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Postgraduate Course: Carbon Markets (CMSE11154)

Course Outline
SchoolBusiness School CollegeCollege of Humanities and Social Science
Course typeStandard AvailabilityAvailable to all students
Credit level (Normal year taken)SCQF Level 11 (Postgraduate) Credits15
Home subject areaCommon Courses (Management School) Other subject areaNone
Course website None Taught in Gaelic?No
Course descriptionThe global carbon market was worth $125 billion in 2000 and could reach $ş1.4 trillion by 2020 (Bloomberg New Energy Finance, 2010). These markets have been described by Commissioner Bart Chilton of the US Commodity Futures Trading Commission as &«$ö clearly the next great frontier in the commodities trading world.&ª There is an urgent need to develop a graduate skills base that can serve growing employer demand for expertise in this area.
Entry Requirements (not applicable to Visiting Students)
Pre-requisites Co-requisites
Prohibited Combinations Other requirements None
Additional Costs None
Information for Visiting Students
Displayed in Visiting Students Prospectus?No
Course Delivery Information
Delivery period: 2011/12 Semester 1, Available to all students (SV1) WebCT enabled:  Yes Quota:  None
Location Activity Description Weeks Monday Tuesday Wednesday Thursday Friday
No Classes have been defined for this Course
First Class First class information not currently available
Exam Information
Exam Diet Paper Name Hours:Minutes
Main Exam Diet S1 (December)Carbon Markets2:00
Summary of Intended Learning Outcomes
After completing this course, students should be able to:

&·Understand the nature of carbon markets as regulatory mechanisms for climate change mitigation
&·Understand the main public policy frameworks behind the major global carbon markets, and have an appreciation for how they may change over time
&·Appreciate the relationship between conventional project and corporate finance and carbon finance
&·Understand how carbon credits are created and commercialised in the major mandatory and voluntary carbon markets
&·Appreciate the regulatory risks associated with carbon credit creation, and the implications for financing emission reduction projects

Cognitive Skills
After completing this course, students should be able to:
&·Critically evaluate press coverage of carbon market issues
&·Think analytically about the financial and strategic implications of climate change for business
&·Critically evaluate alternative policy approaches to climate change
&·Conceptualise key strategic considerations associated with climate change
&·Cooperate with others from different professional, educational and cultural backgrounds to produce group analysis and present the results of group work

Subject-Specific Skills
After completing this course, students should be able to:

&·Understand new developments in public policy frameworks for carbon markets, and evaluate the implications for businesses involved in financing carbon emission reduction projects
&·Develop an understanding of how conventional financing products can be applied to raise finance for carbon emission reduction projects
&·Be able to evaluate carbon finance project risks and opportunities, in broad terms
&·Be able to understand, speak and write the language of carbon finance
Assessment Information
Group presentations and report to class $ú 30%
Exam $ú 70%
Special Arrangements
Additional Information
Academic description Not entered
Syllabus Week 1
Introduction to Carbon Markets: what carbon finance means, how it relates to conventional finance, what carbon markets and carbon offsetting mean, and an outline of course assessment and group projects.

Direct Regulation, Taxes, Incentives and Markets: an overview of the different regulatory instruments used to combat climate change, and their implications for business.

Week 2
A History of Emissions Trading: how we ended up with emissions trading as the most prominent regulatory instrument, and why we have a patchwork of national or regional markets rather than a truly integrated global system.

Week 3
The EU Emissions Trading Scheme (EU ETS): understanding the EU ETS and how the price of carbon affects investment decisions.

Carbon Trading Simulation

Week 4
The Clean Development Mechanism: discussion on the development of the Kyoto Protocol&©s key flexibility mechanism enabling investments in emission reductions projects in developing countries.

In-class exercise: assessing financial additionality of a CDM project.

Week 5
North American markets: overview of emerging carbon markets in the US and Canada.

Australia: overview of the Carbon Pollution Reduction Scheme.

Week 6
The voluntary carbon market: introduction to carbon offsetting, the emergence of standards, and financing of voluntary carbon offset projects.

In-class exercise: choosing the right standard for a voluntary offset project.

Week 7
Reading Week: (No classes)

Week 8
Biocarbon: how different markets treat carbon emissions from biomass and carbon sequestered by forests (Afforestation/Reforestation) or underground (CCS and biochar).

REDD is the new green: introduction to the emerging market for carbon credits for reductions in emissions from deforestation and degradation of tropical forests.

Week 9
Carbon markets and the transport sector: issues around inclusion of the transport sector in emissions trading schemes. Aviation in the EU ETS and proposals for control of international maritime transport emissions.

Week 10
Market participants and infrastructure: discussion on the role of national governments, compliance buyers, voluntary buyers, carbon funds, project developers and aggregators, consultants, speculators, information providers, lawyers, accountants, brokers, exchanges, credit rating agencies, insurance companies, etc.

Carbon Financial Instruments: summary of the current state of carbon financial instruments across the various markets covered in the course, followed by class discussion of the issues.

Week 11
Group presentations

Transferable skills Not entered

Note: the following is provisional; all reading will be updated prior to course commencement and on the advice of guest lecturers; including division into essential and further reading for each week.

Labatt, S (2007) Carbon Finance: The Financial Implications of Climate Change (Wiley Finance).

Capoor, K., and Ambrosi, P.(2009) State and Trends of the Carbon Market 2009. The World Bank, Washington, DC.

Hamilton, K., Sjardin, M., Marcello, T. and Xu, G. (2008) Forging a Frontier: State of the Voluntary Carbon Markets 2008. Ecosystem Marketplace, Washington DC and New Carbon Finance, New York.

Eliasch, J. (2008) Climate Change: Financing Global Forests. The Eliasch Review. UK Office of Climate Change, London.

Karousakis, K. and Corfee-Morlot, J. (2007) Financing Mechanisms to Reduce Emissions from Deforestation: Issues in Design and Implementation. OECD, Paris.

Ascui, F. & Moura Costa, P. (2007) &«CER Pricing and Risk.&ª In: Equal Exchange: Determining a Fair Price for Carbon. UNEP Risoe Centre, Roskilde, Denmark.
Study Abroad Not entered
Study Pattern Not entered
Course organiserMr Francisco Ascui
Tel: (0131 6)50 8343
Course secretaryMiss Rachel Allan
Tel: (0131 6)51 3757
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