New carbon investment fund
Feeling bad about that petrolguzzling car or recent longhaul flight? There could soon be an easy way to offset your carbon usage — and make money from it.
A New Zealand investment company is set to launch what it says is the first carbon fund in the world and hopes to list it on the local stock market next month, opening it up to mum and dad investors.
The fund, which is being set up and managed by Salt Funds Management, intends to buy carbon credits in emissions trading schemes in New Zealand and offshore.
New Zealand’s emissions trading scheme was set up in 2008 in a bid to reduce greenhouse gas emissions as part of the Kyoto agreement.
Those who produce emissions must surrender a unit or pay the Government for every tonne of emissions they make, while greenhouse gas absorbers such as forestry businesses can earn credits.
New Zealand has committed to reduce emissions to 30 per cent below 2015 levels by 2030 as part of the Paris deal.
Paul Harrison, managing director of Salt Funds, said the fund would give investors a new alternative asset class which could give individuals and organisations a chance to invest in or offset carbon.
“The global economy is in transition and the price of carbon is becoming an important factor for investors; as a cost, as an influence and now as an investment opportunity,” Harrison said. The fund launch comes amid a global focus on tacking climate change and moves by the New Zealand Government to tackle obligations here. Harrison said New Zealand was currently not on track to meet its obligations and Treasury had forecast a liability of between $14 billion and $37b over 2021 to 2030. He also pointed to a report released by the Productivity Commission in August which called for the emissions price created through the New Zealand emission trading scheme to rise significantly over the next three decades.
The Government is currently reviewing submissions on its Carbon Zero Bill, in which it hopes to achieve net-zero emissions by 2050.
But the Salt Funds carbon fund, which has yet to get sign-off from regulator the Financial Markets Authority, is not for the faint-hearted.
It carries a level seven risk-rating — the highest risk rating for a managed fund — meaning it is likely to be more volatile than investment in equities and property.
The fund’s product disclosure statement also warns that the price of carbon credits can be affected by weather, fuel switching and storage and public sentiment as well as changes in the laws, regulations or rules regulating the New Zealand emissions trading scheme.
The carbon fund is set to open for investment on October 23 and list on the NZX on November 8.
It will have a minimum investment of $5000. It is not currently seeking money.