Module ECON40C15: Climate Finance

Department: Economics and Finance

ECON40C15: Climate Finance

Prerequisites

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Corequisites

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Excluded Combination of Modules

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Aims

• To review the core areas around financing both the reduction in greenhouse gas emissions and climate resilient infrastructure at the global level.

Content

• Climate Change/climate crisis poses an existential risk to human civilisation and the natural environment. Whilst there are a number of good courses on environmental economics there is a natural gap in the delivery of a course relating directly to the public and private investment required in the face of climate change.
• The course will address this gap and provide a broad spectrum of coverage on the public and private policy in relation to climate finance.
• This module will cover a range of topics including/such as;
• Investment at scale and global resilience
• The landscape of climate finance and the relationship to climate resilience
• Valuation of long run risks and the impact of subjective discount rates
• The public sector investment problem, how to understand return on climate change investment
• Green bonds and investment in infrastructure protection
• Private sector investment and insurance
• Applications: from theory to practice
• Pricing the priceless: environmental valuations and investment
• Market mechanisms to address environmental externalities
• Global carbon markets, cap and trade (EU emissions trading, carbon offsets/sequestration)
• Financing Global Forests (debt for nature swaps)
• Adaptation financing (blockchain verification)
• Climate and disaster resilience financing
• Composite indicators (ecological footprints) to guide investment
• The course is on a contemporary set of issues, so the topics above are indicative and subject to change as the various political and economic mechanisms evolve with the ongoing debate on how to pay for climate change mitigation and resilience.

Learning Outcomes

• By the end of the module students should be able to:
• Price long term climate risk into standard financial instruments.
• Develop and price new financing products linked to green initiatives and low carbon investments.
• Understand cap and trade markets
• Determine the term structure of climate risk
• Understand investment in resilience.
• Understand the impact on actuarial models of insurance against climate-based hazards.
• Be able to understand and price climate change derivatives.

• Financial modelling.
• Risk Modelling.
• Asset Pricing.
• Economics models of discounting and the impact on cost-benefit analysis.
• Group work and presentation skills will be developed.
• Subject specific skills.
• Some work on assest price dynamics and pricing of green contracts.
• Using climate models and simulations as inputs into pricing models.
• Micro-scale green finance and the economics of risk adaptation.

Modes of Teaching, Learning and Assessment and how these contribute to the learning outcomes of the module

• Blended teaching model, with some in person lectures, video based discussion and presentations
• Synchronous class blended in person and virtual classrooms with small group teaching.
• Flipped classroom using the prepared materials to deliver summaries of models and instruments needed in climate finance.

Teaching Methods and Learning Hours

Summative Assessment

Formative Assessment:

1. Group presentation in flipped classroom is assessed with oral feedback during the class. 2. A practice essay on a similar topic to the bespoke essay undertaken as part of a group submission with written feedback.

■ Attendance at all activities marked with this symbol will be monitored. Students who fail to attend these activities, or to complete the summative or formative assessment specified above, will be subject to the procedures defined in the University's General Regulation V, and may be required to leave the University