This course will consider in financial terms the number of carbon sequestration investments options that are available to an organization to manage its emissions liability, such as: 

  1. doing nothing and paying the tax or buying carbon credits from the government or from a carbon market to make up the shortfall;
  2. reducing its carbon liability by undertaking internal projects that use new technologies to lower the carbon emissions of its resources and activities;
  3. investing in external projects (e.g. wind farms; reforestation, etc.) that sequester carbon in order to offset its carbon liability; and under a CPRS selling excess carbon credits generated (if any) in emission trading markets; or
  4. a combination of both internal and external investments.

Decisions to make such both internal and external investments in carbon management projects, termed carbonvestments, fall under the general area of capital budgeting which is the process of valuing and choosing investment projects to allocate a firm’s capital.

It has been widely discussed in the conventional finance literature, where it is documented that the underlying methodology of investment decision making has shifted from relying mainly on business experience and intuition into incorporating the use of Net Present Value (NPV) appraisal techniques. Thecourse will specifically consider the use of Real Options (RO) analysis, and demonstrate its superiority as a capital budgeting technique to appraise and manage carbon sequestration investment projects.  

Carbonvestments and Project Management (Finance)