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New Zealand's fledgling carbon trading market, TZ1, began to take shape yesterday with the announcement of former Vector boss Mark Franklin as chief executive.
Sharemarket operator New Zealand Exchange has been working on the new market for 18 months. Yesterday it handed the task of developing the carbon exchange over to Franklin and the TZ1 leadership team.
Franklin said New Zealand's strong green reputation, innovation and forward-thinking would help the exchange become a trusted international market.
He said TZ1 would be only the second exchange of its kind, after the European Union's emission trading scheme, making it second cab off the rank in the competition for trade.
As well as carbon credits, Franklin said he expected the exchange to grow to include rights to water and other natural resources.
However, Franklin wasn't making any predictions about the size of the new business. He said TZ1 would have "anything between four and 100" staff by the end of next year, with offices in Auckland, Wellington and overseas. He hoped the exchange would begin trading in mid-2008.
NZX chief executive Mark Weldon said a regulated and trusted market for carbon credits was essential for companies to manage their costs and future risk.
Credits sold on TZ1 would be third-party certified to ensure they met the requirements of domestic and overseas governments, and buyers would be able to check their certification on an electronic registry.
Weldon said it would not be workable for the credits to be classified as securities, because someone who had a certified scheme offshore or who had been issued credits by the government would have to issue a prospectus before they could trade.
TZ1 will cater for both the compliance market (businesses buying credits to meet legislative obligations) and the voluntary market (businesses or individuals choosing to buy credits to reduce their carbon footprint).
Franklin will be joined on the TZ1 leadership team by former Microsoft New Zealand managing director Helen Robinson, and by Joanna Silver, who last year established the Carbon Market Working Group of heavyweight companies.
He dismissed suggestions a change of government could derail the exchange: "New Zealand, as part of the world, could not afford not to do this. We will be dragged into it, whether we lead it or not."