APX-ENDEX has published a reference price index for certified industrial wood pellets since 2008, providing the market a valuable tool to increase price transparency. Typically, such wood pellets are used to generate renewable electricity for the overall European goal for renewable energy (20-20-20) together with others sources such as wind, solar, tidal, hydro and other renewable energy sources. As a natural step and at the request of the market, APX-ENDEX decided to be the first exchange in the world to launch exchange-traded certified wood pellet contracts.
“We are excited to take a leading role in the trading of green energy products and bringing transparency to the global biomass market based on certified sources guaranteeing sustainable sourcing. This will enhance the position of renewable energy and bring us closer to reaching the 2020 climate targets. We are also extremely pleased to work together with Port of Rotterdam on this, strengthening the position of the Netherlands and Rotterdam as an energy hub in Europe,” said Bert den Ouden, APX-ENDEX’s CEO after the new exchange was opened.
The biomass exchange, developed in cooperation with Port of Rotterdam, is being launched in two phases. The initial phase, launched last week, provides an opportunity to trade standardised, non-cleared products where the physical settlement is arranged bilaterally by the counterparties. Phase two, scheduled to take place during the course of 2012, will include the development and implementation of clearing services for wood pellets contracts, thereby providing further financial security to market participants. Based on discussions with market parties, APX-ENDEX has chosen to adopt several certification schemes for industrial wood pellets already used in today’s bilateral contracts in order to ensure that the wood pellets originate from sustainable wood sources. Industrial wood pellets are regarded as one of the most suitable alternatives for coal in order to meet the carbon dioxide emissions targets for 2020.
Contracts offered for trading include three months contracts, three quarters and three calendars. As with all the APX-ENDEX futures contracts, wood pellets contracts are listed on Trayport’s Global Vision.
APX-ENDEX currently has 125 memberships on its existing gas and power futures markets. The first trading members have joined the new wood pellets market and APX-ENDEX is in the process of signing up more members in the weeks to come, aiming to have a minimum of ten members joined the exchange by the end of the year.
“The Dutch government recognises the dual need for green and grey energy. With the opening of the Biomass Exchange and the existing gas and electricity exchanges, APX-ENDEX supports shaping the future energy system of this country and beyond. An effective exchange will contribute to the development of a healthy market for biomass and other renewables,” commented Maxime Jacques Marcel Verhagen, the Dutch Deputy Prime Minister and Minister of Economic Affairs, Agriculture and Innovation.
Alexandra van Huffelen, Alderman for Sustainability and Vice Mayor of Municipality of Rotterdam said: “I am proud that the Port of Rotterdam, partner in the Rotterdam Climate Initiative, is one of the initiators of this first Exchange for Biomass Energy. We see biomass as an important option to combat climate change and at the same time as an economic opportunity. Rotterdam has the ambition to be the bioport of Northwest Europe. As a port city we are aware that you need mass and volume to be effective. Sufficient supply of renewable and sustainable feedstock is an important factor for success. This is what makes the biomass exchange we are opening today so significant”.
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