FIRST PRINCIPLES OF FINANCIAL ECONOMICS
MICHAELMAS TERM 2021
Candidates should answer the following question in no more than 1.500 words.
Footnotes are included in the word limit.
A bibliography is optional, and is not included in the word limit.
To write the essay there is no need for extensive research.
Make sure your arguments are well structured and based on sound economic logic.
A short while ago, it was announced that Airbus believes that hydrogcn-fucllcd aircraft are technically viable, and could start service by 2035, drastically reducing airlines' CO2 emissions (see Financial Times 26 September 2021). However, Airbus also said that in order to develop such aircraft it requires ‘a degree of certainty about the regulatory environment and the availability of [hydrogen] fuel'. Why is an environment with available fuel such an important component in Airbus’ decision? What is the role of regulation and/or carbon taxation in delivering such an environment? Might other public policy, such as applying to the public’s sense of social responsibility, be an alternative?
Notice: students SHOULD NOT include in their essay any additional facts beyond those mentioned above, only THEIR OWN analysis of the implied policy questions.