Postgraduate Course: Investment in a Low Carbon Economy (CMSE11152)
Course Outline
| School | Business School |
College | College of Humanities and Social Science |
| Credit level (Normal year taken) | SCQF Level 11 (Postgraduate) |
Availability | Available to all students |
| SCQF Credits | 15 |
ECTS Credits | 7.5 |
| Summary | The 2009 Copenhagen Accord promises to deliver new, additional resources from developed to developing countries to mitigate and adapt to climate change, of US$30 billion/year over 2010-2012, scaling up to US$100 billion/year by 2020 (UNFCCC, 2009). At the same time, the IEA estimates that new, additional investment of, on average, US$500 billion/year will be required to 2030, mainly in developed countries, to move to a global low-carbon economy (IEA World Energy Outlook, 2009). While carbon markets will undoubtedly continue to play a very important role, these substantial financial flows will not be created and delivered by carbon markets and internalising the price of carbon alone. A variety of different mechanisms, including both public and private sector finance, will be required for different technologies, sectors and countries. This course aims to provide students with an understanding of the nature of these new financial flows and the implications and opportunities for business. |
| Course description |
Student Learning Experience
* Understand the drivers for private and public investment in climate change mitigation and adaptation including both commercial and social responsibility goals
* Understand the different types of investment framework and their applicability to different technologies, sectors and scale of project, in different geographical markets;
* Develop the ability to develop financial models for assessing return and risk in a low-carbon project
Week 1
Introduction to Investment in a Low Carbon Economy: in this introductory session we will consider the magnitude of investment required to achieve various atmospheric stabilisation targets. Costs of benefits of taking action now versus adapting and/or deferring action. The concept of pathways or trajectories and implications for timing of investment. Geographic and technology/sector dispersion of investment. The elements of course assessment and group projects will also be outlined.
Week 2
Climate change, trade and investment: in this session we will discuss the direct and indirect implications that climate change has on international trade and foreign direct investment. We will consider the implications of border tax adjustments and various form of credit enhancement that could be used by governments to stimulate private sector investment in climate change mitigation and adaptation.
Week 3
Investment appraisal: in this session we will discuss the role of institutional investors such as pension funds, how they make investment decisions and how climate change is factored into those decisions (or not).
Case study: private equity in emerging markets
Week 4
Transport: in this session we will discuss the sector likely to require the largest total additional investment: transport. We will consider the nature of investment in new vehicle technology R&D, at one end of the spectrum, versus public transport and transport infrastructure on the other. The role of PFI and public-private partnerships will be examined.
Case study: R&D investment
Week 5
Energy: in this session we will look at the investment requirements in energy supply and energy efficiency which will not necessarily be driven by an internalised price of carbon alone. This includes most renewables, demand-side energy efficiency and CCS, for very different reasons.
Case study: venture capital
Week 6
Buildings: the building sector poses some unique challenges to investment, such as planning controls, split incentives between landlords and tenants, and long-lived assets. We will examine the role of energy service companies (ESCOs) and energy performance agreements, and other forms of investment incentive in this sector.
Case study: ESCOs
Week 7
Reading Week: (No classes)
Week 8
Agriculture and Forestry: in this session we will look at the challenges of investment in climate change mitigation and adaptation in agriculture and forestry. While some countries (such as New Zealand) are attempting to include these sectors in carbon markets, others (such as the EU) have deliberately excluded them. How can climate change objectives be balanced against basic needs for food and fuel?
Case study: micro-finance
Week 9
Adaptation: we will examine the major forms of adaptation and the associated projected investment requirements. We will also examine existing adaptation funding mechanisms and discuss how the private sector may interact with public financing mechanisms in adaptation.
Case study: PFI/PPP
Week 10
Geo-engineering: in this session we will discuss the option of geo-engineering, or deliberate large-scale intervention in the earth's climate system to mitigate global warming. Presently the options for geo-engineering are at the R&D stage, but what are the options for the future?
Case study: public sector guarantees and credit support
Week 11
Insurance: in this lecture we will examine the role of the insurance sector in responding to climate change. We will look at how the insurance sector is affected by climate change, and its potential to shape both mitigation and adaptation responses. We will also review the course as a whole in a final discussion.
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Entry Requirements (not applicable to Visiting Students)
| Pre-requisites |
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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
| Pre-requisites | None |
| High Demand Course? |
Yes |
Course Delivery Information
| Not being delivered |
Learning Outcomes
On completion of this course, the student will be able to:
- Overarching Learning Outcomes: Describe and critically evaluate the challenges and opportunities for low-carbon investment.
- Understand and critically discuss the different types of institutional and individual investors: their business model, institutional framework, incentive structures and the role of low carbon investment opportunities on their dashboards.
- Understand and critically discuss institutional investors¿ practices in portfolio management.
- Understand and critically evaluate different innovative financial instruments for supporting low carbon investments.
- Critically evaluate an individual investment proposition from different perspectives, with a focus on commercial low carbon investment but also acknowledge wider social cost-benefit.
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Reading List
ESSENTIAL/RECOMMENDED READING
Note: the following is provisional; all reading will be updated prior to course commencement and on the advice of guest lecturers.
Week 1: Introduction to Investment in a Low Carbon Economy
IEA (2009) World Energy Outlook 2009. Executive summary.
UNFCCC (2007) Investment and financial flows to address climate change.
UNFCCC (2008) Investment and financial flows to address climate change: An update.
Stern, N. (2007) The economics of climate change: The Stern Review. Cambridge: Cambridge University Press. Summary of conclusions and chapter 8 "The challenge of stabilisation", pp. 218-237.
Week 2: Climate Change, Trade and Investment
Santarius, T. (2009) Climate and Trade - Why Climate Change Calls for Fundamental Reforms in World Trade Policies. Berlin: Heinrich Böll Foundation and Forum Environment & Development.
Stewart, R. B., Kingsbury, B. and Rudyk, B. (eds) Climate Finance: Regulatory and Funding Strategies for Climate Change and Global Development, NYU Press, New York and London. Part V Climate Finance and World Trade Organization (WTO) Law and Policy, pp. 247-287.
Cosbey, A. and Tarasofsky, R. (2007) Climate change, competitiveness and trade. London: Chatham House.
Brainard, L. and Sorkin, I. (eds.) (2009) Climate Change, Trade and Competitiveness: Is a Collision Inevitable? Brookings Institution Press.
Week 3: Investment Appraisal
Robins, N. and Fulton, M. (2009) "Investment opportunities and catalysts: Analysis and proposals from the climate finance industry on funding climate mitigation", in Stewart, R. B., Kingsbury, B. and Rudyk, B. (eds.) Climate Finance: Regulatory and Funding Strategies for Climate Change and Global Development, NYU Press, New York and London, pp. 143-151.
Mackenzie, C. & Ascui, F. (2009) Investor Leadership on Climate Change. UN Global Compact.
Week 4: Transport
Department for Transport (2009) Low carbon transport: A greener future. London: Her Majesty's Stationery Office.
Week 5: Energy
UNEP/New Energy Finance (2008) Global trends in sustainable energy investment.
Week 6: Buildings
Boardman, B., Killip, K., Darby, S. and Sinden, G. (2005) The 40% house report. Oxford: Environmental Change Institute.
Week 8: Agriculture and Forestry
FAO (2006) Livestock's long shadow: Environmental issues and options. Rome, Food and Agriculture Organization of the United Nations (FAO). Chapter 3.
Week 9: Adaptation
UNFCCC (2009) "An overview of investment and financial flows needed for adaptation," in Schipper, L. and Burton, I. (eds.) The Earthscan Reader on adaptation to climate change, London: Earthscan, pp. 395-438.
Week 10: Geo-engineering
The Royal Society (2009) Geoengineering the climate: Science, governance and uncertainty. London: The Royal Society.
Week 11: Insurance
Gupta, A. (2008) "Climate change and insurance markets." The World Bank Institute.
Linnerbooth-Bayer, J., Bals, C. and Mechler, R. (2008) Climate insurance as part of a post-Kyoto adaptation strategy. Bonn: Germanwatch.
Mills, E. (2005) "Insurance in a climate of change." Science 309: 1040-1044.
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Additional Information
| Graduate Attributes and Skills |
Cognitive Skills
After completing this course, students should be able to:
* Critically evaluate an individual investment proposition from different perspectives, with a focus on commercial low carbon investment but also acknowledge wider social cost-benefit
* Conceptualise key strategic considerations associated with low-carbon investment;
* 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:
* Identify low carbon investment opportunities for different types of institutional investors;
* Undertake an appraisal of a specific low-carbon investment opportunity;
* Analyse the evolution in low-carbon investment policy frameworks, and evaluate the implications for business;
* Evaluate the risks and opportunities associated with low-carbon investments in different sectors;
* Understand, speak and write the language of low-carbon investment;
* Develop a project investment proposal.
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| Keywords | ILCE |
Contacts
| Course organiser | Mr Francisco Ascui
Tel: (0131 6)50 8343
Email: |
Course secretary | Ms Sarah Yaxley
Tel: (0131 6)50 3475
Email: |
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