The course starts with an overview of how the modern economics relates to the challenges that have been created by ongoing climate changes and why the global heating can be seen as a market failure. Thereafter follows three separate yet coherent blocks each of which is concluded with a study visit linked to the focus of the block.

The first block is about the resources of nature, such as sustainability and overexploitation of the resources of the planet. Here, driving forces of the increased concentration of carbon dioxide in the atmosphere are also discussed, as well as global distribution issues with regard to climate adaptation.

Block two deals with finance, innovations and economic growth. Here, the students will deal with basic economic studies about growth and climate such as the Stern report, climate models of William Nordhaus and the endogenic theory of growth. The block treats the financial costs for a climate adaptation, which meets the aim of the Paris Agreement and how these can be created. Further, preconditions and barriers for green innovations are studied both theoretically and empirically.

The final block is policy oriented and deal with global, national, company and individual levels. It treats questions such as international agreements, emission trading, regulations, taxes and subsidies. The block also studies how both mandatory legislation and self-regulation influence the companies' will and ambitions to green adaptation. Here, differences are also studied between different countries and industries

On completion of the course, the students should be able to describe and analyse:

1. the driving forces behind the climate changes
2. which role market forces and policies play for a transition to a green economy
3. the importance of technical changes, innovation and entrepreneurship for a transition to sustainable growth
4. the importance of the financial market for transition to a green economy

At least 30 hp within mathematics, statistics , qualitative analysis, or corresponding

Suggested Project Topics

-  Market effects of sustainability strategies (ESG, SBTi)
- The EU Emissions Trading System (EU ETS) and the Carbon Border Adjustment Mechanism (CBAM)
- Patent study: clean-tech patents
- The economics of biodiversity

Bolton, P., & Kacperczyk, M. (2021). Do investors care about carbon risk? Journal of Financial
Economics, 142(2), 517–549.
Bolton, P., & Kacperczyk, M. (2023). Global pricing of carbon-transition risk. The Journal of
Finance, 78(6), 3677–3754.
Bouckaert, S., et al. (2021). Net Zero by 2050: A Roadmap for the Global Energy Sector.
Grubb, M., et al. (2021). Induced innovation in energy technologies and systems: Environmental
Research Letters, 16(4).
Dasgupta, P. (2021). The Economics of Biodiversity: The Dasgupta Review. HM Treasury.
DasGupta, R. (2022). Financial performance shortfall, ESG controversies, and ESG performance.
Finance Research Letters, 46, 102487.
Hart, O., & Zingales, L. (2017). Companies should maximize shareholder welfare not market value.
ECGI-Finance Working Paper (521).
Hsiang, S., & Kopp, R. E. (2018). An economist’s guide to climate change science. Journal of
Economic Perspectives, 32(4), 3–32.
Hsu, P. H., Li, K., & Tsou, C. Y. (2023). The pollution premium. The Journal of Finance, 78(3),
1343–1392.
IPCC material
Lovcha, Y., Perez-Laborda, A., & Sikora, I. (2022). The determinants of COn prices in the EU ETS.
Applied Energy, 305, 117903.
Hajikhani, A., & Suominen, A. (2022). Mapping the SDGs in science, technology and innovation.
Scientometrics, 127(11), 6661–6693.
Nordhaus, W. (2018). Projections and uncertainties about climate change in an era of minimal
climate policies. AEJ: Economic Policy, 10(3), 333–360.
Pindyck, R. S. (2021). What we know and don’t know about climate change, and implications for
policy. Environmental and Energy Policy and the Economy, 2(1), 4–43.
Polzin, F. (2017). Mobilizing private finance for low-carbon innovation – A systematic review.
Renewable and Sustainable Energy Reviews, 77, 525–535.
SBTi Monitoring Report (2024)
World Energy Outlook

Students at KTH with a permanent disability can get support during studies from Funka:

Funka - compensatory support for students with disabilities

• PRO1 - Project, 3.5 credits, grading scale: P, F
• TEN1 - Examination, 4.0 credits, grading scale: A, B, C, D, E, FX, F

Based on recommendation from KTH’s coordinator for disabilities, the examiner will decide how to adapt an examination for students with documented disability.

The examiner may apply another examination format when re-examining individual students.

If the course is discontinued, students may request to be examined during the following two academic years.

Examination and project work

- Approved project work (PRO1): 3.5 ECTS
- Approved written assignments: up to 10 bonus points added to the exam result
- Quality of project work: up to 10 bonus points added to the exam result
- Active participation in seminars: up to 5 bonus points added to the exam result
- Written exam (TEN1): 4.0 ECTS

• All members of a group are responsible for the group's work.
• In any assessment, every student shall honestly disclose any help received and sources used.
• In an oral assessment, every student shall be able to present and answer questions about the entire assignment and solution.

On 11/04/2019, the Dean of the ITM school has decided to establish this official course syllabus to apply from autumn term 2019 (registration number M-2019-0740).