TZ1 asserts that New Zealand has a fantastic opportunity to stake a leadership position in climate change response. A robust scheme and an international unit is a good start.

"Designing the New Zealand Units so they are backed by globally traded Kyoto credits is very important. Not only does it help from a pricing perspective for companies, it also helps to ensure New Zealand's carbon market can be truly international and deliver the benefits the NZETS is designed to achieve," said TZ1 Programme Director Joanna Silver.

"It is well accepted that a transparent, regulated and healthy carbon market is a vital tool for ensuring that an emissions trading scheme delivers its ultimate objective - to reduce greenhouse gas emissions. Only by delivering transparent pricing of carbon on both spot and forward markets, can companies be equipped to make decisions on how they will invest in technology, plant and equipment for the future. This is how the real emissions behaviour changes happen," said Ms Silver.

"In addition a regulated market, with purpose-built technology, will deliver lower search and transaction costs and significantly reduced risks in settlement. TZ1 will deliver these for New Zealand companies when it commences operations in 2008," said Ms Silver.

Infrastructure matters. Longer term, markets endure because they have the technology, regulatory structure and liquidity that attract international participation. Carbon markets are no different. Participants go where they can trust the information and manage their risk.

"They also go where there is an international brand they can trust. New Zealand is a Kyoto signatory, we have a great environmental brand, and we now have the framework for a domestic emissions trading scheme that will connect to the broader international market," said Ms Silver.