Isramart: Aust interest in NZ carbon credits

Isramart news:
The implementation of the Government’s emissions trading scheme (ETS) at the end of this month means that companies will be able to generate carbon credits to be sold domestically or overseas, says the chairman of a Maori commercial development company working with an Australian operator.

Tukia Group chairman Lennie Johnson said he had formed a partnership with New Zealand-based investment and advisory firm Carbon & Energy Partners (CEP) and with Australian environmental services company CO2 Group Ltd, which will hold a 45 percent stake in the venture .

“CO2 New Zealand will now be able to generate carbon credits in the form of NZUs and Assigned Amount Units (AAUs),” said Mr Johnson.

New Zealand is the only country under Kyoto to include all six greenhouse gases in its ETS, and all NZUs are backed by a government “assigned amount unit” (AAUs).

Most of the NZUs being offered for trade are coming from carbon sequestration — the capture of carbon to mitigate global warming –in forests and forest owners are able to claim these carbon credits from the Government annually, and either sell them offshore as AAUs or to local emitters who need to buy carbon credits to offset their footprints.

“We will invite investment from our partners and capital markets into carbon projects here in NZ. These projects will be developed on behalf of investors who require significant volumes of carbon credits in order to meet their compliance obligations,” said Mr Johnson.

CO2 Group said its expansion outside Australia allowed it to extend its commercial footprint into international carbon markets, and its chief executive Andrew Grant said a key feature of the ETS was the ability to generate and sell carbon credits into the international carbon market.

Traders today said the local carbon market was continuing to grow in size, interest and activity in the run-up to the start of the ETS on July 1.

“All the trading we have seen this week has been in spot NZUs and in the $17 range,” said local trader OMF Financial on its website. Support this week for the NZU credits had moved from a per-tonne price in the low $17 range to the mid-$17, and there was talk of small forward trades at $1 more.

Demand appeared to be greater than available supply at this stage, but there was not expected to be much forward trading as sellers were risk-adverse about selling credits they did not yet have or were not yet able exactly account for.

New Zealand’s emissions traders recorded their first NZU carbon credit transaction in March last year — 50,000 tonnes of 2008 NZUs traded at $20 a tonne. It was the world’s first sale of Kyoto forestry credits.