Reference Material
Carbon Trading
New Zealand’s emissions trading scheme is set to impact a wide variety of businesses and its introduction will create new challenges for businesses who are natural buyers and sellers of carbon credits.
New Zealand has made commitments to reduce greenhouse gas emissions under the Kyoto Protocol. The introduction of an Emissions Trading Scheme will see the nation’s main carbon emitters being held individually responsible for actively reducing their emissions. In doing so, these emitters will enable New Zealand to reach its Kyoto obligations. The New Zealand emissions trading scheme will cover emissions of the following greenhouse gases: carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride. New Zealand is the only country under Kyoto to include all six greenhouse gases (GHGs).
An emission unit can represent any of the greenhouse gases named above. A carbon credit (the most commonly traded being a CER – Certified Emission Reduction) is one kind of emission unit and relates only to one tonne of carbon dioxide directly. (CO2). New Zealand also has its own domestic emission unit – called a New Zealand Unit (NZU). Most of our NZUs will come from forests – forest owners will be able to claim these carbon credits from the government by measuring forest growth of post 1990 forests. These credits can be sold to local emitters who need to buy carbon credits to offset their carbon footprint.
The ETS focus is the compliance market – the scheme is compulsory and punitive for those who do not comply. The New Zealand compliance market involves the top 200 emitting companies who are continuing to emit Green House Gases (GHG’s) and therefore will be forced to either reduce their carbon footprint and/or buy carbon credits to offset their emissions. The sellers of carbon credits will include the likes of foresters and green progressive companies who are actively reducing their carbon footprint to well below their compliance levels or undertaking renewable energy projects that benefit the planet. All of these activities create carbon credits and these companies will be able to sell-off these credits to a carbon emitter or into the international market.
OMFinancial has clients locally and offshore who are emitters and creators of carbon credits. Our international connections into the global banking sector enable us to have access to the world of carbon trading. We can transact and execute Over-The-Counter (OTC) and exchange-traded carbon transactions involving futures, forwards and options.
We also have access, ability and expertise to formulate carbon strategies to suit both buyers and sellers and investors of carbon credits.
Please contact Nigel Brunel on +64 4 4990028 or nigel.brunel@omf.co.nz
Or visit www.nzcarbonmarket.com