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DRPS : Course Catalogue : Business School : Common Courses (Management School)

Postgraduate Course: Carbon Markets (CMSE11154)

Course Outline
SchoolBusiness School CollegeCollege of Humanities and Social Science
Credit level (Normal year taken)SCQF Level 11 (Postgraduate) AvailabilityAvailable to all students
SCQF Credits15 ECTS Credits7.5
SummaryThe proportion of global GHG emissions covered by carbon pricing schemes are growing rapidly, from 4% in 2010, ~13% in 2016, and over 20% in 2017 (World Bank 2017). Carbon markets are also expected to play an important role under the Paris Agreement, with carbon markets identified in almost half of Parties' National Intended Contributions. This course provides students with a strong theoretical grasp of carbon trading and offsetting, and a practical understanding of the mechanics of different carbon markets.
Course description The course provides a foundation in economic theory for emissions trading, and a detailed understanding of carbon market design. In addition to a detailed understanding how carbon markets work the course also provides the analytical tools for appraising the effectiveness and efficiency of carbon markets as policy instruments for mitigating climate change. We will also cover the role of different participants within emissions trading schemes, the implications of the Paris Agreement for carbon markets, strategies for firms operating in carbon markets, the determinations of market price, and problems and solutions for carbon market design. The course also covers other forms of carbon pricing, such as carbon taxes and internal carbon prices.

1. The economics of carbon markets, externalities and rationale for carbon pricing, price versus quantity instruments
2. Introduction to carbon trading, market participants and carbon financial instruments
3. Understanding carbon price drivers, financial regulation of European carbon platforms, carbon market liquidity and efficiency
4. The compliance and voluntary carbon offset market; REDD+ (reducing emissions from deforestation and forest degradation)
5. Challenges: Carbon leakage; windfall profits; illiquidity; volatility; over-supply; uncertainty
6. Solutions: hedging; banking; borrowing; market stability reserves; linkage; price floors and ceilings
7. Global carbon market: Prospects for linking existing schemes
8. New market mechanisms following the Paris Agreement
9. Participating in carbon markets from a firm's perspective

Student Learning Experience
The course includes a number of guest speakers, both in person and via Skype for overseas speakers. This provides useful real-world insights alongside the more theoretical aspects of the course.
The course will be taught through weekly lectures and some weeks will include a case study, group exercise or other interactive discussion component.
Entry Requirements (not applicable to Visiting Students)
Pre-requisites Co-requisites
Prohibited Combinations Other requirements For Business School PG students only, or by special permission of the School. Please contact the course secretary.
Information for Visiting Students
High Demand Course? Yes
Course Delivery Information
Academic year 2018/19, Available to all students (SV1) Quota:  None
Course Start Semester 1
Timetable Timetable
Learning and Teaching activities (Further Info) Total Hours: 150 ( Lecture Hours 20, Summative Assessment Hours 40, Programme Level Learning and Teaching Hours 3, Directed Learning and Independent Learning Hours 87 )
Assessment (Further Info) Written Exam 70 %, Coursework 30 %, Practical Exam 0 %
Additional Information (Assessment) Coursework - 30%
Exam - 70%

Coursework Assessment
Students will be assigned to groups of 4 or 5 members to evaluate a specific carbon market. Each group will be tasked with producing an executive report of no more than 2,000 words and a 20-minute presentation, covering how the scheme came about (relevant political and regulatory context), the key design features of the scheme, and your critical opinion as to whether this is a well-designed market, and how it could be improved. This assignment is highly valuable for applying the content of the course to a real-world carbon market.

Feedback Assessment marks and feedback will be provided a maximum of 15 days after submission.

Feedback Format
In-class discussions, case studies and exercises (informal peer and lecturer feedback)
Weeks 7 : Group presentations (formal peer and lecturer feedback)
December: Lecturer will provide feedback on group reports
January: Lecturer will provide generic feedback on the exam
Exam Information
Exam Diet Paper Name Hours & Minutes
Main Exam Diet S1 (December)Carbon Markets2:00
Learning Outcomes
On completion of this course, the student will be able to:
  1. Describe and critically evaluate the structure and price dynamics of the major global, regional and national-level carbon markets.
  2. Explain how carbon credits are created and traded in the major carbon markets
  3. Discuss analytically the financial and strategic implications of carbon markets for business.
  4. Critically evaluate alternative design options for carbon markets.
  5. Describe the likely future trends in carbon market development.
Reading List
An online Resource List for the Carbon Markets course is available via Learn.
Additional Information
Graduate Attributes and Skills Knowledge and Understanding
After completing this course, students should have:

- A strong understanding of the key and variable characteristics of emissions trading schemes.
- A critical understanding of the main strengths and weakness of carbon markets.
- A strong understanding of the nature of carbon offset credits and the ways in which they are used.

Applied Knowledge, Skills and Understanding
After completing this course, students should be able to:

- Think analytically about the financial and strategic implications of carbon markets for business.
- Critically evaluate alternative policy approaches to carbon markets.
- Critically evaluate press coverage of carbon market issues.

Cognitive Skills
After completing this course, students should be able to:

- Critically evaluate and synthesize new and complex ideas.
- Make informed judgements in the absence of complete or consistent data.
- Offer creative solutions and insights on complex issues.

Communication, ICT, and Numeracy Skills
After completing this course, students should be able to:

- Comprehend, speak and write the language of carbon markets.
- Verbally communicate and present complex information in a concise and logical way.

Autonomy, Accountability and Working with Others
After completing this course, students should be able to:

- Cooperate with others from different professional, educational and cultural backgrounds to produce group analysis and present the results of group work.
- Manage personal study time and meet assignment deadlines.
Course organiserDr Matthew Brander
Tel: (0131 6)51 5547
Course secretaryMiss Yvonne Stewart
Tel: (0131 6)51 5333
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