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Wood tested as template for commodity market

Wood has been identified as the first traded material in a drive for commodity markets for recovered materials.

The European Pathway to Zero Waste (EPOW), which works with the Environment Agency and WRAP, is looking at creating a commercial marketplace where material can be bought and sold sight un-seen.

The aim is to build a secondary commodities market which is not dissimilar from the London Metal Exchange.  It hopes sellers can safely and confidently buy the product, rather than having to ‘buy into’ the company or person selling the product.

EPOW programme manager Martyn Cheesbrough said: “Currently, there are a lot of waste exchanges that take place within industry. So if a person had some aggregate that they didn’t want, they can be matched up with a person that does want it and then they can make the right arrangements to have the material delivered.

“On a commodities market such as the LME, though, people don’t necessarily know who they are buying from, they are just buying a product. So we are trying to move towards developing this more mature system.”

Initially, wood is being targeted as the first traded material to showcase the resource market. Wood was recognised as a significant growth market with clear opportunities for expansion due to the increased interest in wood for biomass feedstock.

Following a prefeasibility study, EPOW found that the two other potential materials to begin trading with - flat glass and recovered aggregates - did not lend themselves to an open trading system due to the high purity needed for flat glass and the market dominance of five companies for recovered aggregates.

Other materials that may also work on a market basis are said to be textiles and waste electrical and electronic equipment.

But barriers such as ensuring quality standards, sampling and testing protocols, dispute resolution tools and a sufficient balance of in buyers and sellers will need to be overcome. In addition, the most suitable method of charging for the use of the service will need to be decided upon.

Cheesbrough is currently looking for investment in the commercial venture and will bring a stakeholder forum together at the end of the year.

Readers' comments (2)

  • This should be the logical next step for recycle markets - and has operated for metals for many years. we need to avoid this development pushing all materials to the lowest common denominator use - energy in the case of wood. It will also need the waste industry to move away from its attachment to bilateral sales and sign up to a proper system of specifications and standards - which they have not always been keen on so far.

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  • From EPOW programme manager, Martin Cheesbrough

    Your story on the LIFE+ European Pathway to Zero Waste (EPOW) work on commodity markets for recycled material needs one clarification. The partnership between WRAP and Environment Agency is looking at what conditions are necessary for a commodities market for recycled material to successfully operate in the South East of England – not to set one up ourselves.

    Eight potential commodity materials were considered for this research including textiles and WEEE, with wood emerging as the most suitable focus for this research project. The work will recommend what pre-conditions would be necessary, and where relevant interventions would enable and facilitate commodity markets and waste exchanges to operate effectively, and so divert waste from landfill. We aim to produce draft guidance documentation aimed at exemplifying lessons learnt about developing and operating a commodity exchange for end-of-waste materials. These will be used to inform potential private sector operators of an exchange and/or other regions within the EU. For more information go to www.environment-agency.gov.uk/epow

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