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The Japanese Forestry Agency of the Ministry of Agriculture, Forestry and Fisheries (MAFF) has implemented a series of policies designed to increase the use of domestic wood. Over the past decade, these policies and programs promoted the “cascading-use of forest resources” to more fully utilize domestic wood resources, including low-grade woody biomass for biofuel. Thus, these programs expand the overall demand for domestic wood products and provide more economic opportunities for the domestic forestry and forest products industries while helping to develop a globally competitive forestry and forest products sector through economies of scope and scale. The Ministry of Economy, Trade and Industry (METI) oversees and regularly reviews feed-in tariff (FIT) programs. After the Fukushima Dai’ichi nuclear power disaster caused by the Great East Japan earthquake, METI in July 2012 started providing generous tariffs to support the expansion of biomass power generation. The schedule of tariffs was applied over a 20-year time frame and are guaranteed at a set purchase price following METI’s approval of a biomass power generator. The new FIT program initially set a purchase price of 40 yen/kWh for biomass power plants smaller than 2,000 kW and 32 yen/kWh for power plants larger than 2,000 kW, but only if they use domestically sourced woody biomass derived from forest thinning operations. For bioenergy plants using imported (sustainably sourced) woody biomass, the FIT program initially set a purchase price of 24 yen/kWh. The generous FIT tariffs have resulted in the rapid increase in the number and capacity of biomass power generators all over Japan. However, in order to reduce the energy burden in Japan, METI has begun to reduce the tariffs for newly joining biomass power generators. Biomass generating facilities range from large-scale coal-biomass co-firing plants (mainly using imported wood pellets), medium-sized biomass power plants (using domestic wood, imported palm kernel shell (PKS) and wood pellets), biomass facilities co-located with wood manufacturing companies (fueled by wood waste and sawdust), to small-scale heat/electricity co-generators that utilize a wide variety of fuels. The supply of domestic unutilized wood or imported ordinary wood (wood pellets, wood chip, PKS and other agricultural residues) is currently sufficient to meet the demand of this rapidly growing biomass sector. As of December 2019, Japan has approved proposals for biomass power plants with a pooled power generation capacity of 8.5 GW, while the operational capacity of qualifying power plants stood at 2.1 GW. The lack of supply of biomass for the approved, but not yet operating power plants, is the key limiting factor in Japan’s efforts to increase its use of biomass for energy generation. In order to increase the demand for domestic wood and help revitalize rural mountain communities, MAFF and METI have developed and implemented a number of strategies designed to subsidize the expansion of woody biomass energy. Developing this new industry is currently an on-going activity and it is likely that success in this area will greatly increase the demand for woody biomass, exceeding the domestic supply of woody biomass (including forest thinnings) and thereby providing new opportunities for foreign wood suppliers. Exporting wood chips, white pellets and torrefied (black) pellets to Japan represents a strong new market for the U.S. forest products industry. Given the growing demand for woody biomass in Japan (as well as CLT panels which can be manufactured using lower quality softwood lumber), there also exists a possibility to expand exports of lower quality logs and lumber from the US.
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