Commodities - Emissions

With global warming on the rise, chances for ecosystems to adapt naturally are diminishing, making climate change one of the greatest threats facing the earth. At the 1992 Earth Summit, most of the world’s countries joined an international treaty – the United Nations Framework Convention on Climate Change (UNFCCC) – to consider the options for reducing global warming. More recently, a number of countries ratified an addition to the UNFCCC – the Kyoto Protocol – with more powerful and legally binding measures.


Emissions trading is one of the mechanisms under the Kyoto Protocol that is designed to help countries cut the cost of meeting their emissions targets. This course throws light on the regulatory background for emissions trading, the reduction targets, and trading mechanisms specified under the Protocol. It covers the EU Emissions Trading scheme and its trading practices in detail. The course also focuses on the factors that determine the price of carbon, and looks at some of the emissions markets that have been set up across the globe.


    On completion of this course, you will be able to:

    Describe the regulatory background for emissions trading, particularly the UNFCCC and the Kyoto Protocol

    Describe the workings of the emissions trading system in the European Union (EU ETS)

    Explain the key factors influencing the price of carbon

    List some of the different markets where emissions trading takes place


    Topic 1: Regulatory Background

    What is Emissions Trading?

    Cap & Trade

    The UNFCCC & the Kyoto Protocol

    Ratifying the Kyoto Protocol

    Kyoto Targets

    Kyoto Mechanisms

    Clean Development Mechanism (CDM)

    CDM Projects

    Joint Implementation (JI)

    Emissions Trading

    Topic 2: EU Emissions Trading Scheme (EU ETS)


    EU ETS

    NATIONAL Allocation Plans (NAPs)

    The Linking Derivative

    Emissions Trading Scheme – Example

    Trading in Practice

    o New York Mercantile Exchange (NYMEX)

    o Intercontinental Exchange (ICE)

    o European Energy Exchange (EEX)

    o Nord Pool

    Topic 3: Emissions Trading Market

    Emissions Market

    London Electricity Brokers Association (LEBA)

    Other EU Markets

    US Emissions Markets

    o Acid rain Program

    o Other US Markets

    Topic 4:What Determines the Price of Carbon?

    Political & Regulatory Issues

    Market Fundamentals

    o The Impact of Weather

    o Effect of Seasonality on Demand for Emissions Allowances

    o Fuel Switching

    o Dark Spread – Example

    Technical Factors



    75 Minutes

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