Reference Material
Carbon Trading
New Zealand’s Emissions Trading Scheme (ETS) will impact a wide variety of businesses and its introduction has set new challenges for our economy.
New Zealand is the only country under Kyoto to include all six greenhouse gases (GHGs) and the only country outside the European Union to have an ETS.
Our scheme has some differences to Europe’s ETS. Until the end of 2012 - the main differences are business only have to offset half of their emissions and they have the option of paying a $25 per tonne tax (CAP) or seeking cheaper emissions elsewhere.
The New Zealand scheme has its own domestic emission unit – called a New Zealand Unit or NZU. All NZUs are backed by a government Assigned Amount Units (AAUs). The majority of our NZUs will come from carbon sequestration within forests and forest owners will be able to claim these carbon credits from the government annually. They can be sold offshore as AAUs or to local emitters who need to buy carbon credits to offset their footprint.
In addition to the ETS – New Zealand also has the Permanent Forestry Sink Initiative (PFSI) – this initiative seeks lock up forests permanently and the government also issues credits for annual carbon sequestration in PFSI forests.
At this point – the only unit that is priced under the CAP of NZ$25 is the domestic NZU – all other units are more expensive than the CAP or unable to be used – e.g. Hot Air AAUs.
We completed the first transaction under the ETS which was the first sale of Kyoto forestry credits in the world and we have executed several carbon transactions since. Carbon is a commodity to us and whilst it’s a politically created market (which has its influences) – carbon is subject to the normal forces like any market, something we have vast experience in.
OMFinancial can assist in all aspects of the transaction from seeking initial interest through to Term Sheet and Contract stage as well as facilitate settlement if required. We are regulated by the New Zealand Stock Exchange as well as subject to the Client Funds Regulations Act 1990 which safeguards and protects clients’ property.
These include many types of carbon transactions, such as:
- Spot & Forward Carbon purchases and sales – OTC and Exchange Traded
- Carbon Derivatives
- Aggregation
- Carbon Credit Comparisons
- Carbon Farming
We have access to local and global markets through our wholesale banking connections and the ability and expertise to formulate carbon strategies to suit both buyers and sellers of carbon credits.
Please contact our carbon team on +64 9 523 1166 or email us
Visit NZ Carbon Market for live pricing