Course Handout

EN 606 Energy Resources, Economics & Environment 3-0-0-6

Energy systems offer a variety of choices for individuals, companies and society. The history of
human development has been accompanied by an increasing use of energy services. The depletion
of fossil fuel reserves and the externalities associated with energy systems (health, environment
etc..) have resulted in a focus on a search for energy systems that are sustainable. The challenge
of climate change is driving changes in energy systems.

Most decisions in the real world are based on an economic assessment This course will equip
students with the tools necessary for economic analysis and quantification of impacts of energy
systems. We will review the availability of energy resources and study methods for quantification
of resource depletion and scarcity. The course will cover basic concepts in economics and their
application to energy systems. Tools and techniques for project economics for an individual/
company perspective and macro-decision making for society will be introduced. We will discuss
basic concepts of welfare economics and environmental economics that are necessary for energy
systems analysis and their environmental impacts.

Assessment
Assignment 10 Marks

Course Project 30 Marks

In-semester Quizzes (Best 8/10) 10 Marks

Mid-semester Exam 10 Marks

End-semester Exam 40 Marks

Lectures

Lecture Timings: Slot 1, Mon – 8:30, Tue – 9:30, Thu- 10:35 Venue: Microsoft Teams

Course Instructor: Rangan Banerjee

(9820410135, email: rangan@ese.iitb.ac.in)

Teaching Assistants (TAs): Matrika Ghimiray (matrika.ghimiray@iitb.ac.in), Pratik Joshi

(pratikjoshi@iitb.ac.in), Subhadip Bhattacharya (subhadip.eee@gmail.com), Aditya Sanjaykumar
Patoliya (adityapatoliya@iitb.ac.in), Chaitanya Pramod Kolhe (chaitanyakolhe@iitb.ac.in),
Balkrishna Surve (bsurve@gmail.com)

Incentive: An incentive of up to +5 marks will be given for attendance and participation in class
activities. (There will be three levels + 5, + 3 and 0 - +5 for active engagement, +3 for average, 0
for poor engagement/involvement)
The following is a tentative breakup of topics & number of lectures:

S. Topic No. of
No. lectures

1 Course Overview, Issues related to Energy systems- energy and 6

growth, energy and equity, quality of life, energy and
environment. Country Energy Balance Construction – India and
World Dis-aggregation by supply, Disaggregation by end-use,
Energy intensity, Kaya Identity

2 Energy Economics - Simple Payback Period, Time Value of 4

Money- discount rate, Criteria for Assessing Energy Projects -
IRR, NPV, Life Cycle Costing, Cost of Saved Energy, Cost of
Energy generated,

3 Resources & Reserves Growth Rates in Consumption, Estimates 4

of Duration of Fossil Fuels, McKelvey Diagram, Peak oil,
Hubbert’s model, Renewable Energy resources

4 Economics of natural resources – scarcity, non-renewable 5

resources, Hotelling’s rule, renewable resource economics,
Markets and Monopoly

5 Utility function, Indifference curve, public goods, private goods, 4

Pareto Optimality, Intergenerational Equity, Risk and
Uncertainty

6 Energy Chain, Primary energy analysis, Net Energy Analysis 2

Examples, Energy Cost of Energy, Life Cycle Analysis of
Bioenergy

7 Energy Models, Input –Output Analysis 3

8 Financing Energy – Debt/ Equity- Sources of funds, innovative 3

financing models
 9 Quantifying Environmental impacts, DALY, Emission factors, 2
Emission inventories Externalities, Economics of Climate
Change, Valuing the Environment

10 Energy Policies- market or mandate, Regulation, Interventions 3

Future Energy Systems and Sustainability 1

11

Tentative Dates

Jul 26 Beginning of course work

Jul 31 Assignment group formation

Aug 4 Quizzes begin (Every Wednesday)

Aug 15 Submission of Assignment

Aug 21 and 23 Mock UN Meeting Sessions

Aug 22 Deadline for course project group formation

Aug 29 Course Project Submission: Topic brief

Sep 11 to Sep 18 Mid-semester exams week

Oct 10 Course Project Submission: Detailed Proposal

Oct 18 to Oct 21 Individual meeting with project groups for project meeting

Oct 27 Course Project Submission: Interim Report and Final Presentation

Oct 28 Course Project Presentations

Nov 8 to Nov 20 End-semester exams week

Nov 22 Course Project Submission: Final Report

Expectations

1. Country Balance Assignment: The objective of the assignment is to give you an idea of
the various aspects that you should consider while analysing scenario for a country. It
 asks you to perform energy balance of a country where you have to look for data about
primary, secondary energy and end-uses. You also create a Sankey diagram and a PECSS
diagram. This is done for two time periods to understand the growth in energy generation
and consumption quantitatively. The assignment is a group activity. It is accompanied by
a report submission and a presentation in Mock UN setting.
2. Course Project: The objective of course project is to give you a hands-on experience in
applying the concepts covered in the course to a real-life problem. There is complete
liberty in choosing the topic, problem and solution, given the topic is relevant to the
course. The course project is a group activity and is a semester-long task. It is
accompanied by report submission and presentations.
3. Note: Reports for assignment and course project must be original work and your own
writing. Any assignment or project that is copied will be rejected.

References

1. GEA, 2012: Global Energy Assessment - Toward a Sustainable Future, Cambridge

University Press, Cambridge, UK and New York, NY, USA and the International
Institute for Applied Systems Analysis, Laxenburg, Austria. (mainly Chapter 1 -
Energy Primer pp. 99-150, Chapter 3- Energy and Environment-pp. 191-
254.Chapter 4 – Energy and Health pp. 255-324)

2. Conrad, J. M., Resource Economics, 2nd Edition, Cambridge University Press, New
Delhi, 2010.

3. Hanley, N., Shogren J. F. and White, B., Environmental Economics in Theory and
Practice, Macmillan India Ltd., New Delhi, 1997.

4. Tester J.W., Drake E.M., Driscoll M. J., Golay, M.W, Peters, W.A., Sustainable
Energy Choosing Among Options, PHI Learning Private Limited, New Delhi, 2009.

5. J.M. Conrad and C.W. Clark, Natural Resource Economics, Cambridge University
Press, 1987.

6. Kolstad, Charles D., Environmental Economics, Oxford University Press, New Delhi,
1999.