Wood Trading Exchange Stokes Green Energy Row
By Terry Macalister, The Guardian
Oil, gold and even pork bellies have been traded on commodity markets for many years, but traders are now able to buy and sell industrial wood pellets via an electronic market place for the first time.
The APX-ENDEX exchange in the Netherlands has launched green energy contracts at a critical moment, when demand for biomass is soaring, but critics argue that burning wood to generate electricity causes as many problems as it solves.
Drax power station in Yorkshire. Credit: freefotouk/flickr
Traditional power stations such as Drax in North Yorkshire are increasingly switching to burning wood instead of coal to reduce carbon emissions and an international trade in wood pellets is developing.
APX has developed the contracts in co-operation with Port of Rotterdam, which has seen a big increase in the amount of wood being brought into the docks to feed biomass plants across Europe. The port – the biggest in Europe – says it expects to be handling 2-3m tons annually by 2025 as imports from places such as Canada and Russia soar.
The APX commodity exchange has been publishing data on industrial wood pellet prices since 2008 and argues a traded contract will help biomass users find supplies in a more cost-efficient and transparent way. "Bilateral trading has been going on but not on any exchange. That will now change," said a spokeswoman for APX.
There is a growing controversy over subsidies being given to further the development of biomass plants in Britain. Renewable obligation certificates (ROCs) are issued to green generators and can be traded with other suppliers as a way of their meeting their obligations on renewable energy. A review by the Department of Energy and Climate Change has proposed keeping the 0.5 ROC (per MWh) support level for co-firing of coal or other fossil fuels and biomass.
This has not only upset other wood users worried about the impact on product prices, but also Fergus Ewing, the Scottish energy minister, who fears Britain becoming dependent on foreign imports.
"Both oil and gas prices have shown us the importance of a secure local supply, and if we rely too heavily on imported timber there is a risk of energy security problems in future," he argues.
Companies such as RWE are involved in switching the Tilbury coal-fired power station to biomass and is open about its plans to bring in all the fuel from America.
Terry Macalister is energy editor of the Guardian. Reprinted with permission.