Carbon Markets.pptx - FINA 455 Lecture 5 Carbon Markets FINA 455 WINTER 2019 A Addas 1 Environmental Asset Classes • This new asset class is the

Carbon Markets.pptx - FINA 455 Lecture 5 Carbon Markets...

This preview shows page 1 - 28 out of 65 pages.

FINA 455 Lecture 5 Carbon Markets FINA 455 WINTER 2019 A. Addas 1
Image of page 1
Environmental Asset Classes This new asset class is the manifestation in securities markets of the emerging field of “environmental finance.” Environmental finance is the art and science of using economic incentives, financial tools, and market mechanisms to achieve desired environmental outcomes. Helps businesses manage emerging corporate risks arising from climate change, environmental problems and resource scarcity. FINA 455 WINTER 2019 A. Addas 2
Image of page 2
Environmental Asset Classes Examples of environmental assets: Rights to emit local and regional pollutants, such as sulfur dioxide and nitrogen oxide Rights to emit global pollutants, such as carbon dioxide Renewable energy credits Water quality and quantity rights Indices of sustainable corporate equities Green bonds Weather derivatives FINA 455 WINTER 2019 A. Addas 3
Image of page 3
Environmental Asset Classes Environmental asset classes can help: Corporations pursue major new opportunities while managing their energy and environmental risks. Analysts evaluate companies on the basis of their environmental performance, exposure to environmental risks, and response to environmental opportunities. Portfolio managers to incorporate them into their portfolios. FINA 455 WINTER 2019 A. Addas 4
Image of page 4
Emergence of the Environmental Asset Class Cap-and-trade first used in 1982 to phase out lead-based gasoline. Success enabled first large-scale environmental market in the United States, the Environmental Protection Agency (EPA) Acid Rain Program in early 1990s. Used cap-and-trade market model to reduce sulfur and nitrogen oxide emissions from fossil-fuel combustion in electricity power plants. Achieved environmental with minimal costs relative to benefits FINA 455 WINTER 2019 A. Addas 5
Image of page 5
Emergence of the Environmental Asset Class The implementation of the acid rain program was accompanied by the evolution of over-the-counter (OTC) spot and forward markets in emission allowances . A host of financial derivatives followed, including futures, options, and swaps . FINA 455 WINTER 2019 A. Addas 6
Image of page 6
FINA 455 WINTER 2019 A. Addas 7
Image of page 7
FINA 455 WINTER 2019 A. Addas 8
Image of page 8
Costs FINA 455 WINTER 2019 A. Addas 9
Image of page 9
Market Solutions: subsidies helped renewables … FINA 455 WINTER 2019 A. Addas 10
Image of page 10
… and fossil fuel subsidies are falling FINA 455 WINTER 2019 A. Addas 11
Image of page 11
GHG Emissions Global Carbon Atlas Climate Change Dashboard ( GHG Emissions ) FINA 455 WINTER 2019 A. Addas 12
Image of page 12
GHG Emissions FINA 455 WINTER 2019 A. Addas 13
Image of page 13
GHG Emissions FINA 455 WINTER 2019 A. Addas 14
Image of page 14
FINA 455 WINTER 2019 A. Addas 15
Image of page 15
GHG Emissions FINA 455 WINTER 2019 A. Addas 16
Image of page 16
GHG Emissions FINA 455 WINTER 2019 A. Addas 17
Image of page 17
GHG Emissions FINA 455 WINTER 2019 A. Addas 18
Image of page 18
GHG Emissions FINA 455 WINTER 2019 A. Addas 19
Image of page 19
GHG Emissions FINA 455 WINTER 2019 A. Addas 20
Image of page 20
Image of page 28

You've reached the end of your free preview.

Want to read all 65 pages?

  • Summer '14
  • N/A

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes
A+ icon
Ask Expert Tutors