance. Washington, DC: IFC. [pdf] Available at: http://www.ecobankingproject.org/wp-content/uploads/2015/09/sustainable_energy_finance.pdf

Further reading:
1. Ovchinnikova M., Titov M. Prove the Need: Equator Principles and Sustainable Banking Guidelines. M.: National Banking Journal, 2008.
2. Yarygina I. (ed.). Problems and Prospects of International Monetary and Financial Relations. M.: Finance University, 2014.
3. Titov M., Shonya E. Bank Financing of Energy Efficiency Projects: practical recommendations and examples. – IFC (World Bank Group), 2012.
4. G20 Green Finance Synthesis Report 2016 [pdf] Available at: http://unepinquiry.org/wp-content/uploads/2016/09/Synthesis_Report_Full_EN.pdf 
 
Week 11: Environmental and social risk management There have been a number of studies looking at the relation between companies’ environmental, social, and corporate governance practices (ESG) and their financial performance. The vast majority of them find a direct link: companies that do good by the environment, their labor force, and communities, do well financially. 

Questions for the seminar:
1. What do you know about IFC Sustainability Framework?
2. Why large multinationals and mid-sized companies are increasingly taking a long-term view toward managing environmental and social risks?
3. Do you agree that by addressing environmental and social issues they can achieve better growth and cost savings, improve their brand and reputation, strengthen stakeholder relations, and boost their bottom line?
4. Why do you think that embedding sustainability into the company’s business leads to enhanced reputation and increased brand value?
5. Can we trust the conclusion that there is a correlation between good environmental and social performance and financial performance?

Core reading:
1. IFC, 2012. The business case for sustainability. Washington, DC: IFC. [pdf] available at: http://www.ifc.org/wps/wcm/connect/topics_ext_content/ifc_external_corporate_site/sustainability-at-ifc/publications/publications_brochure_businesscaseforsustainability 
2. IFC, 2012. Understanding Environmental and Social Due Diligence Process. Washington, DC: IFC. [pdf] Available at: http://www.ifc.org/wps/wcm/connect/b58ead804942ee5da7a5ff4f5ddda76e/IFC+Process.pdf?MOD=AJPERES

Further reading:
1. TCFD, 2017. Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures. [pdf] Available at: https://www.fsb-tcfd.org/publications/final-recommendations-report/ 
2. IFC Performance Standards on Environmental and Social Sustainability, 2012: [pdf] Available at: http://www.ifc.org/wps/wcm/connect/Topics_Ext_Content/IFC_External_Corporate_Site/Sustainability-At-IFC/Policies-Standards/Performance-Standards 

Week 12: UN Sustainable Development Goals

The UN’s 17 Sustainable Development Goals were introduced during the 70th UNGA held in New York in September 2015. They are the building blocks of the 2030 Agenda for Sustainable Development. Sustainable development decision making requires broad participation of all. The purpose of this session is to discuss current status and progress with SDGs, with special focus on the related to our course topic: SDG 7 (affordable and clean energy), SDG 9 (Industry, Innovation and Infrastructure), SDG 11 Sustainable Cities and Communities), 12 (Responsible consumption and production) and SDG 13 (climate action).

Questions for the seminar:
1. Among internationally agreed seventeen Sustainable Development Goals (SDGs) which goals are particularly important to you personally?
2. What is your assessment of the progress with Goal No.7 (affordable, reliable, sustainable and modern energy for all) in 2017 comparing with 2016?
3. What is the role of renewables in reaching SDG No.7?
4. What is the role of Natural gas in reaching SDG No.8?
5. How oil and gas reach countries (major exporters) should change their energy strategies to achieve SDG No.7?

Core reading:
1. UN. Transforming our world: the 2030 Agenda for Sustainable Development. [online] Available at: https://sustainabledevelopment.un.org/post2015/transformingourworld 
2. IEA. Commentary: A new approach to energy and sustainable development - the Sustainable Development Scenario. [online] Available at: https://www.iea.org/newsroom/news/2017/november/a-new-approach-to-energy-and-sustainable-development-the-sustainable-development.html

Further reading:
Energy, emissions and universal access. In: World Energy Outlook 2017. International Energy Agency. Pp. 63-106.

Energy Efficiency and Renewable Energy. In: World Energy Outlook 2017. International Energy Agency. Pp. 281-330.

Angelou N., Bhatia M. Capturing the multi-Dimensionality of energy Access. World Bank, ESMAP 2014/16. [pdf] Available at: http://documents.worldbank.org/curated/en/937711468320944879/pdf/88699-REVISED-LW16-Fin-Logo-OKR.pdf 

Rysankova D., Portale E., Carletto G. Measuring Energy Access: Introduction to the Multi-Tier Framework. Sustainable energy for all. [pdf] Available at: http://www.se4all.org/sites/default/files/MTFpresentation_SE4ALL_April5.PDF