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APX-ENDEX: World's First Exchange for Biomass Renewable Energy

APX-ENDEX, an Amsterdam-based energy exchange, launched today, 3 November 2011, the world's first exchange for biomass renewable energy. In practice, the exchange will propose trading certified wood pellet contracts.

"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."

The idea of a biomass exchange located at the Port of Rotterdam - which receives, handles and stores pellets - has been discussed for several years now. APX-ENDEX reminds that they launched the Industrial Wood Pellets price already in 2008. Today's announcement inscribes itslelf in its continuity and is only the first step of a project that will be completed in 2012 with associated services on the exchange:

"The biomass exchange, developed in cooperation with Port of Rotterdam, is launched in two phases. The initial phase, launched today, 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."

As reported by the Canadian magazine Biomass (article by Gordon Murray  HERE), the pellet producers were not initially well used to trade on exchange, and consequently not so enthusiastic as could be energy producers, used to trade by these means. But they would soon realise the benefit of "an open, liquid, and transparent market".

The sustainability of biomass is a core requirement, both politically and legally (see Directive 2009/28/EC) in order to develop biomass trade. As regards certification, APX-ENDEX writes that:

"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 CO2 emissions targets for 2020."

Another source of pellets market information consists in a project financed by the EU: PELLETS@LAS (HERE) .

References: Press release, APX-ENDEX, 3. november 2011.