Course 03 of 20 · Emissions and Carbon Desk Academy

Compliance Market Architecture

Stage A, Market foundations. Level 2 of 10.

How a cap-and-trade scheme is constructed: coverage, cap setting, allocation method, surrender cycle and oversight bodies.

129 chapters · 12 modules · every chapter one 8 to 10 minute explainer · builds on: Course 01, Course 02

Enrol or enquire See the 129 chapters
How a chapter is delivered

One chapter is one idea taken to the point of use

Each chapter covers one idea to the point where you can use it, and comes two ways: a narrated explainer, and a deep dive audio discussion of around thirty minutes that works the same material at depth.

Self-paced throughout, and the same chapters can be taught as a cohort. Chapters run in order: each one assumes only what the chapters before it taught, and capability belonging to a later course is named and deferred rather than half-covered.

Curriculum

12 modules · 129 chapters

Open any module for its full chapter list, in teaching order.

M0 What a Cap-and-Trade Scheme Actually Is Ch 1-10
  1. A Statute Creates the Scarcity
  2. The Five Decisions Every Scheme Designer Takes
  3. Carbon Tax Against Traded Cap: What Each Fixes
  4. Baseline-and-Credit Is a Different Machine
  5. Intensity Caps and Absolute Caps Are Not Interchangeable
  6. The Point of Regulation Decision
  7. Naming the Liable Party
  8. The Legislative Stack Beneath a Scheme
  9. Phases, Trading Periods and Why Schemes Reset
  10. How to Read a Scheme You Have Never Seen
M1 Drawing the Coverage Boundary Ch 11-21
  1. The Covered Activity List
  2. Capacity Thresholds and the Plant Just Below
  3. Which Gases a Scheme Admits
  4. One Installation or Several: The Aggregation Rule
  5. Simplified Regimes for Small Emitters
  6. Opt-In: Volunteering for an Obligation
  7. Cessation, Partial Cessation and Leaving the Scheme
  8. Bringing a New Sector Inside
  9. Regulating Millions of Emitters Through Their Suppliers
  10. Aviation Scope: The Argument Nobody Has Settled
  11. Coverage Gaps Are Chosen, Not Overlooked
M2 Setting the Cap Ch 22-32
  1. What the Cap Is a Promise About
  2. Choosing the Baseline Year
  3. The Linear Reduction Factor as the Cap's Engine
  4. From National Target to Scheme Cap
  5. Setting a Cap Above Actual Emissions
  6. Rebasing: Cutting the Ceiling in One Step
  7. Adjusting the Ceiling When Coverage Moves
  8. Sub-Caps and Ring-Fenced Budgets
  9. A Cap Path That Reaches Zero
  10. Who Signs Off a Cap, and the Review Clause
  11. An Illustrative Cap Built From a Target
M3 Allocation Without Payment Ch 33-45
  1. The Case for Giving Allowances Away, and Its Assumptions
  2. Grandfathering on Historical Emissions
  3. Benchmarking: Allocation per Unit of Output
  4. Setting the Benchmark Value
  5. Product Benchmarks and the Fallback Routes
  6. The Activity Level Report and Annual Updating
  7. Allocation Bands and the Step Change at the Edge
  8. The New Entrant Reserve
  9. The Cross-Sectoral Correction Factor
  10. Carbon Leakage Lists and Who Qualifies
  11. Compensating Indirect Costs Outside the Allowance Pool
  12. Output-Based Allocation Where There Is No Fixed Ceiling
  13. An Illustrative Benchmarked Entitlement Calculated
M4 Allocation by Sale Ch 46-54
  1. Selling Rather Than Granting: The Design Case
  2. The Auctioned Share and Its Trajectory
  3. Who Is Allowed to Bid
  4. The Reserve Price as a Statutory Soft Floor
  5. The Sale Calendar as a Supply Schedule
  6. Unsold Volume and What Becomes of It
  7. Earmarking the Receipts
  8. Splitting Proceeds Between Linked Jurisdictions
  9. Selling at a Fixed Price Instead of Auctioning
M5 Supply Adjustment and Price Containment Ch 55-65
  1. Why a Fixed Ceiling Produces an Unsteady Price
  2. A Rules-Based Reserve That Absorbs Surplus
  3. The Two Thresholds of a Quantity Trigger
  4. Cancelling Reserve Holdings Permanently
  5. Price-Triggered Release: The Cost Containment Reserve
  6. Tightening From Below: Withholding When Price Falls
  7. The Price Collar Argument and Its Assumptions
  8. Tiered Release and the Hard Ceiling Question
  9. Discretionary Intervention and the Credibility Cost
  10. Does Supply Adjustment Weaken the Target
  11. An Illustrative Reserve Trigger Walked Through
M6 Flexibility Built Into the Design Ch 66-76
  1. Banking: Carrying a Surplus Into Next Year
  2. Why Unlimited Banking Changes What a Cap Means
  3. Borrowing Against a Future Allocation
  4. Free Allocation Received Before the Obligation Falls Due
  5. Holding Limits on Participants Who Have No Obligation
  6. Vintages: Units Dated by Year of Issue
  7. The Multi-Year Compliance Period
  8. Letting Credits Discharge a Compliance Obligation
  9. The Credit Usage Cap as a Design Lever
  10. Qualitative Filters on Eligible Credits
  11. Requiring a Domestic Benefit From an Accepted Credit
M7 The Surrender Cycle Ch 77-87
  1. The Compliance Year From Emission to Discharge
  2. The Scheme's Statutory Deadline Chain
  3. The Verified Figure Becomes the Scheme's Number
  4. What Discharges a Surrender Obligation
  5. Missing the Deadline and Making Good Afterwards
  6. When the Verified Figure Is Later Corrected
  7. Conservative Estimation When a Report Does Not Arrive
  8. Selling an Installation Mid-Obligation
  9. Insolvency and the Orphaned Obligation
  10. True-Up at the End of a Multi-Year Period
  11. An Illustrative Compliance Year, Date by Date
M8 Enforcement and Penalty Design Ch 88-97
  1. Designing a Penalty That Does Not Become a Price Cap
  2. Indexation and the Real Value of a Sanction
  3. Publication as a Sanction
  4. Sanctions for Reporting Failure Rather Than Shortfall
  5. Suspending Access as an Enforcement Tool
  6. What the Early Fraud Episodes Taught Scheme Designers
  7. Criminal Liability and the Director's Exposure
  8. Appeals and the Operator's Remedies
  9. How Enforcement Design Sets a Floor Under Value
  10. An Illustrative Enforcement Case Worked Through
M9 Institutions and Oversight Ch 98-108
  1. The Competent Authority and What It Decides
  2. Splitting the Regulator's Roles Across Bodies
  3. Accrediting the Verifier as a Scheme Institution
  4. Who Watches the Accreditation Bodies
  5. The Registry Administrator's Place in the Architecture
  6. Independent Scrutiny of Primary Sales
  7. Classifying the Allowance Under Financial Regulation
  8. Market Abuse Rules Applied to a Compliance Unit
  9. Position Reporting and Transparency Duties
  10. What the Scheme Publishes and What It Withholds
  11. The Legal Nature of an Allowance
M10 Linkage, Leakage and Scheme Evolution Ch 109-119
  1. What Linking Two Schemes Actually Means
  2. Full Recognition Against One-Way Acceptance
  3. The Design Convergence a Link Demands
  4. Linking as a Regional Compact
  5. The Cap Arithmetic of a Linked Market
  6. Delinking and the Units Left Stranded
  7. The Leakage Argument and Its Assumptions
  8. Border Adjustment as a Leakage Instrument
  9. Border Adjustment Against Free Allocation
  10. Reforming a Scheme Without Breaking Trust
  11. Winding a Scheme Down
M11 Reading a Scheme Whole Ch 120-129
  1. Comparing Two Schemes on One Page
  2. Designing a Scheme From Scratch, Part One: Boundary and Ceiling
  3. Designing a Scheme From Scratch, Part Two: Issuance and Flexibility
  4. Designing a Scheme From Scratch, Part Three: Discharge and Sanction
  5. Diagnosing a Scheme That Has Gone Loose
  6. Where Architecture Predicts Price and Where It Does Not
  7. One Scheme's Mechanics Are Not Another's
  8. The Simplifications This Material Makes Openly
  9. What Scheme Architecture Cannot Let You Do
  10. Which Later Course Answers Which Question

The brochure gives each of these 129 chapters a paragraph on what it covers and what you can do once you have worked through it.

This is course 3 of twenty

It stands alone, and it is also the entry point to the Emissions and Carbon Desk Academy pathway.

Enrol or enquire See the whole pathway