Blockhill

Nick Lewis, who joined Celsias as chief executive and a big investor from smart meter company Energy Intellect, said Celsias would start its carbon credit creation system online early next year.

The system would enable people to calculate their annual carbon emissions and store that information securely online as a base emission line. Then, for every tonne of emissions the household was able to eliminate, a credit would be created. Lewis reckons each New Zealand household is responsible for about 8 tonnes of reducible emissions.

Celsias would then act as New Zealand's first retail carbon credit bank, allowing credits to be held in accounts until their owners wished to cash them in.

Carbon credits now trade at between $US10 and $US60 ($15-$90), so savings on petrol from car sharing, cutting electricity use, and paying for fewer plane tickets would provide a much bigger return for families - although curtailing their lifestyles.

But many predict that as the world moves to tackle climate change, carbon credits could escalate in value dramatically, which has fund managers rubbing their hands in anticipation.

"Look at the overall macro picture and the countries that have signed the Kyoto Protocol," Lewis said. "They need to get back to 1990 emission levels so the world will be short on carbon credits. I believe the value will go up as we enter a shortage period."

But as an investigation by Sunday Star-Times showed last week, systems calculating household emissions - even those operated by government-owned agencies - can produce bewilderingly different results.

When the same data was entered, the CarbonZero calculator operated by Landcare Research reported households were emitting twice as much carbon dioxide compared to results calculated by Niwa, the National Institute of Water and Atmospheric Research.

The great disparity in the value of credits trading on exchanges such as the Chicago Climate Exchange reflected several factors, including the fact that not all carbon credits were created equally, said Lewis.

Credits created through dodgy schemes will be worth less than those created by the planting of permanent forests, for example, because they carry the risk that credits will be revealed one day as bogus.

Lewis acknowledged the success of ventures such as Celsias will depend on a worldwide set of accounting standards so the creation of carbon credits can be audited to reduce their fraudulent creation, or forging.

Lewis said the firm, which is being developed primarily for businesses in the US to manage their emissions, was talking to auditors on this front.

For households interested in creating carbon credits, profiting from them, or aiming to become carbon neutral - a term for those who offset their emissions by planting trees - there may be better ways of going about it.

The CarbonZero project by Landcare allows households to achieve carbon neutrality - on paper at least - by calculating their annual emissions and paying a sum towards bush regeneration in New Zealand.

For example, my household produces roughly 800kg of carbon dioxide emissions a month -which would cost us monthly payments of $212.14 to claim carbon neutrality. But with one pair of return flights to the UK to see family, monthly CO2 emissions rise to just over 1500kg a month, and an offset monthly contribution of $401.48 throughout a year.

There are no carbon credits available to households, and fewer than 50 have opted to go carbon neutral.

The carbon credits created by CarbonZero do not belong to those paying for the regeneration, but to the landowners.

For those wishing to create credits they own, forestry investments offered the most likely option, said Roger Dickie from the NZ Forest Owners Association. But for that to happen, the government needed to reverse its policy of claiming all credits created by private forestry planting.

Dickie said such a U-turn was expected and that in the future, returns on private forests would include the value of the carbon credits they created, although that could have big implications for the way profits were made.

Permanent carbon credits required forests to be left intact for 99 years, but selective harvesting could result in the creation of slightly less valuable but still profitable credits, he said.

One attractive element of credits on forests was that they could be cashed in at any time. On a Douglas fir forest taking 25 years to mature, that meant ready cash more rapidly than forestry owners have been used to.

Janine Starks of fund manager Liontamer said retail investments tracking the carbon credit market had started in Europe, and the firm was monitoring their progress with a view to one day introducing similar products here.