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Japanese wood chip and wood pellet demand expected to grow

After the 2011 earthquake and disaster at the Fukishima nuclear plant, or“Higashi Nihon Daishinsai,” Japan had to look for alternative sources of sustainable fuel and heating, such as wood pellets, chips and palm kernel shells (PKS). As the world’s largest market for these materials, Japan represents a big opportunity for the bioeconomy.

As old coal plants are phased out in Japan, the use of wood pellets, chips and PKS in co-firing plants is expected to continue increasing. Construction of new dedicated biomass power plants across Japan is also expected to increase.

The first Japanese power plants using 100 per cent wood pellet fuel are expected to come online in the coming years, which means demand for wood pellets will increase.

“Wood chips are here to stay,” thanks to high demand for the materials from other industries, including the paper industry and particle/MDF manufacturing sector.However, the number of 100 per cent PKS-fueled plants are decreasing because of sustainability challenges.

On a regional scale, Japan is interested in using biomass for building heat. Municipalities in rural Japan have shown interest and are looking into using biomass for heat and power. But this use of biomass is unlikely in larger city buildings, so these municipalities are known as “Biomass Towns.”

Outlook scenarios

These outlooks are based on possible sways in Japan’s bioenergy market caused by several factors, including the country’s Feed-in-Tariff (FIT) program, coal plant actions and closures, new sustainability requirements, climate change mitigation and COVID-19.

Japan released efficiency requirements for thermal power generation plants in 2016. Although these requirements are not strictly binding, this government plan was put in place to help increase plant productivity. Under these requirements, it is recommended that all new coal-fired power plants’ heat efficiency be at least 42 per cent, with a target of 44.3 per cent by 2030.

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