Assessor Resource

FNSFMK512A
Apply knowledge of emissions markets

Assessment tool

Version 1.0
Issue Date: May 2024


This unit applies to individuals who are engaged in the financial services industry, including advisers who provide advice on defined financial products in the emissions markets or other emissions market participants

This unit describes the background knowledge and understanding required and performance outcomes expected of a market participant in the emissions markets.

This unit is intended, to address the specialist knowledge requirements of those intending to operate in the emissions marketplace. This embodies that mandatory knowledge outlined in ASIC RG146 Appendix A2.11.

Note: this competency does not address the skills or the generic knowledge requirements in ASIC RG 146

You may want to include more information here about the target group and the purpose of the assessments (eg formative, summative, recognition)

Prerequisites

Not applicable.

Employability Skills

This unit contains employability skills.



Evidence Required

List the assessment methods to be used and the context and resources required for assessment. Copy and paste the relevant sections from the evidence guide below and then re-write these in plain English.

Not applicable.

Submission Requirements

List each assessment task's title, type (eg project, observation/demonstration, essay, assingnment, checklist) and due date here

Assessment task 1: [title]      Due date:

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Assessment Tasks

Copy and paste from the following data to produce each assessment task. Write these in plain English and spell out how, when and where the task is to be carried out, under what conditions, and what resources are needed. Include guidelines about how well the candidate has to perform a task for it to be judged satisfactory.

Required skills

communication skills to:

liaise with others, share information, seek advice and guidance

learning skills to maintain knowledge of changes to regulation, markets and emissions

research and analysis skills to:

identify economic influences, operations of emissions markets and characteristics of financial products traded in the regulated and voluntary markets

access and interpret legislation and regulation impacting on emissions markets and market operations

identify and interpret relevant information

analyse information and data relative to carbon markets

maintain currency of products and services knowledge

self-management skills to:

monitor and adapt to changes in compliance issues

Required knowledge

Understanding of the types of products and their characteristics:

analysis of the types of emissions units, and their characteristics (encompassing carbon units, Australian carbon credit units, and eligible international emissions units)

characteristics of emissions units including their status as personal property, and how they are typically derived from inception to the point of acquiring status as a financial product

risks associated with each type of emission unit, including rating, restrictions on their use, transfer, and bankability for future use

processes for acquiring, transferring and surrendering emissions units, including compliance with the requirements of the Australian National Registry of Emissions Units

Knowledge of the operation of regulated and voluntary carbon markets

geopolitical context of carbon markets including the influence of political and economic factors and corporate social responsibility

main participants in carbon markets, and their key objectives and participation behaviours as factors influencing market activity

emissions unit supply and demand factors and regulated price factors influencing market activity and prices

issue of carbon units via auction, and auction types

types of transactions in carbon markets, including transactions relating to the carbon pricing mechanism and in voluntary markets, and the function of financial markets facilitating such trading (including internationally)

potential trading strategies and their implementation in carbon markets (e.g. hedging and investment strategies)

risks associated with carbon markets, including liquidity, pricing, credit, operational, and regulatory risks

carbon market transaction documentation, including the types used for different types of counterparties and transactions, their key terms and conditions and advantages and disadvantages

Understanding of the regulated emissions legal environment—disclosure and compliance

domestic regulatory framework for the carbon pricing mechanism, including the role of the Clean Energy Regulator and the Australian National Registry of Emissions Units

domestic regulatory framework for the Carbon Farming Initiative, including the role of the Clean Energy Regulator and the Australian National Registry of Emissions Units

international regulatory framework for carbon trading, including the Clean Development Mechanism

relevant legal principles (e.g. Corporations Act, ASIC Act, Privacy Amendment (Private Sector) Act, Australian National Registry of Emissions Units Act 2011, National Greenhouse and Energy Reporting Act 2007, Carbon Credits (Carbon Farming Initiative) Act 2011, Clean Energy Act 2011)

the relationship between ethical and regulatory requirements (e.g. good faith, utmost good faith, full disclosure of remuneration/fees and any other conflicts of interest that may influence the adviser’s recommendation), and the application of these requirements in professional practice

relevant industry standards and codes of conduct

regulators’ guidelines, including our requirements in this policy

dispute resolution procedures (external and internal)

Understanding of the taxation obligations in the emissions market

taxation treatment of emissions units and taxation issues relating to emissions units

deductibility of costs associated with emissions units

The range statement relates to the unit of competency as a whole. It allows for different work environments and situations that may affect performance. Bold italicised wording, if used in the performance criteria, is detailed below. Essential operating conditions that may be present with training and assessment (depending on the work situation, needs of the candidate, accessibility of the item, and local industry and regional contexts) may also be included.

Emissions markets include:

Domestic and international carbon markets

Voluntary markets

Compliance markets

Emissions products include:

carbon units (issued by the Clean Energy Regulator under the Clean Energy Act) (ACUs);

Australian carbon credit units (issued by the Clean Energy Regulatory under the Carbon Farming Initiative) (ACCUs); and

eligible international emissions units (EIEUs).

voluntary environmental schemes

Participants include:

Liable entities

Financial intermediaries

Carbon farming project proponents

Speculators

Transactional processes include

Acquiring emissions units

Transferring emissions units

Auction processes

Registry processes

Surrendering emissions units

Transaction documentation

Regulatory

Organisation

Exchange-required

Market information includes:

Economic statistics and data

Government policy changes

Trading data, including pricing, liquidity and limits (market and credit)

Market standards and conventions affecting transaction sizes

Emissions market transaction purpose includes:

Hedging

Acquitting liability

Trading

Advising

speculating

Copy and paste from the following performance criteria to create an observation checklist for each task. When you have finished writing your assessment tool every one of these must have been addressed, preferably several times in a variety of contexts. To ensure this occurs download the assessment matrix for the unit; enter each assessment task as a column header and place check marks against each performance criteria that task addresses.

Observation Checklist

Tasks to be observed according to workplace/college/TAFE policy and procedures, relevant legislation and Codes of Practice Yes No Comments/feedback
Identify the domestic and international regulatory framework within which emissions reduction schemes are placed 
Identify the key legislation, regulation and industry codes of practice relevant to operating within Australian emissions markets 
Comply with relevant legal and regulatory principles when operating in emissions markets 
Discuss regulatory risk for both voluntary and regulated emissions markets and determine possible impacts of pending regulatory or legislative change 
Identify regulated and voluntary carbon markets and outline how they operate 
Distinguish the respective supply and demand drivers for voluntary and regulated markets 
Describe price drivers for emissions products 
Differentiate participants in carbon markets and the motivations for their participation 
Distinguish the functions of the primary and secondary emissions markets 
Discuss auction types and processes 
Describe the functions, requirements and rules for registries 
Compare the different types of emissions products available of emissions instruments traded in the compliance and voluntary markets 
Identify the key features of compliance market products 
Describe the risks inherent within each product and their potential impact in a given context. 
Describe transactional processes for each product, including acquiring, transferring and surrendering 
Describe the tax treatment of emissions products, including deductibility of costs where relevant 
Determine relevant market information influencing the market 
Analyse relevant information when selecting products for an emissions markets transaction 
Devise strategies for using emissions market products 
Seek advice and guidance of specialist expertise where required 
Apply knowledge of financial market transactional processes when operating in emissions markets 
Complete relevant documentation and complete any additional organisational processes 
Relevant emissions trading markets sources are reviewed regularly and any changes are applied in daily work 
Maintain professional competence in market knowledge in accordance with codes of conduct and/or organisational requirements 
Processes for maintaining up-to-date knowledge about relevant aspects of emissions trading markets are implemented 

Forms

Assessment Cover Sheet

FNSFMK512A - Apply knowledge of emissions markets
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Assessment Record Sheet

FNSFMK512A - Apply knowledge of emissions markets

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