Carbon credits excite foresters

By Mark Reynolds

A move by the Sydney Futures Exchange to set up a carbon credit trading market has forestry companies here excited.

Carbon credits are essentially financial market instruments that are generated by trees absorbing carbon dioxide. The credits can be used by industrial companies to offset carbon dioxide emissions from their plant and machinery.

A market in the credits is expected to develop as part of global moves to reduce carbon emissions under the Kyoto Protocol.

The Sydney Futures Exchange (SFE) and its subsidiary, the New Zealand Futures and Options Exchange, said yesterday that they had signed a memorandum of understanding with State Forests of New South Wales to develop the carbon credits market.

"By establishing an exchange-traded market for carbon credits before the Kyoto Protocol comes into force [in 2008-2012], the SFE can provide organisations with an early opportunity to lock in a financial position and secure a competitive advantage," said SFE head Les Hosking.

Bruce Maunsell, principal with New Zealand forestry company Greenplan, said his company planned to assist the Sydney exchange with its plans.

The market globally is estimated to be worth $US5 billion over the next decade.