15.031J | Spring 2012 | Undergraduate

Energy Decisions, Markets, and Policies


The following texts are referenced as readings on multiple occasions:

[B] = Brealey, R., S. Myers, and F. Allen. Principles of Corporate Finance. 10th ed. McGraw-Hill, 2010. ISBN: 9780077404895.

[G] = Giugni, M., D. McAdam, C. Tilly, eds. How Social Movements Matter. University of Minnesota Press, 1999. ISBN: 9780816629152. [Preview with Google Books]

[M] = MIT Energy Initiative. “The Future of the Electric Grid.” MIT Energy Initiative, 2011.

Buy at MIT Press [V] = Viscusi, W. Kip, Joseph E. Harrington, Jr., and John M. Vernon. Economics of Regulation and Antitrust. 4th ed. MIT Press, 2005. ISBN: 9780262220750.

Energy Systems and Policies: Overview
1 This Course and The U.S. Energy System

U.S. National Research Council. “Context and Challenges.” Chapter 1 in America’s Energy Future. National Academies Press, 2009, pp. 1–30. ISBN: 9780309141451.

“Annual Energy Review 2011.” (PDF - 3.4MB) U.S. Energy Information Administration. pp. 1–13.

2 Comparative Energy Systems

Required Readings

U.S. Energy Information Agency. “World Energy Demand and Economic Outlook.” (PDF - 20MB) Chapter 1 in International Energy Outlook 2011. pp. 9–24.

“Primary Energy Consumption.” (PDF) BP Statistical Review of World Energy 2011.

Friedman, T. “Our Carbon Copies (Too Many Americans).” Chapter 3 in Hot, Flat, and Crowded. Farrar, Straus, and Giroux, 2008, pp. 53–76. ISBN: 9780374166854.

United Nations. 2008 Energy Balances and Electricity Profiles. United Nations, 2011. ISBN: 9789210613002.

3 U.S. Energy Problems


Why Not Use American Coal Instead of Saudi Oil? (PDF)

Required Readings

“Environmental Regulation.” Chapter 21 in [V].

National Research Council. “Executive Summary.” In Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use. National Academies Press, 2009. ISBN: 9780309146401.

Lee, Henry. “Oil Security and the Transportation Sector.” In Acting in Time on Energy Policy. Edited by K. S. Gallagher. Brookings, 2009, pp. 56–88. ISBN: 9780815702931.

Weimer, D. L. “Cost-Benefit Analysis.” In The New Palgrave Dictionary of Economics. Edited by S. N. Durlauf and L. E. Blume. 2nd ed. Vol. 2. Palgrave Macmillan, 2008, pp. 271–5. ISBN: 9780333786765.

Kelman, S. “Cost-Benefit Analysis: An Ethical Critique (with replies).” In Economics of the Environment: Selected Readings. Edited by R. N. Stavins. 5th ed. W. W. Norton & Company, 2005, pp. 260–75. ISBN: 9780393927016.

4 The Market and The State

Required Readings

Mason, Alpheus Thomas, and William M. Beaney. “Carter v Carter Coal, 298 U.S. 238 (1936).” In American Constitutional Law: Introductory Essays and Selected Cases. Prentice Hall, 2004, pp. 290–6. ISBN: 9780131174375.

Debate Preparation (PDF) (Courtesy of Susan Silbey. Used with permission.)

Selected Arguments of Antifederalists (1780s)

Friedman, Milton. Capitalism and Freedom. 40th Anniversary ed. University of Chicago Press, 2002, pp. 12–6. ISBN: 9780226264219. [Preview with Google Books]

Hayek, Friedrich. The Road to Serfdom: Text and Documents—The Definitive Edition. University of Chicago Press, 2007, pp. 71–3. ISBN: 9780226264219.

Marx, Karl. The 18th Braumaire of Louis Napoleon. Originally published in 1852. Dodo Press, 2009, p. 15. ISBN: 9781409961666.

———. “Economic and Philosophical Manuscripts, 1844” and “German Ideology, 1845–6.” In Karl Marx: Selected Writings in Sociology and Social Philosophy. Edited by T. B. Bottomore and M. Rubel. Reprinted in Watts, 1956. Penguin, 1963, pp. 91–5.

Frankfurt Institute for Social Research. Aspects of Sociology. Edited by Max Horkheimer and Theodor Adorno. First published in 1956. Beacon Press, 1973, pp. 38–48. ISBN: 9780807041697.

Mills, C. Wright. “The Promise.” In The Sociological Imagination. Oxford University Press, 1959, pp. 5–7.

Hughes, T. P. “London: The Primacy of Politics.” Chapter IX in Networks of Power: Electrification in Western Society, 1880-1930. Johns Hopkins, 1983, pp. 227–60. ISBN: 9780801828737. [Preview with Google Books]

5 Path Dependence in Energy Systems

Required Readings

Gawande, A. “Getting There from Here.” New Yorker, January 26, 2009.

Unruh, G. C. “Understanding Carbon Lock-in.” (PDF - 1.3MB) Energy Policy 28 (2000): 817–30.

Mahoney, J. “Path Dependence in Historical Sociology.” (PDF) Theory and Society 29, no. 4 (2000): 507–48.

The Climate Problem
6 Climate Science and Policy

Required Readings

National Research Council. “America’s Climate Choices: Report in Brief.” National Academies Press (2011).

———. “Limiting the Magnitude of Future Climate Change: Report in Brief.” National Academies Press (2010).

Getting Warmer: A Special Report on the Carbon Economy,” The Economist, December 3, 2009.

A Deal in Durban,” The Economist, December 17, 2011.

National Research Council. “America’s Climate Choices: Advancing the Science of Climate Change: Report in Brief.” National Academies Press (2010).

Parsons, J., et al. “Designing a U.S. Market for CO2.” Journal of Applied Corporate Finance 21 (2009): 79–86.

National Research Council. “Adapting to the Impacts of Climate Change: Report in Brief.” National Academies Press (2010).

7 Climate Agreement Negotiations I & II

Required Readings

World Climate: A Computer-Simulation-Based Role-Playing Exercise

At the site, you can freely access all of the materials needed to play and facilitate the World Climate simulation, including the models, facilitator guides, the negotiation documents, and other materials. Other simulations, animations, and tools recommended, but not required, can be found at Climate Interactive.

Household and Organization Decision-Making
8 Economics of Energy Demand

Required Readings

Note on the Economics of Energy Demand, Teaching Note (PDF)

McKinsey & Company. “Executive Summary.” Unlocking Energy Efficiency in the U.S. Economy (2009).

Smil, V. “Energy in the Twentieth Century: Resources, Conversions, Costs, Uses, and Consequences.” (PDF) Annual Review of Energy and the Environment 25 (2000): 21–51.

Goodwin, P., J. Dargay, et al. “Elasticities of Road Traffic and Fuel Consumption with Respect to Price and Income: A Review.” Transport Reviews 24, no. 3 (2004): 275–92.

Hausman, J. A., and P. L. Joskow. “Evaluating the Costs and Benefits of Appliance Efficiency Standards.” American Economic Review 72, no. 2 (1982): 220–5.

9 Energy Use by Individuals and Households

Required Readings

Griskevicius, V., R. Cialdini, et al. “Applying (and Resisting) Peer Influence.” MIT Sloan Management Review 49, no. 2 (2008): 84–8.

Goldstein, N., R. Cialdini, et al. “A Room with a Viewpoint: Using Social Norms to Motivate Environmental Conservation in Hotels.” Journal of Consumer Research 35, no. 3 (2008): 472–82.

Weber, Max. “Social Action and Social Relationship.” In The Theory of Social and Economic Organization. First published in 1922, translated in 1964. Martino Fine Books, 2012, reprinted pp. 128–43. ISBN: 9781614272571.

10 Normative Frameworks for Business Decisions

Required Readings

Friedman, M. “The Social Responsibility of Business is to Increase its Profits.” The New York Times Magazine, September 13, 1970.

Handy, C. “What’s a Business For?Harvard Business Review 80 (2002): 49–56.

Pindyck, R., and D. Rubinfeld. Microeconomics. 7th ed. Prentice Hall, 2008, pp. 551–68. ISBN: 9780132080231.

Chapter 2 in [B].

11 Business Decisions in Reality: CHP at Hexion


Ingersoll, C., D. Mehrotra, and J. Sterman. “Waste Heat Recovery at Hexion.” MIT Sloan School of Management (2010).

Margonelli, L. “Waste Not.” TheAtlantic.com, May 2008.

Lindley, D. “The Energy Should Always Work Twice.” Nature 458, no. 12 (2009): 138–41.

12 Organizational Decision-Making: Biodiesel at MIT


Biodiesel@MIT (PDF) (Courtesy of Susan Silbey. Used with permission.)

Required Readings

Cohen, M., J. March, et al. “A Garbage Can Model of Organizational Choice.” Administrative Science Quarterly 17, no. 1 (1972): 1–25.

Kagan, R., N. Gunningham, et al. “Explaining Corporate Environmental Performance: How Does Regulation Matter?Law & Society Review 37, no. 1 (2003): 51–90.

Sharma, S. “Managerial Interpretations and Organizational Context as Predictors of Corporate Choice of Environmental Policy.” Academy of Management Journal 43, no. 4 (2000): 681–97.

Loundsbury, M. “Institutional Sources of Practice Variation: Staffing College and University Recycling Programs.” Administrative Science Quarterly 45, no. 46 (2001): 29–56.

13 Developing Profitable Strategies


Rivkin, Jan W. “Husky Injection Molding Systems.” Harvard Business School Case. Harvard Business School Publishing. Case: 799157-PDF-ENG, May 14, 1999.

Husky Case Discussion Questions (PDF)

Required Readings

Porter, Michael. “What is Strategy?Harvard Business Review, Nov-Dec 1996, 61–78.

Chapter 11 in [B].

14 Innovation and Energy Business Models

Required Readings

Christensen, C. M. “Managing Disruptive Technological Change: A Case Study.” Chapter 9 in The Innovator’s Dilemma. Harvard Business School Press, 1997.

Roberts, E., and W. Liu. “Ally or Acquire? How Technology Leaders Decide.” Sloan Management Review 43, no. 1 (2001): 26–34; reprint no. 4312.

Munir, K., and N. Phillips. “The Concept of Industry and the Case of Radical Technological Change.” The Journal of High Technology Management Research 13, no. 2 (2002): 279–97.

Primary Energy & Electric Power
15 Non-Renewable Energy Resources

Required Readings

Pindyck, R., and D. Rubinfeld. Microeconomics. 7th ed. Prentice Hall, 2008, pp. 573–7. ISBN: 9780132080231.

Krautkraemer, J., and M. Toman. “Fundamental Economics of Depletable Energy Supply.” Resources for the Future Discussion Paper 03-01 (2003).

Tietenberg, T., and L. Lewis. “The Allocation of Depletable and Renewable Resources: An Overview.” In Environmental & Natural Resource Economics. 8th ed. Addison-Wesley, 2008, pp. 134–55. ISBN: 9780321485717.

16 Shale: Opportunities & Challenges

Required Readings

Penn Environment. “In the Shadow of the Marcellus Boom: How Shale Gas Extraction Puts Vulnerable Pennsylvanians at Risk.” (PDF - 1.3MB) May, 2011.

Bipartisan Policy Center Energy Project. “Shale Gas: New Opportunities, New Challenges.” Bipartisan Policy Center (2012).

Jacoby, H. D., F. M. O’Sullivan, et al. “The Influence of Shale Gas on U.S. Energy and Environmental Policy.” (PDF - 1.2MB) Economics of Energy & Environmental Policy 1, no. 1 (2012): 37–51.

U.S. Secretary of Energy Advisory Board. “Shale Gas Production Subcommittee, 90-Day Report.” U.S. Department of Energy (2011).

MIT Energy Initiative. “The Future of Natural Gas.” MIT Energy Initiative, 2011.

17 (Yesterday’s &) Today’s Electric Power System

Required Readings

pp. 1–11 and Appendix A in [M].

“Natural Monopoly Regulation and Electric Power.” Chapter 12 in [V].

Griffin, J. M., and S. L. Puller. “Introduction: A Primer on Electricity and the Economics of Deregulation.” In Electricity Deregulation: Choices and Challenges (Bush School Series in the Economics of Public Policy). University Of Chicago Press, 2005. ISBN: 9780226308562. [Preview with Google Books]

Appendix B in [M].

18 Tomorrow’s Electric Power System

Required Readings

pp. 11–12 in [M].

Joskow, P. L. “Creating a Smarter U.S. Electricity Grid.” (PDF) Sloan Foundation and MIT, discussion draft, October 1, 2011.

Smart Grid System Report.” U.S. Department of Energy (2009). pp. iii-xii.

Wiser Wires,” The Economist, October 8, 2009.

Chapter 2–9 in [M].

Public Policies: Determinants & Processes
19 Making Public Policy


Clean Coal/ Dirty Air/ Trading Filth (A) (PDF)

(Focus on Questions 1 & 2)

Required Readings

Madison, J. “The Federalist #10.” 1787.

Lowi, T. “The Public Philosophy: Interest-Group Liberalism.” American Political Science Review 61, no. 1 (1967): 5–24.

Lowi, T. “Four Systems of Policy.” Public Administration Review 32, no. 4 (1972): 298–310.

Whitt, J. A. Urban Elites and Mass Transportation: The Dialectics of Power. Princeton University Press, 1982, pp. 3–39, 174–210. ISBN: 9780691028262.

20 Social Movements

Required Readings

Burstein, P. “Social Movements and Public Policy.” In [G]. pp. 3–21.

Useem, B., and M. Zald. “From Pressure Group to Social Movement: Efforts to Promote Use of Nuclear Power.” Social Problems 30, no. 2 (1982): 144–56.

Rucht, D. “The Impact of Environmental Movements in Western Societies.” In [G]. pp. 204–24.

Cotgrove, S., and A. Duff. “Environmentalism, Middle-Class Radicalism and Politics.” Sociological Review 28, no. 2 (1980): 333–51.

21 U.S. Environment Policy


Clean Coal/ Dirty Air/ Trading Filth (A) (PDF)

(Focus on Questions 3 & 4)

Required Readings

Wilson, J. Q., ed. “The Politics of Regulation.” In The Politics of Regulation. Basic Books, 1982, pp. 357–94. ISBN: 9780465059683.

“Environmental Regulation.” Chapter 21 in [V].

Sandel, M. J. “It’s Immoral to Buy the Right to Pollute (with replies).” In Economics of the Environment: Selected Readings. Edited by R. N. Stavins. 5th ed. Norton, 2005, pp. 355–8. ISBN: 9780393927016.

22 Micron-gap Thermal Photovoltaics; Economic Development & Green Growth

Required Readings

OECD. “Towards Green Growth: A Summary for Policy Makers.” (PDF - 2.7MB) OECD (2011).

UN Environment Program. “Towards a Green Economy.” UNEP (2011).

A Bad Climate for Development,” The Economist, September 17, 2009.

Hogan, D., M. Kapur, et al. “Rural Electrification in India: The Solar Energy Opportunity.” (PDF) Class report, 15.220, Fall 2009.

Final Paper Presentations & Debrief
23 Final Paper Presentations & Debrief No readings
24 Final Paper Presentations & Debrief (cont.) No readings

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