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Sydney, New South Wales (NSW)Asia Pacific’s carbon market hub

Key reasons to set up in Sydney

Sydney is Australia’s commercial and financial services capital and Australia’s platform for business engagement with Asia, Europe and the US.

Sydney is already the centre of the world’s second largest carbon market with growth opportunities unmatched anywhere else in the world.

The world’s second largest carbon market

The CPRS covers 75 per cent of Australia’s greenhouse gas emissions including the stationary energy, transport, fugitive emissions, industrial processes, waste and forestry sectors. Australia emitted a total of 576 million tonnes of CO2 equivalent in 2006.

With this volume of potential trade, the CPRS establishes new and sustained demand for carbon market services, and compelling opportunities for early investors.

The CPRS will create opportunities in specific sectors:

•Corporate finance, project finance and accounting

•Carbon advisory services and consulting

•Carbon asset management

•Trading and brokerage services

•Legal services

•Monitoring, reporting and verification

The CPRS is linked with CDM and linked with Asia

Emitters can import unlimited quantities of Kyoto-recognised units, except for Assigned Amount Units. Australian emitters will demand a range of abatement options and will look to Clean Development Mechanism (CDM) opportunities as well as domestic abatement and permit trade.

Australia will become the second major global market for compliance buyers of CDM credits after Europe. Combine this CDM demand with domestic abatement and it is clear that Sydney is firmly positioned as the newest growth market for the world’s carbon service industry.

It is time to set up in Sydney and capitalise on the carbon market opportunity.

Australia’s emissions trading scheme – the Carbon Pollution Reduction Scheme (CPRS) – will create major opportunities for carbon business investors.

Australia’s Emission Profile

Transport

Industrial Processes

Agriculture

Waste

Land Use Change

Fugitive Emissions

Forestry

-50 0 50 100 150 200 250 300 350

StationaryEnergy

Australia's Emission Profile (Mt CO2 e)

The world’s second largest emissions trading market

The CPRS will be the world’s second largest emissions trading market, with a scheme that covers 75 per cent of Australia’s greenhouse gas emissions. Based on Australia’s most recent emission profile, the CPRS will cover approximately 450 million tonnes of CO

2 equivalent.

With Sydney as your base, you will be located in a city with an economy larger than the national economies of Singapore and New Zealand. There are immense opportunities currently available – particularly to first mover carbon market businesses.

1. Source: United Nations Framework Convention on Climate Change,

Expected average annual CERs by Host Party, May 2009.

Source: Department of Climate Change. National Greenhouse Gas Inventory 2006.

Sydney is your platform into Asia

Australia’s emissions trading scheme is designed to link with international markets, including Clean Development Mechanism (CDM).

The credits generated by CDM will be accepted for compliance in the CPRS.

China and India account for 70 per cent of transactions under the CDM and Sydney enjoys strong trading links with both these countries. These two nations produce over 200 million Certified Emission Reduction credits each year1.

Almost one-third of people living in Sydney can speak a non-English language. The depth and breadth of Asian languages enables companies to service multiple CDM projects from a single Sydney office.

The continued development of the Asia-Pacific will underpin the region‘s role as a major generator of carbon credits in the medium and long-term. Setting up now in Sydney is the perfect way to capitalise on this opportunity.

Case study: Emergent Ventures India (EVI)EVI helps companies maximise their Carbon Value by implementing Greenhouse Gas Management plans and going Carbon Neutral, thus minimising business risks stemming from climate change. In 2009 EVI set up in Sydney. EVI now assists large emitters in Australia by linking them to CDM projects around the world. They also assist service companies to enter into the voluntary offset market.

When EVI examined the Australian market it partnered with the Department of State and Regional Development. Department representatives met EVI in India and helped the company undertake a site visit to Sydney. The Department provided information on the Australian industry and arranged meetings with potential clients. By assisting the company to develop its client-base, the Department helped EVI to set up and win business.

EVI had been examining the Australian market for some time. Working with the Department of State and Regional Development helped us progress the investment and set up our presence in Sydney. Vinod Kala, Managing director, eMergent Ventures india

The NSW Government makes it easy for businesses to access Australia’s carbon market. The Department of State and Regional Development provides free services to investors. An investment manager can work one-on-one with your company and help you set up in Sydney quickly and efficiently.

There is a consummate range of assistance available for all businesses, whether they are scoping the market for the first time or looking to execute their market entry.

Stage of investment Service available

Scoping opportunity Information and data benchmarking Sydney against other locations

Advice and market data to assist your business plan

Coordinating a market visit for your business

Introduction to potential business partners in Sydney

Market Entry Access to meeting facilities in Sydney so you can meet with potential clients

Advice on regulation, including how to register a business in Australia

Introduction to property agents, recruitment specialists and universities

Introduction to service providers such as management, legal and financial service firms

Services are tailored to the needs of each project. Additional forms of assistance are available on a case-by-case basis. The NSW Government can help you take advantage of the significant emerging opportunities in Australia and Asia. It can help you to set up in Sydney, connect to these markets and help your business to grow.

The NSW Government – getting you into the market

To get started contact us on:

Email: carbontrading@business.nsw.gov.au

Tel: +61 2 9338 6765

www.business.nsw.gov.au/carbontrading

Sydney’s timezone allows European and American companies to follow the sun

Sydney’s business day overlaps with the opening of London and the close of New York markets. This offers ‘follow-the-sun’ opportunities that no other global location can match. Carbon market firms can set up joint operations in London and Sydney and service the global market.

Sydney has traded emissions since 2003

The NSW Government introduced the Greenhouse Gas Abatement Scheme (GGAS) in 2003. This has established Sydney as Australia’s centre for carbon and environmental market skills. GGAS remains the world’s second largest carbon market after the European Union Emissions Trading Scheme.

Sydney is home to a cluster of sectors that have several years of carbon trading experience. These include energy, financial services, legal services, advisory services and accountancy.

Sydney is also home to other energy and environmental markets

Sydney is home to a dynamic trading market in renewable energy certificates (RECs). Electricity retailers are legally mandated to source a percentage of electricity sales from renewable energy.

By 2020, 20 per cent of Australia’s electricity supply will be from renewable energy sources, up from 7 per cent now.

The Australian Securities Exchange (ASX), Sydney Futures Exchange, also offers a liquid market in electricity futures and options. Turnover in this market equates to 142 per cent of electricity system demand in the national electricity market. ASX is introducing futures and options trading on RECs, AEUs and CERs.

Timezones covered by Sydney’s working day

Emissions and renewable energy trading schemes are not new to Australia. The market infrastructure is in place for carbon businesses to manage their price and counter-party risks.

Leveraging Sydney’s strengths as a finance centre

Australia has what is widely considered to be the most sophisticated financial sector in the Asia-Pacific region, underpinned by a world-class regulatory system.

As Australia’s finance capital, Sydney has the talent, expertise and infrastructure in place to build a carbon market industry.

Australia’s financial markets are well serviced by existing over-the-counter trading infrastructure, exchange-based trading mechanisms, clearing houses and settlement services.

Australia has the second largest stock market (free-floating market capitalisation) in Asia – more than double the size of Hong Kong and more than four times that of Singapore. The ASX also operates the largest futures market (by notional value traded) in the Asia Pacific, the Sydney Futures Exchange.

Australia has the fourth largest pool of funds under management in the world. Sydney is the headquarters for 80 per cent of foreign and domestic banks in Australia.

Sydney’s financial services workforce is half that of London and one-third that of New York. The workforce has particular expertise in commodities trading and asset management.

Sydney’s quality of life is unmatched. The city is a great location for businesses and expatriate staff, offering political stability, good amenities, high levels of safety and health care.

Sydney ranks in the top 10 of 215 cities reviewed in the 2009 Worldwide Quality of Living Index compiled by Mercer Human Resource Consulting.

The market is easy to access

Registering a business in Australia is simple, with only two procedures required. In 2008, the World Bank ranked Australia as the most efficient country in the world to start a business.

Australia’s straightforward regulatory system means it is easy to establish a new carbon trading business in Sydney. It is even easier to access the market by contacting the NSW Government and taking advantage of investment facilitation services.

Asian language speakers in Sydney

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18,205

Korean35,943

Hindi36,982

Mandarin96,704

Cantonese125,292

Companies are winning business in Sydney’s carbon market

Australian Securities Exchange Group (ASX) is one of the world’s top 10 listed exchange groups, measured by its market capitalisation. It is headquartered in Sydney. ASX is introducing a new environmental product suite to be delivered via its existing contemporary trading, clearing, and settlement infrastructure. ASX is planning to introduce a futures and options market for carbon pollution permits and fungible credits prior to the commencement of Australia’s CPRS.

Westpac’s headquarters are in Sydney. Westpac is recognised as a global leader in sustainability and managing the challenges of climate change with first hand experience trading in existing carbon markets. Westpac has been trading in the European Union Emission Trading Scheme since 2006 and participated in the first trade of permits under the forthcoming Australian Carbon Pollution Reduction Scheme in May 2008.

Macquarie Bank The Macquarie Group is an active trader of emission allowances and originator of carbon credits in international environmental markets in addition to providing advisory services to help organisations source and acquire investment opportunities presented by climate change. Regionally, Macquarie provides risk management products to Australian and New Zealand companies to help them manage their price and compliance risk arising from obligations under their respective emission trading schemes. Macquarie’s trading and marketing activities in the Asia Pacific region are headquartered in Sydney.

Lloyd’s Register Quality Assurance (LRQA) is part of the Lloyd’s Register Group. It was established in the UK in 1985 and has 41 offices world wide. LRQA can provide verification and validation reports for emission reduction projects under Kyoto Protocol for Clean Development Mechanism (CDM) and Joint Implementation (JI), ISO 14065 and the Voluntary Carbon Standard (VCS 2007). LRQA also certifies organisations globally to ISO 14001.

Source: ABS, 2006 Census of Population and Housing.

AllensArthurRobinson • • • • • • • • • ANZBank(CarbonTradingSolutions) • • • • Arkx • Arup • • • • AustralianSecuritiesExchange(ASX)Energy&Environment • • • Baker&McKenzie • BlakeDawson • CarbonCareers • CCRC,UNSW • • CEEM (Centre for Energy & Environmental Markets University of NSW) • •

CitiBank • • • • ClaytonUtz • ClimateFriendly • • • CommonwealthBank • • • • Deacons • DeloitteToucheTohmatsu • • • • DeutscheBank • • E3EnvironmentEconomics&Ethics • • • • • • Energetics • • • Envex • EnvironAustralia • • • • ERM • • • • Freehills • GHDPtyLtd • • • GreenAirgroup • • IBMAustralia • • • • KPMG • • LeafCarbon • • • LloydsRegister • MacquarieGroup • • • • • • MerrillLynch • • • MinterEllison • nabCapital • • • • NetBalanceManagement • • • NewForests • • • Newedge • • NextGenerationEnergySolutions(NGES) • ParsonsBrinckerhoff • PereniaCarbon • • • • • • PricewaterhouseCoopers • • • • • • • • SahaInternational • • • • • • SKM • • • • • TFSBrokers • • • • • • ThomsonReuters • • URSAustralia • • Viewlocity • • Westpac • • • • • •

Carbon Market in Sydney: at a glanceA cross section of companies

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Source: Department of Environment and Climate Change (NSW), representative group of institutions with a major presence in Sydney

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New South Wales Government Department of State and Regional Development

PO Box 5477, Sydney, NSW 2001 Australia Tel: +61 2 9338 6765 Email: carbontrading@business.nsw.gov.au

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