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How To Conduct A Carbon Trade.
Once a producer has prepared a package of what ERCs are
for sale there are a number of ways that a seller can enter into an ERC
trade.
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Make a direct offer to and contract with a buyer. The
seller can make offers unsolicited or through a
response to a buyers request for proposals. One of
the difficulties of this approach is that the package
of ERCs which will be attractive to buyers will most
likely be bigger than most Canadian producers can
offer individually.
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Contract through broker or aggregator. The seller
can contract to sell ERCs to a broker or aggregator,
or contract the broker or aggregator to sell his or
her ERCs as a package with others. This approach
has the potential to be more attractive to buyers.
Sellers will need to be comfortable with the services
offered by the broker or aggregator. In Canada some
corporations are emerging to provide brokerage
services and some producer associations at local
and provincial levels have considered providing this
function for their members.
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Spot and futures contracts. The producer will need
to determine together with the buyer, whether
ERCs of current vintage are to be traded (spot) or
future ERCs are to be traded. The contract, pricing
and risk sharing will be based on which of these or
both are to be included.
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Transaction Costs. The producer should be aware of
the costs of conducting a sale including legal costs,
verification and certification costs, insurance costs
(for non delivery of ERCs) and aggregation or brokerage
fees. All of these costs should be built in to
the ERC sale price.
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Competition. The seller will need to consider that
there will be competition in the market place to sell
ERCs and to buy them. The more informed the producer
is with respect to where the competition is,
market price, risk profiles for other ERCs, the better
chance the producer will have of negotiating a fair
price and shared risk with the seller.
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Registration. In Canada there will be a registry for
ERC trades which the seller or buyer will need to
report to once the transaction takes place.
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