Westpac seeks to package foresters' carbon credits
Westpac Banking's New Zealand arm is seeking a leadership position in New Zealand carbon market trading now that the government appears committed to proceeding with the emissions trading scheme.
The bank announced this morning it has approached 600 forestry industry participants to "discuss the option of dealing their carbon credits through Westpac, who will then package them up to help large carbon-liable companies trade off their carbon credits," said Westpac's managing director of Financial Markets NZ, Lloyd Cartwright.
While there were brokers offering to trade Kyoto-compliant New Zealand Units (NZU's) created by the ETS, Westpac was the first trading bank to get involved in the emerging market, Cartwright told BusinessWire.
He was reluctant to discuss levels of demand as it was "early days", but said "we have done some trades".
The two greatest sources of risk for the bank were the price NZUs would achieve and regulatory risk of government policy changing.
"After (Environment Minister) Nick Smith's comments last week, I'm not as concerned about regulatory risk," said Cartwright, referring to Smith's reiteration that the ETS will commence as announced from July 1 to apply to stationary energy and transport fuels.
That was despite vigorous lobbying by business interests concerned that New Zealand is getting too far ahead of Australia, which has postponed its ETS-equivalent indefinitely while it waits for major economies such as the United States and China to commit to carbon reduction goals.
"Westpac is the first New Zealand bank to offer this service and the first major financial institution to get actively involved in the ETS, and the bank is the first intermediary to enter the market beyond simply offering a broking service," said Cartwright.
“This will provide the ‘missing link’ between smaller forestry companies with carbon credits on their books who are looking to monetise them now and corporate entities who need to acquire larger volumes of carbon credits to manage their liability,” he says.
"Through this process we’re able to foster the creation of an actual market price for NZUs.”
Westpac has been trading carbon products in New Zealand, Australia and European markets since 2006.
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