As an undergraduate Economics teacher, you can use this set of computer-based tools to teach the concept of Carbon Pricing and the instruments to implement it- Carbon Tax and Cap-and-Trade/Emissions Trading System (ETS). This lesson plan includes a resource to help students understand the importance of shadow price in the cost-benefit analysis of carbon pricing. This will enable students to understand how carbon emissions, one of the drivers of climate change, are affecting global economics.
The use of this lesson plan allows you to integrate the teaching of a climate science topic with a core topic in Economics.
A teacher-contributed lesson plan by Megha Jacob, Jesus and Mary College (Delhi University), India.
Want to know more about how to contribute a Lesson Plan? CONTACT US
A reading to introduce and describe in detail, the different aspects of global carbon pricing and its importance as an instrument for climate policies.
A reading to introduce the topic of Shadow and Market Prices and to explain concepts such as Social Cost of Carbon (SCC), Shadow Price of Carbon (SPC), and Marginal Abatement Cost (MAC) in the context of internal carbon pricing in the UK.
An interactive visualization tool with map, data and downloadable graphs to understand the carbon pricing initiatives of various nations over a thirty-year timeline.
Here is a step-by-step guide to using this lesson plan in the classroom/laboratory. We have suggested these steps as a possible plan of action. You may customize the lesson plan according to your preferences and requirements.
Use the reading, ‘Carbon Pricing Dashboard’ by World Bank to introduce the topic of carbon pricing.
Play the embedded video, “Climate Countdown: Carbon Pricing” by Connect4Climate (~5 min), to explain the importance of carbon pricing.
Use the sub-sections in the reading resource to describe what is carbon pricing, what are the main types of carbon pricing, and why it is important for governmental or organizational policy making.
Use the text to also distinguish between international and national/subnational/regional carbon pricing.
Finally, introduce the concept of internal carbon pricing and the factors that determine it.
Use this paper to explain the need for climate informed policies in the economic assessment of a country.
Given its significance in greenhouse gas emissions, use carbon as an example to explain the social costs of carbon and its shadow price in internal carbon pricing.
Further, compare the marginal abatement costs and social costs of carbon for different stabilization goals as determined by the Stern Review.
Finally, introduce the concept of discounting and discount rates for calculating carbon prices.
This reading uses the United Kingdom (UK) as the area of study but this reading can be discussed in the context of other regions.
Use the interactive map and data, ‘Carbon Pricing Dashboard- Map & Data’ by World Bank, to visualize the information available on the carbon pricing initiatives implemented by several nations over the past thirty years.
Use the tabs to navigate to data available on the greenhouse gas emissions, the carbon prices implemented across different countries and the value of the carbon pricing initiatives selected (ETS or Carbon Tax).
Encourage your students to explore different regions or countries, download the data/graphs on their carbon pricing data and draw comparisons to improve understanding of the real-world scenario of carbon pricing across various geographies.
Suggested questions/assignments for learning evaluation :
Carbon pricing is used as an instrument for making climate policies. Explain.
What is the difference between market prices and shadow prices?
What is the importance of shadow pricing in evaluating the costs of greenhouse gases?
In the context of climate change, what are discount rates, marginal abatement costs and statistical value of life?
The tools in this lesson plan will enable students to:
explain the concept and importance of pricing carbon
evaluate carbon pricing as an instrument for climate policy packaging
describe shadow prices in environmental economics
distinguish between shadow price, social cost and market price
define discount rate, marginal abatement costs and statistical value of life
If you or your students would like to explore the topic further, these additional resources will be useful.
A teaching module, ‘The Economics of Global Climate Change’ by Jonathan M. Harris, Brian Roach and Anne-Marie Codur, Global Development and Environment Institute, Tufts University, USA.
A teaching module, ‘The Economics of Global Climate Change’ by Jonathan M. Harris, Brian Roach and Anne-Marie Codur, Global Development and Environment Institute, Tufts University, USA
This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.
Strictly Necessary Cookies
Strictly Necessary Cookie should be enabled at all times so that we can save your preferences for cookie settings.
If you disable this cookie, we will not be able to save your preferences. This means that every time you visit this website you will need to enable or disable cookies again.