What is CarbonSim?
Environmental Defense Fund’s carbon simulation tool (aka, CarbonSim) is a carbon market simulations tool that allows stakeholders to participate in a simulated process of designing or participating in an ETS. It is a low- cost and low-risk option for building capacity for policymakers and regulated companies. The experiential learning processes this simulation tool enable serves to increase ETS literacy, helps build support for ETS as a policy option, and illustrate how policy outcomes are a function of design. In addition, CarbonSim can allow different stakeholders to build relationships, mutual understanding and trust, which are key prerequisites for working together on policy design and implementation. More importantly, it provides stakeholders with a safe and risk-free opportunity to try out new ideas, make mistakes, and learn lessons which can speed the adoption of effective ETS.
Markets by Choice – Results by Design
Join us for a session of CarbonSim — a fun, Artificial Intelligence-enhanced, multi-lingual, multi-user, carbon trading simulation game. CarbonSim brings markets to life, teaches the principles of emissions trading, demystifies how to develop and implement a carbon portfolio management strategy, and demonstrates that results are driven by design. In this two-hour session you’ll play a round, collaborate with your peers, and maybe win a prize. Best of all, you’ll see why emissions trading system (ETS) stakeholders are excited about how this cutting edge simulation tool is helping them to better understand, appreciate the limits of, and advocate for environmental markets.
CarbonSim has been road tested by >3500 ETS stakeholders from 30 countries, including China, Mexico, USA, Australia,…
What Actually Happens in a CarbonSim Exercise?
CarbonSim participants manage virtual companies that are faced with an ETS-related compliance mandate – reduce emissions at the lowest possible cost. In the simulated carbon market, virtual companies from different industrial sectors manage carbon portfolios where they can reduce emissions using abatements (including efficiency improvements, process changes, fuel switches, or emissions controls) that are relevant to their particular sectors. Players can also participate in government-sponsored allowance auctions, exchanges, or OTC markets. Two different products are traded – government issued allowances and private sector-created offsets. Both abatements and market-related options have different capital requirements and returns.
The exercise will be run over the course of a few hours. It consists of a short survey (intended to assess baseline knowledge), a cap and trade/CarbonSim 101 tutorial followed by up to three virtual years (each of which takes 20 to 30 minutes), a lessons-learned/practical implications discussion, and a follow-up survey. Throughout the exercise participants will see how they are performing – both individually, in comparison to their colleagues, and as part of a system.
Participants will gain a better understand the unique characteristics, risks, and opportunities that are the hallmarks of carbon markets. They will come to understand that environmental and economic outcomes are a function of design choices.
Students and budding policymakers learn how the choices that they make – about both program design and administration – can affect the performance of the ETS. Industry carbon managers learn how to deploy a variety of strategies – involving production changes, the use of abatements, and trading – to satisfy ETS obligations. Investors can learn how their portfolio companies might be affected by exposure to a variety of ETS designs and the practical decisions that those companies will have to make.
CarbonSim Preparation Materials
Here are some resources that you that will help you prepare for the carbon market simulation session:
- World Bank Simulating Carbon Markets report (8 pages)
- CarbonSim glossary (10 pages)
- EDF CarbonSim portal
- CarbonSim videos (overview 0:54:07, open hand round 0:23.11)