Sydney Bourse, NSW State Forest To Create Carbon Mkt
8/31/99
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Title: Sydney Bourse, NSW State Forest To Create Carbon Mkt
Source: Nikkei America
Status: Copyright 1999, contact source for permission to reprint
Date: August 31, 1999
Byline: Diedre Sheehan, diedre.sheehan@dowjones.com
Nikkei English News via NewsEdge Corporation : SYDNEY (Dow Jones)--
The Sydney Futures Exchange and State Forests of New South Wales, a
government-owned forestry concern, said Monday they have agreed to
develop a carbon credits trading market by mid-2000.
Carbon sequestration credits are based on the idea that trees absorb
carbon dioxide from the atmosphere and, thus, can be used to offset
pollution.
The 1997 Kyoto protocol of the U.N. Climate Change Conference, which
has yet to be ratified, set legally binding targets for individual
country's emissions of carbon dioxide, or greenhouse gases. But it
also allowed countries with high emissions to buy carbon credits from
countries with lower emissions.
Governments are expected to set individual targets for companies
within their countries and those are likely to be met by carbon
credit trading, too, according to the SFE and State Forests.
"By establishing an exchange-traded market for carbon credits before
the Kyoto Protocol comes into force, SFE can provide organizations
with an early opportunity to lock in a financial position and secure
a competitive advantage," Leslie Hosking, the chief executive of the
SFE, said in a statement.
State Forests, which is owned by the government of the Australian
state of New South Wales, has been pushing for some time to set up a
carbon credits market in Australia.
Earlier in August, State Forests said that it is working with
privateely held Victorian Plantation Pty. Ltd. of Australia to
develop an accounting method for the carbon stored in trees that
could be used in a trading system.
In July, Japan's Tokyo Electric Power Co. (J.TER or 9501) agreed to
participate in a forest plantation project promoted by State Forests.
And last year, State Forests sold carbon credits in the form of 1,000
hectares of hardwood plantation to a state-owned electricity
generator, Pacific Power.
"I believe we will increasingly see the environmental benefits of
forests becoming their primary commercial asset," said Bob Smith,
chief executive of State Forests. "Similar environmental markets
could be established for the role of forests in salinity control and
land repair."
On the new SFE market, the carbon absorbed by forests that comply
with Kyoto protocol requirements would form the underlying commodity
traded. Each unit traded would be electronically serialized and
denominated in one metric ton of carbon dioxide equivalent.
Buyers could purchase these credits as a hedge in a future emissions
trading market, or bundle them with product sales to create
emissions-free products, the SFE said.