Course 09 of 20 · Emissions and Carbon Desk Academy

Market Balances, Auctions & Price Drivers

Stage C, Price formation, hedging and procurement economics. Level 5 of 10.

Supply and demand balance construction, primary auction mechanics, and the drivers that set price formation.

124 chapters · 12 modules · every chapter one 8 to 10 minute explainer · builds on: Course 01, Course 03, Course 05

Enrol or enquire See the 124 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 · 124 chapters

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

M0 The Carbon Balance as an Instrument Ch 1-10
  1. Supply Set by Statute, Not by Geology
  2. The Balance Identity Under a Cap
  3. Fixing the Scheme Boundary Before Any Arithmetic
  4. The Compliance Year as the Accounting Period
  5. The Tonne of Carbon Dioxide Equivalent as One Unit
  6. Issuance Is a Flow, Holdings Are a Stock
  7. The Residual Term in a Capped Market
  8. What a Carbon Balance May Honestly Claim
  9. The Published Data a Carbon Balance Rests On
  10. Map of the Work Ahead on This Desk
M1 Constructing the Supply Side Ch 11-21
  1. Allowance Supply as a Policy Variable
  2. Counting the Auction Volume for One Compliance Year
  3. Putting Free Allocation Into the Supply Line
  4. Activity Level Changes and the Allocation That Follows Output
  5. The New Entrants Reserve as a Supply Channel
  6. Unsold Auction Volume and Where It Goes
  7. Offset and International Credit Limits as a Supply Entry
  8. Supply That Leaves: Cancellation and Voluntary Retirement
  9. Ranking Supply Channels by How Far They Can Move
  10. The Carbon Supply Table, Part One: The Entries
  11. The Carbon Supply Table, Part Two: Where It Can Be Wrong
M2 Constructing the Demand Side Ch 22-32
  1. Demand Is Verified Emissions, Not Consumption
  2. The Power Sector Entry and What Decides Its Size
  3. Industrial Emissions by Sector and Their Separate Rhythms
  4. Aviation Inside a Compliance Scheme
  5. Shipping Emissions and the Phase-In Problem
  6. A Separate Cap for Buildings and Road Transport
  7. Production Volume as the First Industrial Driver
  8. Carbon Intensity and the Tonnes per Unit of Output
  9. Hedging Demand Is Not Compliance Demand
  10. Investor Holdings as a Demand Entry
  11. The Carbon Demand Table and Its Weak Entries
M3 The Surplus, the Bank and the Link Between Years Ch 33-42
  1. The Cumulative Surplus and Why It Outweighs Any Single Year
  2. Measuring Allowances in Circulation
  3. Who Holds the Surplus and Why That Changes Its Behaviour
  4. Banking as the Mechanism That Joins Two Years
  5. The Banking Arbitrage Condition
  6. A Cap Is a Budget, Not an Annual Limit
  7. Borrowing: Where It Exists and Where It Does Not
  8. Front-Loaded and Back-Loaded Budgets
  9. The Surplus Trajectory as a Coherence Check
  10. What Changes When a Scheme Runs Short of Surplus
M4 Quantity Rules That Bend Supply Ch 43-52
  1. Why Schemes Added Quantity Rules After the Fact
  2. The EU Market Stability Reserve: The Intake Rule
  3. The EU Market Stability Reserve: Release and Invalidation
  4. The UK ETS Supply Adjustment Mechanism
  5. The UK ETS Cost Containment Mechanism
  6. The Regional Greenhouse Gas Initiative's Two Reserves
  7. California and Quebec: Reserve Tiers Above the Market
  8. New Zealand's Trigger Price and Containment Reserve
  9. Reading a Quantity Rule You Have Never Met
  10. Putting a Quantity Rule Into Your Supply Forecast
M5 Primary Auction Mechanics Ch 53-64
  1. What a Primary Allowance Auction Is For
  2. The Auctioneer, the Platform and Who May Bid
  3. Single-Round Sealed-Bid Uniform Price: The Common Design
  4. Building the Aggregate Demand Curve From Bids
  5. The Clearing Price and the Marginal Bid
  6. Partial Fills and Ties at the Clearing Price
  7. The Reserve Price and What It Does to the Outcome
  8. Reserve Price Designs Compared Across Schemes
  9. Undersubscription and the Volume Nobody Bought
  10. Current and Advance Auctions in the Linked Western Market
  11. The Auction Calendar and the Volume Profile of a Year
  12. When an Auction Does Not Happen
M6 Bidding Into an Auction Ch 65-74
  1. Admission: Becoming an Admitted Bidder
  2. The Collateral a Bid Ties Up
  3. Deciding What Share of Your Requirement to Bid For
  4. Choosing a Bid Price Against the Secondary Market
  5. Bidding in Tranches Rather Than at One Price
  6. Purchase and Holding Limits as Bid Constraints
  7. The Information Your Bid Leaks
  8. Between Clearing and Delivery
  9. Bidding Through an Intermediary
  10. A Worked Auction From the Bidder's Seat
M7 Auction Results as Market Information Ch 75-83
  1. Anatomy of a Published Auction Result
  2. The Cover Ratio and What It Does Not Tell You
  3. The Clearing Discount or Premium to the Screen
  4. Bid Distribution Statistics and Their Honest Use
  5. The Number of Successful Bidders as a Concentration Signal
  6. Building an Auction Result Time Series
  7. The Pre-Auction Price Pattern Argument and Its Assumptions
  8. Conduct Boundaries Around a Primary Sale
  9. The Standing Auction Monitoring Routine
M8 The Abatement Cost Anchor Ch 84-94
  1. Why a Capped Market Prices the Last Tonne Abated
  2. Constructing a Marginal Abatement Cost Curve
  3. Reading Somebody Else's Abatement Curve Sceptically
  4. Fuel Switching as the Clearest Abatement Step
  5. Computing the Coal to Gas Switching Carbon Price
  6. Why Switching Gives a Range, Not a Price
  7. When the Switching Lever Runs Out
  8. Industrial Abatement as a Capital Decision
  9. Abatement Not Available at Any Price This Year
  10. Short-Run and Long-Run Abatement Cost Are Different Anchors
  11. The Gap Between the Curve and the Observed Price
M9 Short-Run Price Drivers Ch 95-105
  1. Separating a Fundamental Move From Noise
  2. Gas and Coal Prices as the Dominant Daily Driver
  3. Electricity Demand and the Carbon It Pulls Through
  4. Weather as a Carbon Price Driver
  5. Renewable Output and the Tonnes It Displaces
  6. Nuclear and Hydro Availability as a Carbon Signal
  7. Industrial Output and the Economic Cycle
  8. The Surrender Deadline and the Seasonal Bid
  9. Free Allocation Timing and the Selling It Funds
  10. Utility Forward Selling and the Hedging Flow It Creates
  11. Correlation That Holds Until It Does Not
M10 Policy, Expectation and Positioning Ch 106-115
  1. Why Tomorrow's Rules Price Today
  2. Pricing a Proposal That Is Not Yet Law
  3. Scope Expansion and the Demand It Adds
  4. Linking Two Schemes and What It Does to Both Prices
  5. Free Allocation Phase-Out and the Buying It Creates
  6. Border Carbon Adjustment as a Price Driver
  7. Overlapping Policy and the Waterbed Argument
  8. Investment Fund Participation and Positioning Data
  9. Liquidity and Concentration as Price Influences
  10. Separating What Policy Has Done From What It Might Do
M11 Integration, Testing and Limits Ch 116-124
  1. Netting the Balance and Reading the Result
  2. A Worked Compliance Year, Part One: The Balance
  3. A Worked Compliance Year, Part Two: The Auction Programme
  4. A Worked Compliance Year, Part Three: The Price View
  5. When the Market Disagrees With Your Balance
  6. Backtesting a Carbon Balance and Logging the Miss
  7. Writing the Balance Note a Decision Maker Will Read
  8. What a Carbon Balance Cannot Do
  9. Where the Balance and Auction Thread Continues

The brochure gives each of these 124 chapters a paragraph on what it covers and what you can do once you have worked through it.

This is course 9 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