The demand for biomass as a renewable raw material has increased further in recent years due to more stringent requirements for climate protection. Wood-like biomass in particular is in increasing demand as a fuel for power plants. In order to bring more system into the biomass trade, Europe's first biomass exchange will open on November 3rd in Rotterdam. What opportunities does the biomass exchange offer and what does it mean for the biomass trade?
Trading opportunities at the biomass exchange in Rotterdam
The Biomass Exchange in Rotterdam is a joint project of the electricity and gas exchange APX-Endex and the largest port in Europe in Rotterdam.
The development of the biomass exchange and the trading of biomass are to be developed in two phases. In the first phase, there will only be the possibility of direct trade in biomass between two parties (buyer and seller), in which the biomass can change hands under transparent conditions.
In the second phase, which is due to start in 2012, the biomass exchange will provide further framework conditions ("clearing services") to ensure problem-free biomass trade between several contracting parties. As the APX-Endex announced, commercial contracts for the period of 3 months, 3 quarters and 3 calendar years should be concluded.
Wood chips are very popular at the biomass exchange
The main purpose of the new biomass exchange, which is integrated in the Rotterdam Energy Port, is to trade industrial wood chips. A price index for industrial wood chips has been created by APX-Endex for 3 years.
The price development of wood chips in Germany has shown an upward trend in the past 3 years (see chart), which, however, can be described as moderate in direct comparison with the strongly fluctuating heating oil prices. Wood chips therefore remain a comparatively inexpensive and little fluctuating source for electricity and heat production.
The annual Trading volume of wood chips Hakan Ekstrom, President of Wood Resources International, increased 2002% between 2008 and 5. In 2010, a worldwide all-time high was recorded, with an increase of 25% to around 35 million tons of traded wood chips. This rapid increase is mainly attributed to the high demand for wood chips in China.
If you are interested, you can find an interesting article about the Development of the European wood market read in 2010, which was published on globalwood.org.
Buyers of biomass on the stock exchange
The growing demand for woody biomass in Europe is mainly due to the strong demand for energy wood. This trend is in turn a reaction to Europe's political efforts to actively contribute to climate protection and the energy transition.
The achievement of the "20-20-20 target" of the European Union should be emphasized here. The following 2020 goals are to be implemented by 3:
- Greenhouse gas emissions cut by 20%
- 20% share of renewable energies in total energy consumption (electricity, heat, traffic)
- 20% increase in energy efficiency
The major customers for the woodchips traded in Rotterdam will be the large biomass cogeneration plants.
Numerous power plants in the EU are converted to biomass. In addition, with the help of co-firing (“co-firing”), biomass is already being used as a fuel in coal-fired power plants. As a Berliner, I can change from fossil to renewable fuels thanks to the comprehensive Vattenfall AG's biomass strategy Experience up close.
In addition to the energetic use, the service of the biomass exchange should also be interesting for the material usage paths of biomass. As a major customer, I think of the numerous pulp factories or chipboard manufacturers in the EU.
With regard to the sustainable use of biomass, the material use of biomass should even have the first priority, even before the energetic use. This cascade use supports the efficient use of the valuable raw material biomass. See also the article on Brandenburg's biomass strategy.
Overview of international biomass exchanges
APX-Endex even describes the newly launched biomass exchange as “the first in the world”. Perhaps in this context it should be added that it is the first biomass exchange of its size and with an international focus, since some concepts for biomass exchanges have already been implemented in North America.
Here is an overview for trading venues that specialize in biomass trading worldwide:
- Minneapolis Biomass Stock Exchange | United States
- Biomass Commodity Exchange (BCEX) | UK
- North American Biomass Exchange | United States
- Biomass eXchange LLC. | United States
- Delaware Biomass Exchange | United States
It remains to be seen how the biomass exchange in Rotterdam will be accepted and how different quality characteristics and quality requirements for biomass will be dealt with. I also hope that too sustainability criteria and the existing certification systems (FSC, PEFC, ISCC etc.) are taken into account when trading in biomass.
I look forward to this new dimension in international biomass trading and keep my fingers crossed for sustainable development. What do you think?