Green House Gas - SO2 - NOx - Environmental Action
Natsource is proud to participate in all major environmental credit markets. These include the nationwide SO2 emission allowance market, NOx emission allowance market under the Ozone Transport Commission Budget Rule in the northeastern states, regional new source offset markets for NOx, VOC, CO, PM, ROG emission reduction credits, and the emerging greenhouse gas (GHG) reduction credit markets.
As in the other markets we serve, Natsource acts strictly in the role of introducing broker for emission credit transactions. We do not make principal transactions, so you are always seeing the best market pricing available. In addition, all terms and conditions of transactions are kept strictly confidential.
As the leading full service broker in the field, Natsource provides a comprehensive range of environmental brokerage services, including:
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Free consultation on emissions and emissions trading issues, if required, including assisting in the development of a risk management strategy. |
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Assistance with emission credit contract design. |
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Free monthly newsletter, Airtrends, with current market prices, activity and technical analysis of market behavior. |
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Trading and options seminars arranged at request of clients. |
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Custodial services arranged for clients that require complete anonymity in emission credit acquisition. |
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Coordination with federal and state regulatory agencies regarding interpretation of regulations regarding emissions credits, as well as assistance in activities related to source, quality and quantity verification. |
In a typical transaction, Natsource matches buyer and seller of emission credits and negotiates terms and conditions with both parties. Natsource discloses the counterparties to each other only after an agreement has been reached. Written confirmations are faxed to both parties within the hour after which buyer and seller contact each other to put a written contract into place.
Natsource can assist you in tailoring a variety of transactions to your specific needs, including:
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Immediate settlement transactions: The most common type of trade; follows the standardized terms
that payment for credits is to be made within 3 to 5 business days of the confirmation that credits have been transferred to the account of the buyer.
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Forward transactions: Forward transactions may either be structured as pay now (discounted) receive later or as pay later, receive later. The second transaction type is the most common; however they are often restricted to those with investment grade credit. Credit problems often may be solved through negotiation.
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Vintage Swaps: Swaps between vintages allow those with immediate needs to meet them without having to outlay or receive cash. These structures enable a utility or others to avoid capital gains or losses through the IRS treatment of this transaction as a "like kind" exchange.
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Options: At present the majority of options have been structured as European call and put options with expiration dates as far out as ten years. Other structures including zero cost collars, strangles and call spreads are also available.
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Inter-pollutant and Inter-commodity Swaps/Exchanges: We have structured numerous interpollutant credit swaps, including the exchange of NOx allowances for SO2 allowances and emission reduction credits (ERC) for SO2 allowances. We have also structured swaps of emission credits for other commodities such as coal or wholesale power.
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Nitrogen Oxide (NOx) Emissions Allowances and New Source Offsets (NOx, VOC, etc.)
Natsource is a leader in structuring a variety of credit transactions in the often complex NOx emission markets. Our efforts were recognized by the New England Power Pool (NEPOOL), which selected Natsource to conduct the first interstate auction of NOx credits for its members. Natsource also created the first public NOx credit price indicators.
The Ozone Transport region NOx allowance market has become the most liquid of the NOx markets, with live quotes available for vintages 1999-2002 and option structures available. Markets for discrete emission reduction credits (DERs) are available for several regions in the U.S. that have implemented open market trading programs.
ERC markets for NOx and other criteria pollutants are the most complex of all, with regulations that often differ from state to state. Natsource has used its regulatory expertise to develop a detailed primer on all types of NOx markets that is available on request.
Sulfur Dioxide (SO2) Emission Allowances.
The SO2 allowance market is the most developed and liquid of the environmental credit markets. With over $1 billion in transactions to date, we can assist you in developing a risk management strategy and tailoring a variety of transactions in the SO2 market to fit your specific needs.
Emerging Greenhouse Gas Emissions Market.
Not only does a global market for GHG emissions appear likely, but the potential rewards for smart players in the field are enormous. Natsource is committed to maintaining its leading position in the environmental markets and has dedicated staff working to structure GHG transactions.
While we anticipate the creation of a standardized tradable GHG commodity, the rules for what may "count" as an emission reduction for trading purposes have yet to be finalized, Natsource is assisting customers in building a "portfolio" of GHG emissions reductions, where credits vary in quality based on how they were generated, reporting procedures, and third party verification. In addition to quality provisions, in some transactions we are adding contingency terms to address the concern that credits may not be recognized under a mandatory program in the future.
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