By Andrew Cave for Finance Day
Marijn van Diessen has a ready analogy for anyone finding it hard to fathom forging a business around trading energy certificates.
“Let’s say you want to decarbonise your energy consumption,” says the STX Group chief executive.
“If you live in a nice house with a roof, you would probably put up some solar panels. But if you live in on the third floor of a block of flats in central London, you might ask a friend with a roof to put up some solar panels on their property for you. You help them to finance that and in return you can claim that your flat is green. That’s a beautiful concept. It allows people who want to move earliest, but might be constrained, to invest in that move, while also allowing people who have the opportunity but not the finance to get their projects off the ground. What those homeowners are doing is creating a marketplace for decarbonisation opportunities and that’s what we do too.”
The certificates that STX trades can denote investments in projects to increase energy efficiency, such as switching to alternative fuels and offsetting carbon by physically sucking it out of the air.
For van Diessen, STX chief executive since March 2024, it “all boils down to basically the same thing – connecting people who need or want to decarbonise their footprint with people that actually have access to opportunities to decarbonise. It’s very much needed,” he says. “If we want the energy transition to be efficient, then it’s very important to think about systemic solutions and allow those kinds of connections to take place.”
STX was founded as an energy brokerage in an Amsterdam canal house in 2005 when van Diessen says it traded products that had “hardly any liquidity”. Unless STX and its competitors could find a counterparty for a company wanting to do a renewable energy trade, the deal would simply not be possible.
In those early days, STX did not actually take any trading positions onto its own books; it simply found the other side of the transaction. Now STX Group has offices in Brussels, Lyon, Hamburg, Madrid, Milan, Warsaw, Budapest, Gothenburg, New York, Houston, Mexico City and Singapore, as well as its headquarters in Amsterdam and its London base near Victoria.
The company, owned by a group of private investors, recently set up a borrowing base up to EUR 375 million. Employing nearly 600 people across the group, it has net earnings above EUR 60 million and deals with more than 7,000 companies and counterparties. These vary from global tech and finance giants and large industrials to small and mid-sized businesses that also have environmental compliance obligations or desires.
Suppliers meanwhile can range from large farms wanting to capture and sell the methane emissions from their cows to renewable energy project developers involved in wind energy or biofuels.
STX trades with “wholesale” players such as oil companies, utilities and power companies.
Each year, STX trades 300 terrawatt-hours (TWh) of renewable energy, 4TWh of biomethane and more than 30 million tons European Union carbon credits (EUAs).
“We want to have a very diversified portfolio in different sectors and countries,” says van Diessen.
“They’re all driven by compliance to environmental legislation and, as that evolves over time, we want to be exposed to it all. We do take trading positions now but it’s still a relatively illiquid market.” When discussing boosting the company’s portfolio, it is worth mentioning STX’s recent acquisition of Marine Olie. The move to acquire the waste-based advanced feedstocks trader reinforced STX’s position and strong ambitions in the fuels market, supporting it moving towards becoming a position-backed trading house.
Van Diessen grew up in The Netherlands and took a degree in econometrics and masters in quantitative finance and actual sciences at Tilburg University. Did he always envision a career in this field? “The honest answer is no,” he laughs. “I do sometimes reflect on how this came about.”
However, he was intrigued by trading at an early age. Undeterred by interning at Goldman Sachs during the 2008 global financial crisis, he was offered a position to trade equity derivatives at the US investment bank just as Lehman Brothers was filing for bankruptcy.
After five years at Goldman and nearly eight at McKinsey, which he joined to focus on macroeconomics and energy, he joined STX as Chief Commercial Officer in 2022.
The company, founded in 2005 when the European Union’s Emissions Trading Scheme (ETS) was established, had bought a majority stake in Vertis, a Hungarian carbon broker, a year earlier in 2021.
STX competes with fellow “pure play” renewable energy traders such as ACT Commodities, based in Amsterdam, Californian 3Degrees and Anew Climate, based in Texas.
Its biggest volumes are in the trading of certificates verifying renewable power, such as wind energy, biofuels and biomethane (including Bio-LNG), a biofuel made by processing organic waste flows such as household and industrial organic waste.
“It was obvious to me that this was going to be a once-in-a lifetime opportunity,” says van Diessen.
“We want to have a very diversified portfolio in different countries and sectors because they are all driven by different aspects of regulation, which evolves over time.”
Future growth is partly driven by the widening net of regulatory compliance, with all eyes on the EU to see when it will introduce the next phase of the ETS scheme.
“If you look at the European market, it’s remarkable what’s already been achieved,” says van Diessen, who moved up to the role of Chief Executive Officer in March 2024.
“It was quite a loose system to begin with. It’s only in the last five or six years that it really started to become a little more stringent on companies. During its time, I think it’s been quite effective in reducing Europe’s carbon emissions. There’s a lot of talk about the transition not going fast enough but some of these schemes that are a little bit older are actually effective. I see a lot of opportunities to accelerate the transition, but I think that government policymakers are a little bit reluctant to improve on some of these things because they fear that the electorate has not fully bought into some of them yet.”
“Europe is very important to us, because the continent leads the market for environmental commodities, but we have also been ramping up our presence in the US over the past 18 months.”
Van Diessen says the global growth is predicated upon changing climate change regulations and increasing consumer pressure for action on climate change. “If biofuel mandates in the EU increase, then obviously the volumes of our products will also go up,” he says. “But the voluntary market is also growing, with companies increasingly wanting to show their consumers that they are making a difference and using green alternatives.”
Van Diessen expects the regulatory and voluntary drivers to become more intertwined over coming years. “The EU is now forcing more disclosures about companies’ carbon footprints,” he says, “with companies increasingly having to explain what they’re doing about them. Climate change can only be addressed through systems change. If we have to fully rely upon voluntary action, we’re never going to get there.”
Van Diessen is excited about the EU’s Renewable Energy Directive 3 (RED3), which instructs European nations to set the share that renewable energy must take of the overall energy market.
‘We think this could really create a step change in the transition,” he says. “It will probably be implemented slightly differently by each country in the EU and the timelines could differ too, but we see some promising signs.”
In shipping, meanwhile, he anticipates an impact from the new FuelEU Maritime regulations mandating companies to ensure that certain levels of their fuels are renewable.
The EU is also expanding the ETS system to new sectors, while the Carbon Border Adjustment Mechanism is seeking to level the playing field between producers inside and outside the European Union.
Britain’s carbon regulatory market was divorced from the ETS following Brexit, but STX still sees the UK as an important market for energy certificate trading and advice to the corporate market.
Elsewhere, other nations including Indonesia are envisaging creating their own carbon emissions trading scheme. “If some of the things that are being talked about happen,” says van Diessen, “we think it will be really exciting for our market and create additional demand for these environmental commodities and accelerate the energy transition.
As for the chief executive himself, he is happy to focus on the renewables sector. “I could trade a lot of other things,” he says, “but I’m firmly of the opinion that we have to do something about the problem of climate change, and I would be surprised to hear anybody say they don’t think it is important. It was very much an agenda of the political left for many years, but it’s now mainstream middle politics, not left or right. I’m a big believer in market mechanisms and if we can use markets for this cause, that’s something that gets me very excited.
There’s consensus that we need to do something and the way to move is very much through these market-based mechanisms. If we don’t use them there’s a real risk that the transition will be more costly.”
