Introduction

Climate change may be today’s most serious challenge to the future wellbeing of our planet.

The extent of the environmental and economic impact from climate change is uncertain, however, the recent scientific evidence is increasingly worrisome, suggesting that the world’s businesses and governments may have to take aggressive and coordinated steps in order to avert a catastrophe.

Carbon finance - which refers to investments in greenhouse gas emission reduction companies and projects, and the creation of financial instruments that effectively put a price on carbon emissions – is required to transform our global economy. This block week course will explore the science of climate change and its related economic and environmental impacts, and carefully examine the financial tools and techniques that can be applied to combat climate change in the context of evolving global policy.

Specific areas to be covered include the use of capital markets to create market-based emissions trading systems, venture capital to develop low emissions technologies, project finance to build renewable energy projects, real estate finance to implement energy efficiency, and corporate finance to manage businesses impacted by climate change and ultimately, related regulatory changes. This is a finance course, designed around a combination of cases and financial tools to reach our course objectives.

Course Objective of Carbon Finance

This course is designed for both planning a career in financial services who want to understand the financial implications of climate change, and for students planning a career in a climate change-related field (such as renewable energy companies, non-profit or government organizations) who want to understand the application of the relevant financial tools. The course will also be useful for future consultants or general managers who may help their clients or employer develop and implement “green business” strategies. Specifically, the course objectives are to:

• Understand the scientific issues underlying climate change.
• Analyze which financial tools have been used to date, and their relative effectiveness in combating climate change.
• Evaluate financial tools and strategies that might be used in the future, in the context of a carbon-constrained global economy and national and international policy developments.

Organizational and personal Impacts of Carbon Finance

• Calculate and report on the organization’s carbon footprint (Low Carbon Energy, Lifecycle Analysis, CSR)
• Carbon reduction commitments
• Options for reducing emissions and developing a structured carbon management strategy

• Dealing with Carbon Credits
• Carbon trading strategies
• Carbon management strategies

Target Audience of Carbon Finance

• Individuals considering a consultancy job in renewable energy and/or those interested in carbon management and trading strategies and carbon reduction commitments for small, medium, and large organizations.
• Managers and directors intending to reduce the organization’s carbon footprint and needing to find out more about carbon trading.

Course Outlines of Carbon Finance

Day 1:

• Background: Understanding the science of climate change and related impact on the environment, and introducing the application of financial tools to this problem. The electric car industry will be examined to understand the potential to reduce greenhouse gas emissions and the challenges associated with innovating an entire sector of the economy. Climate Change Science and Introduction to
• Carbon Finance: What is the problem, and how can carbon finance address it?

Day 2:

• Capital Markets Tools:  Critical analysis of carbon markets, including allowance markets and carbon credit offset programs. The EU Emissions Trading System, the Kyoto Protocol, and the Clean
• Development Mechanism: International treaties and market-based mechanisms, credit trading systems, and forestry offsets.

 Day 3:

Investment Tools: Investing in companies and projects that have the potential to reduce emissions of greenhouse gases, including renewable energy sectors such as biofuels, wind, and solar.

• Part 1: Financing Renewable Energy Projects: How can we increase the availability of renewable energy through project finance?
• Part 2: Financing Renewable Energy Companies: What are the key considerations when investing in companies developing innovative renewable energy technologies?

Day 4:

• Financing Energy Efficiency: Evaluating the challenges and opportunities of investing in energy efficiency in the real estate sector.
• Carbon Capture and Sequestration: Evaluating the challenges and opportunities of investing in the capture and sequestration of greenhouse gases from fossil fuel production.

Day 5:

Socially Responsible Investing: Analysis of the most recent and innovative investment tools and products for tackling climate change, including the movement to divest portfolios of fossil fuel investments, and the growth of the green bond sector.