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(e.g. growing trees). Participation in theETS due to ‘emissions removal’ activitiesis voluntary and allows participantsto potentially sell the units they havegenerated for a profit.Units are held in an account in theparticipant’s name via an onlineregistry and all transfers in and out ofa participant’s account are recorded.A security interest may be registeredon the PPSR against a participant’sETS account.Units are tradeable on the commercialmarket domestically as well asinternationally (subject to certainrequirements). The price of carbon(i.e. the average price of a unit) willtherefore be determined by supplyand demand.The Climate Change Response Act2002 contains significant penalties forfailure to comply (including criminalconviction and potential imprisonment).The offences are strict liability andtherefore it is important to be awareof ETS obligations if you are engagingin an industry where participationis mandatory, to ensure you do notinadvertently breach that Act.The New Zealand ETS (unlike schemesin some other jurisdictions) is designedto cover “all sectors, all gases”. Entryinto the ETS for each sector isstaggered:26