Programme PGP Term V Academic Year 2021-22

Course title Carbon Finance Area Public Systems Group Credits 0.75

Prof. Amit Garg

Course Description & Objectives
Carbon Dioxide emissions are the largest contributors to ‘greenhouse effect’ that causes ‘Global Warming’ and results in ‘Climate Change’. The term ‘Carbon Finance’ is used, in practice as well as in the course title, as a surrogate for ‘Climate Change Finance’ to cover wide ranging financial responses to mitigate and adapt to climate change. The course is aimed to provide conceptual and practical understanding of the anthropogenic forcing causing the climate change, the global frameworks and mechanisms to deal with it, challenges to and responses by the business community internationally, and the dynamics underlying the ‘Carbon Finance’.

Scientifically, ‘Climate Change’ refers to any change in climate over time, whether due to natural variability or as a result of human activity. However, from the regulatory perspective, as defined by the United Nations Framework Convention on Climate Change (UNFCCC), ‘climate change’ refers to: “A change of climate which is attributed directly or indirectly to human activity that alters the composition of global atmosphere and which is in addition to natural climatic variability observed over comparable periods”.

The climate change is an extreme case of externality: its origin is in global human activities for production as well as for consumption; and its implications are global and long-term. Responding to climate change is therefore a global venture; governed by international legal, regulatory and institutional frameworks; and includes business responses through fast emerging carbon pricing initiatives globally. These initiatives including carbon markets can be used for efficient economic and business responses to climate change. Like all environmental markets, ‘Carbon Markets’ are a creation of regulations. The dynamics of the global carbon market results from institutions, policies, instruments and the specific measures agreed periodically by the nations which are party to the UNFCCC. These are currently covered under Nationally Determined Contributions and Long Term Strategies under UNFCCC. “Net Zero” discussions and pledges are being made all over the world – including by countries and corporates.

The course will introduce the evolution of the global carbon markets, carbon finance instruments and developments. Various carbon finance instruments such as Emissions Trading, Programme of Activities, Green bonds and sustainable finance, Nationally Determined Contributions (NDCs) and Internationally Transferred Mitigation Options (ITMOs) from the Paris Climate Change Agreement will be discussed. The course has global focus with significant India-centric components. The course discussions will use conceptual materials on climate change economics and finance and practical case studies. Besides the financial instruments for carbon mitigation, the course also includes discussion on financial services to deal with adverse impacts of climate change, such as climate change insurance and emergent adaptation funds.

Case method and class discussions