Magazine article New Zealand Management

JUST GOOD BUSINESS POLICY: We Have Lift-Off

Magazine article New Zealand Management

JUST GOOD BUSINESS POLICY: We Have Lift-Off

Article excerpt

Byline: Adelia Hallett

New Zealand has a greenhouse-gas emissions trading market. As this issue of NZ Management went to press, news broke of the sale of the first New Zealand credits (called NZUs), and others are in the pipeline.

The trade is significant not only in New Zealand, but also globally; itCOs the first sale of credits under an emissions trading scheme outside Europe, and is believed to be the first sale of forestry credits anywhere in the world.

The 50,000 units represent 50,000 tonnes of carbon sequestered in New Zealand forests.

They sold at $20 a tonne Co a 20 percent discount on the international price of offset credits from emissions-reduction projects in developing countries, known as certified emissions reductions, or CERs.

This is not surprising, given that NZUs can be used only in New Zealand (unless they are converted to Assigned Amount Units, or AAUs, which requires regulatory approval), and the New Zealand market lacks the liquidity and fungibility of international markets.

Details of the buyer and seller are being kept confidential, but trader Nigel Brunel, of OMFinancial, told NZ Management it was a New Zealand buyer. ItCOs possible the units have been bought by a speculator, but it is more likely that it was a large industrial emitter keen to start building a portfolio of credits against the time when the company has to start surrendering credits to offset emissions.

The sale is a reminder that, despite perceptions, New ZealandCOs emissions trading scheme is in force.

The scheme, brought in late last year by the Labour government with the support of the Greens, New Zealand First and the Progressives, is being reviewed by a special select committee as part of a confidence and supply agreement between the National and Act parties. However, the new Government stopped short of suspending the scheme, as it originally intended, which means the scheme is live. …

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