Biomass Exchange launches in November

By Lisa Gibson | October 04, 2011

On Nov. 3, the world’s first biomass exchange will be launched from Rotterdam, Netherlands, by Energy Exchange APX-ENDEX (Amsterdam Power Exchange-European Energy Derivatives Exchange), in cooperation with the Port of Rotterdam.

As a response to market request, APX-ENDEX and Port of Rotterdam announced in July 2010 their intention to launch the world’s first exchange-traded industrial wood pellets contracts, according to APX-ENDEX. A joint market consultation study among market participants and other stakeholders revealed the growth potential of the industrial wood pellets market and the need for exchange traded biomass products.

“The trade platform is, besides standardize and certify products, indispensible to make energy generation more sustainable via the use of biomass,” said Hans Smits, CEO of the Port of Rotterdam Authority. “In the port area itself, we foresee a market of 2 to 3 million tonnes in 2025. Outside Rotterdam, demand will be many times larger. APX-ENDEX increases the chance that these flows will run via Rotterdam Energy Port.”

The commodities futures exchange program will be deployed in two phases, starting with physical settlements arranged bilaterally by the counterparties, allowing market participants to trade standard contracts in a transparent environment, according to APX-ENDEX. Over the course of 2012, clearing services for wood pellet contracts will be developed and implemented, providing further financial security to market participants.

A commodities futures exchange is an organized marketplace in which members can freely buy and sell commodities, and Gordon Murray, executive director of the Wood Pellet Association of Canada, said it has three main benefits. It creates liquidity in the market, allows stakeholders to observe instantaneous market price and provides price transparency. APX-ENDEX has published a reference price index for industrial wood pellets since 2008.

“This market will underline the importance of mobilizing all possible sources for achieving the renewables targets, in a competitive and therefore most cost-effective way—thus paving the way to a renewable energy supply at the best ratio between cost and benefits, both for the energy supply and the environment,” said Bert den Ouden, CEO of APX-ENDEX.