The market requires environmentally credible verification or certification processes. Photo / Getty Images
TZ1, the carbon market arm of sharemarket operator NZX, is to be part of an international network enabling firms to access and trade offsets for their greenhouse gas emissions.
It is one of four global registries for Voluntary Carbon Standard (VCS), the most popular of the standards in
the voluntary carbon market.
The voluntary market, distinct from regulated or "compliance" markets like the Government's planned Emissions Trading Scheme (ETS), allows companies to buy carbon credits either to trade or to retire in order to cover their carbon footprints.
While it is much smaller than compliance markets like the European ETS or Kyoto's clean development mechanism market, it is growing fast.
TZ1 says over-the-counter trading in the voluntary market last year was worth US$258 million ($340 million), a four-fold increase on 2006. When transactions on the Chicago Climate Exchange are included turnover was US$330 million.
The market requires environmentally credible verification or certification processes and registries which can provide a transparent provenance for every parcel of units. Nearly a third of the credits traded arise from renewable energy projects. The rest are about evenly divided among forestry-based, landfill and energy efficiency projects.
TZ1 chief executive Mark Franklin expects growing demand from exporters which want - or need - carbon neutral credentials.
The fact that some of their input costs, like electricity and transport fuels, would include a carbon cost under the ETS would only get them part of the way to that status.
More than half the turnover on the voluntary market last year was in Europe which has had a compliance market up and running for three years.
The other three registries in the VCS system are the bank of New York Mellon, the French bank Caisse des Depots and US-based market infrastructure firm APX.
