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Asian biomass demand on the up

Wood pellet imports into South Korea and Japan have grown quickly in the past few years. South Korea imported 2.4 Mt of wood pellets in 2017, while Japan imported over 0.5 Mt. Meanwhile, PKS consumption has also risen rapidly in both countries, to 1.5 Mt in 2017.

At the same time, there is growing demand for local biomass in both Japan and Korea. Research for our Asian Pacific Biomass report concluded that the two countries used approximately 4.3 million bone dry metric tonnes (BDMT) of wood chips in 2017, most of which were sourced locally. This figure is likely to increase significantly in the future, due to preferential subsidies in both countries for locally sourced biomass.

The Japanese FiT provides a higher rate of support for local forestry residues of YEN32/kWh for projects above 2 MW, and YEN40/kWh for projects below 2MW. This compares to the YEN21/kWh (previously YEN24/kWh) rate for projects using imported biomass.

Meanwhile the Korean government has recently (see here) approved changes to the country’s Renewable Portfolio Standard policy which will increase subsidies for local biomass. Specifically, biomass power plants using domestic ‘unused woody biomass’ e.g. forest residues, brash, hogfuel etc, will be eligible for a new weighting of 1.5-2.0REC/MWh. However, support for power projects using imported fuels will be reduced from 1.5REC/MWh currently, to 1.0REC/MWh for projects which finalise their construction plans in H1 2019, and 0.5REC/MWh for those whose plans are finalised in H2 2019. (Subscribers to Forest Energy Monitor can find out more about these changes in Issue #86).

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