ETS Summer University

ETS E-Learning Online Course

ETS E-Learning Online Course

ETS Online Course

Welcome to the course! These 22 course units provide comprehensive information on the theory, design, and operational considerations of emission trading systems.

The earlier units cover basic concepts, while the later units provide specialised information about their design and implementation. You are strongly encouraged to devise your own personalised learning path by completing the units that address your topics of interest. 

For instructions and more information about the course click here

Click on a unit below to be directed to the course description. You may then click on the title in the desciption to access the unit - no login required! 

The units with green text are available in multiple languages: English, French, Spanish and Chinese.

This e-learning platform was designed and implemented by the Ecologic Institute and Development Solutions, with funding from the European Commission. The individual units were authored by Lisa Zelljadt, Michael Gillenwater, Pedro Barata and Benjamin Görlach. The authors would like to thank the following language experts for guidance on the non-English versions of the course units: Ximena Aristizábal Clavijo, Cristián Retamal, Andrés Prieto Perez (Spanish), Emilie Magdalinski, Annabelle Vinois (French), and Guan Ziyu (Chinese).

Please note that Adobe Flash 10 or above may be required for online course content. To view the course units in your browser, it is best advised to use Internet Explorer.

 Unit 1 - Instrument Choice in Climate Policy: Theory and Practice

This unit reviews the various climate policy instruments to place emissions trading in context as one of many “tools” in the policy toolbox and covers the following topics:

  • Differences between policy types including economic/market instruments, “command-and-control regulation, persuasive (soft) instruments, and voluntary agreements
  • Quantity vs. price-based (cost-effective) mechanisms
  • Economic theories related to policy choice

 Unit 2 - Emissions Trading in the Policy Mix: Opportunities, Challenges and Policy Interactions

This unit compares ETS against other climate policy tools and covers the following topics:

  • The advantages and disadvantages of emissions trading
  • Which sectors make the most sense to include in an ETS
  • What role cost effectiveness plays

The unit also discusses interactions of policy instruments, such as emissions trading and renewable energy credits and discusses why an ETS is not a complete substitute for command and control regulation.

 Unit 3 - Establishing an Emissions Trading System: Design Elements and Choices

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This unit introduces emissions trading as a tool in a country’s emissions reduction policy framework and provides a basic introduction to the following:

  • Overview of ETS design
  • ETS coverage
  • Emissions baseline and setting the cap
  • Allocation of emission rights
  • Compliance and Measurement, Reporting, & Verification
  • Temporal flexibility
  • Price stabilisation options
  • Governance

 Unit 4 - International Climate Change Cooperation and Global Emission Trading

This unit presents a brief overview of international cooperation on climate change mitigation, discussing the United Nations Framework Convention on Climate Change (UNFCCC) and its Kyoto Protocol. It reviews the Protocol’s flexible mechanisms, which are

  • the Clean Development Mechanism
  • Joint Implementation
  • International emissions trading

and discusses the tradable emission units involved as well as how these mechanisms may evolve in the climate negotiations going forward

 Unit 5 - Emissions Trading in the European Union: Evolution and Experiences

This unit is geared towards understanding the main drivers and conditions behind the establishment of the EU ETS, its main features and lessons learned. Specifically, the following topics are explored:

  • Background: why the EU embraced emissions trading as a central pillar of its climate policy
  • Basic design of the EU ETS: legal basis, cap-setting, scope and coverage, allocation, offsets, compliance cycle, registry, and market oversight
  • Lessons from the implementation of the EU ETS
  • Outlook beyond 2020: Strengthening the EU ETS and building an international carbon market

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Webinar #2 in Online ETS Course Series on the Past, Present and Future of ETS
  • Moderator: Elizabeth Zelljadt (Ecologic) 
  • Guest Presenter: Damien Meadows (European Commission)


 Unit 6 – Emissions Trading Around the World


This unit profiles existing ETS in various countries and regions, highlighting their similarities and differences in their design elements and reasons for these. For each ETS examined, the unit provides

  • background and historical context
  • an overview of the main rules and relevant design elements such as scope and size of the programme
  • a “focus feature” unique to that particular ETS and its role

Learners are able to compare and contrast different approaches to emissions trading using real examples from programmes that are currently in operation around the world

 Unit 7 - Scope and Coverage

This unit focuses on the sectors and entities to which emissions limits are applied, discussing

  • Which sectors make sense to cover
  • What thresholds make sense in terms of entity size
  • Point of regulation: upstream vs. downstream coverage and its effects on number of actors and trading
  • Implications of expanding scope and coverage over time

This unit uses many of the ETS discussed in Unit 6 as examples.

 Unit 8 - Tools and Methodologies for Data Collection and Inventory Generation


This unit provides details on all aspects of monitoring, reporting and verification (MRV) of GHG emission and mitigation for an ETS. It begins with a general framework, explaining the purposes and goals of MRV, then presents in detail the following:

  • Different types and scales of inventories
  • Typical functions of MRV systems and resources needed
  • Specific examples of MRV from existing ETS

 Unit 9 - Allocating Allowances in an Emissions Trading System Part I: Basics


This unit explains the design options regulators have when deciding how to allocate allowances in an ETS, evaluating pros and cons of

  • grandfathering
  • benchmarking
  • auctioning

The lesson also discusses options for dealing with new entrants and closures, and looks at theoretical advantages and disadvantages of various allocation options.

 Unit 10 - Allocating Allowances in an Emissions Trading System Part II: Options, Implications and Experiences


Building on Unit 9, this unit contrasts theory with political realities regulators typically face when making allocation decisions. It covers

  • How to choose a particular allocation method for a particular sector
  • Specific options and challenges for new entrant or closure rules
  • Experiences with, and lessons learned from, allowance allocation in existing ETSs
  • Examples of auctioning formats and platforms in different ETS

 Unit 11 - Establishing a Functioning Registry: Standards and Best Practices


This unit covers technical details of registries in emissions trading systems, including:

  • What are registry accounts and who are registry users?
  • What is a transaction log?
  • What processes and transactions are recorded in a registry?
  • What are the units traded and tracked by a registry?
  • What are registries’ information technology needs?
  • What are the data security issues with registries

Basic examples from existing ETS are provided.

 Unit 12 – Monitoring, Reporting, Verification, Compliance and Enforcement


This unit details how to safeguard the operation of an ETS through MRV and enforcement by regulators. It reviews the importance of good compliance enforcement and provides details on the following:

  • Challenges in ensuring accurate MRV, particularly administrative capacity constraints
  • Involvement and coordination with third parties, including verifiers
  • Experiences with MRV and enforcement from existing ETS programmes

 Unit 13 - Developing Countries in the Carbon Market: Specific Challenges and Market Readiness


This unit discusses what makes a country “ready” for a carbon market and provides information on sources of support for building market readiness. It details aspects of market readiness, breaking them into

  • technical prerequisites, such as sufficient emissions data
  • regulatory prerequisites, such as institutional and legal infrastructure, and
  • socio-political prerequisites such as an economic environment favourable to market-based approaches

The second part of the unit provides descriptions of and links to major institutional sources of help in setting up capacity for emissions trading and other market-based climate change mitigation policies.

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Webinar #3 in ETS Online Course Series on Developing Countries in the Carbon Market: Specific Challenges and Market Readiness

  • Moderator: Elizabeth Zelljadt (Ecologic)
  • Guest Speaker: Duan Maosheng (Tsinghua University)

 Unit 14 - Administrative Structures for Emissions Trading: Ensuring Capacity for a Functioning Market


This unit describes what is needed to administer an ETS in terms of capacities and infrastructure, including:

  • regulatory needs such as technical regulations and guidelines
  • relevant staff, their background and expertise
  • the involvement of third parties, and how third parties are accredited and supervised
  • governance of carbon markets created by an ETS and how their operation is overseen

 Unit 15 – Carbon Market Dynamics

Limiting the right to emit GHGs and allowing entities to trade those rights creates a market for emission reduction allowances – this unit explains how that market works, detailing

  • What drives carbon prices - factors affecting demand and supply of allowances
  • Where and how is carbon traded – typical market participants and transaction types

The material in this unit requires some basic economics and may be challenging to those with no understanding of financial markets, but provides links to basic information in these fields. The material in subsequent units (especially 16 and 17) is based on the information laid out here, as regulators have a role in structuring the markets explained in this unit.

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Webinar #1 in Online ETS Course Series on Market Dynamics and Risks
  • Moderator: Elizabeth Zelljadt (Ecologic) 
  • Guest Presenter: Marcus Ferdinand (Thompson Reuters Point Carbon)

 Unit 16 - Balancing Supply and Demand: Addressing Uncertainty in Dynamic Markets

This unit looks at policies and ETS design elements that can help “manage” the carbon market discussed in Unit 15. These mainly involve influencing the supply of emission allowances and offsets. Topics covered include:

  • aspects of timing, including compliance periods and allowance auctions
  • quotas and price triggers for offset supply
  • the concept of allowance reserves to manage carbon price volatility
  • a detailed look at the EU’s Market Stability Reserve

 Unit 17 – Carbon Market Oversight

This unit looks at what regulators can do to prevent fraud and abuse of markets, either by external criminals or entities covered by the ETS programme. The material relies heavily on lessons learned from existing ETS and focuses on implementing rigorous surveillance and strict rules to

  • prevent crime and fraud in carbon markets
  • prevent market manipulation and abuse
  • ensure fairness and equal access for all participants in the market

 Unit 18 – Leakage and Competitiveness

This unit explains and addresses concerns that companies covered by an ETS are put at a competitive disadvantage compared to those in regions without similar climate change mitigation policies. It provides:

  • a basic understanding of the concept of carbon “leakage” and correlating competitiveness impacts
  • approaches for responding to leakage and competitiveness concerns
  • details of the EU approach to addressing carbon leakage

 Unit 19 – Stakeholder Outreach and Involvement

Introducing an ETS only works if there is some degree of political acceptance and conceptual understanding of emissions trading – all relevant stakeholders need to be informed about and involved in the process. This unit therefore covers

  • formats and approaches for successful stakeholder outreach and engagement, including experiences and best practices
  • the role of the media and an effective media outreach strategy

 Unit 20 - Corporate Strategies to Manage Compliance and Risk

This unit looks at various options companies have in complying with an ETS, in terms of trading and risk management. It reviews major risk management strategies associated with emission allowance trading, as well as types of transactions and relevant trading venues.

 Unit 21 – Legal and Regulatory Framework for an ETS

This unit looks at creation and operation of an ETS from a legal perspective for regulators, covering

  • The legal basis of an ETS under different governance systems – whether the programme is the result of an act of parliament, a presidential decree, a regulation from a government agency, etc.
  • The legal nature of allowances - how they are defined in legal terms for accounting and taxation purposes

Legal definitions are important not only for regulators who make the rules of an ETS on the basis of existing law, but also for entities subject to emissions limits with respect to proper accounting and tax reporting procedures.

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Webinar #4 in Online ETS Course Series on ETS - "Keeping it Legal"
  • Moderator: Elizabeth Zelljadt (Ecologic) 
  • Guest Presenter: Franz Litz (Litz Energy Strategies)


 Unit 22 – Linking ETS

This unit discusses linking separate emission trading programmes to each other in order to create a joint carbon market, assessing the associated challenges and constraints. The following topics are covered in detail:

  • Benefits and risks of linking carbon markets
  • Different forms of carbon market links
  • Conditions for linking
  • Examples of links among existing or planned ETS