Abaxx Commodities Exchange CEO says the company can power the energy transition

• Abaxx is a new commodity exchange that aims to stabilize prices and support the energy transition.
• “Commerce and networking keep the world at peace,” Abaxx CEO told BI.
• Investments in the energy transition reached $1.8 billion in 2023, led by China and the US.

The race to clean up the global economy is on.

Investments in the energy transition – a broad shift from fossil-based energy production systems to renewable resources such as wind and solar power – will reach $1.8 billion in 2023, with countries such as China and the United States leading the charge , according to BloombergNEF, an energy research. company. The International Energy Agency says total investment in clean energy could reach $2 trillion by the end of the year.

But moving to a cleaner, lower-carbon world doesn’t just depend on the work of government officials, legislators, or even major companies. It also relies on players working behind the scenes to ensure the prices of key commodities such as liquefied natural gas, essential for generating electricity and heating, and carbon offsets, which help companies offset the impact of their carbon emissions.

A new Singapore-based commodity exchange called Abaxx, which launched in June, is working to do just that, offering companies, governments and project developers a transparent marketplace for their transactions. Commodity markets help stabilize prices by helping suppliers and consumers set fair prices, protect against volatile price changes, and execute efficient and transparent transactions.

Exchanges like Abaxx play a role in this as they help lock in prices and smooth out drastic swings in the future. Abaxx deals in futures contracts, legally binding agreements to buy or sell commodities at a specified future date. Three regionally deliverable liquefied natural gas contracts and two carbon offset contracts are already traded on the exchange. It is working on launching futures contracts for gold and battery metals such as lithium, a component of the batteries that power electric vehicles like Tesla.

Josh Crumb, CEO and founder of Abaxx, says unclear pricing can lead to higher and more volatile prices for consumers, while forcing commodity producers to navigate turbulent investment cycles.

“If you look at the battery supply chain, nickel sulfate, lithium, cobalt, these things have gone through huge boom and bust fluctuations over the last couple of years,” Crumb told Business Insider. “The main reason is that we don’t have a lot of transparency in the marketplace so that people can submit their plan, price, coverage, all of that.”

Crumb first realized that the commodities industry needed more innovation when he was working as a strategist at Goldman Sachs in the years after the financial crisis of 2008. This coincided with the end of the commodities boom of the 2000s in during which the prices of many commodities, from food to oil to chemicals, rose sharply.

Now, with trading in full swing, Crumb hopes Abaxx will play a role in stabilizing what he sees as the next commodity investment cycle – marked not just by the need for new commodities to facilitate the energy transition, but also by growth of electrification.

“When people talk about the energy transition to a low-carbon economy, they’re usually talking about replacing internal combustion engines with electric vehicles, with electricity provided by low-carbon renewables, hydro and nuclear. This will lead to a dramatic increase in electricity. consumption,” a Crumb representative wrote to Business Insider via email. Between 2022 and 2050, global electricity production is expected to grow at a faster rate than in the last decade, according to a report by the agency International for Energy.

Most importantly, however, exchanges like Abaxx could play a critical role in geopolitics, Crumb said. “You want more transparency; you want more markets because we believe that leads to more peace,” he said. “We believe trade and networks keep the world at peace.”