What are the risks with wood burning in Japan?

Alasdair talks to Roger Smith, Japan Director for Mighty Earth, about Japanese biomass imports and the risks of the country's coal power stations switching to wood-burning.

Further reading: 

• SMOKESCREEN: SUMITOMO’S “CARBON NEUTRAL” FAILURES 
• SUMITOMO CORPORATION’S DIRTY ENERGY TRADE: Biomass, Coal and Japan’s Energy Future
• Biomass cofiring loopholes put coal on open-ended life support in Asia, Mongabay
• As biomass burning surges in Japan and South Korea, where will Asia get its wood?, Mongabay
• Fossil Free Japan
• Biomass Info, a resource library  (Japanese) 

Find all our latest investigations, features and interviews at www.landclimate.org

Transcript

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Alasdair: 0:06

Hello and welcome to the Land and Climate Podcast. In this week's episode, I spoke to Roger Smith from climate research group Mighty Earth about how wood burning for electricity is developing in Japan.

Roger: 0:18

This whole burning biomass in coal plants doesn't have a clear ceiling to it. And that's the scary thing because you could very quickly have Japan consuming more than the world produces today in biomass.

Alasdair: 0:30

I started by asking Roger to explain his own role at Mighty Earth.

Roger: 0:33

Mighty Earth runs campaigns globally to really move entire industries. The main goals are to stop deforestation and address climate change. I'm personally based near Tokyo, Japan, and I've been working with Mighty Earth here for the past three years with a big focus on coal and then also woody biomass, those things like wood pellets. We just find that the industries are totally intertwined and you can't really address one without the other.

Alasdair: 1:01

Give us of background about the Japanese energy sector. That's a very broad question, but it'd be just great to understand a little bit about where coal and biomass fits in and the kind of energy picture in a sense in Japan.

Roger: 1:13

Japan overall imports pretty much all of its energy and that's nothing new. I mean, that goes back decades. Coal, oil, gas, uranium for nuclear, and then biomass as well. Most of the wood is imported too. After the Fukushima nuclear disaster in 2011, there was a lot of push to change the system and a bunch of things happened. On the good side, Japan created a renewable energy incentive program. For a time, Japan was actually the second biggest producer and consumer of solar power in the world, which is amazing. You saw solar going up on homes all over the place. Unfortunately, as part of that same subsidy program, there's also an incentive to import and burn wood. It actually had the highest incentive in the entire world of ¥24 per kilowatt hour, which, is maybe somewhere around like 20 US cents or so on an average year. That's big money. That has really driven a lot of Japanese companies to look abroad for where they can get this wood for cheaply. In addition to that, after 2012, the government in power changed. Prime Minister Abe came in and was pushing for liberalisation of the power sector. You start to see a bunch of new power generating companies show up and they've been proposing small coal plants. Japan's got a new wave of really small and inefficient coal power plants, but then also biomass power plants, even palm oil burning power plants, just something that's almost unthinkable. I mean, you have companies that know nothing about this sector, like a major travel company getting into the power generation business after liberalisation and then just with these incentives for renewable energy, it doesn't make a whole lot of sense. It's not as if it's a really strategic, 'okay, we're going to reduce carbon emissions, so we're going to do X, Y and Z'. It's more 'here is a really high incentive. Whatever you can build, build. And at the same time you can also do some coal'. Japan's emissions are going up and in the meantime, foreign forests are on the chopping block. And that's really where my organisation got involved, it was one, what the heck is going on in Japan? We did kind of a white paper for allies and then ended up publishing two reports about the situation here. Our recommendations for how Japan could maybe put this genie back in the bottle and spend its subsidy money in a wiser way that actually gets greenhouse gas reductions, that doesn't harm forests abroad, that doesn't harm the health of people in communities where their forests are being chopped down and turned into pellets. Also that has more long term energy security for the country because they really do have renewable energy potential in Japan. That's things like offshore wind, onshore wind, geothermal, solar, you don't have to import a ton of wood to try to do this.

Alasdair: 3:55

Can you explain about how wood burning has become part of this renewable energy incentive program?

Roger: 4:01

Absolutely. The threat of wood burning or general biomass is twofold. One is that there's a program called the Feed in Tariff and it really just sets a price. So a fixed price. And if a generator can build a power plant, for every kilowatt hour it produces, it gets ¥24. That's a massive incentive. That incentive is actually a 20 year contract. They have that certainty that they're going to get paid the subsidy above and beyond just the value of whatever the power is. That's what enables them to sign contracts with companies abroad, including Drax, to import fuel to Japan. The second thing is that Japan has what's called an Energy Conservation Act that came out of the tries to make the power sector more efficient. That's where you see standards for coal plants that are trying to increase their efficiency over time, phase out inefficient units. Thanks to industry, there's a loophole in there. If you burn wood along with the coal, the emissions for the wood aren't counted. The wood is essentially not a fuel. Magically, you dump a bunch of wood in, you produce the same amount of power or more power, your emissions go down. On paper, you know. The reality in the atmosphere is different. It's really those two things that are driving the import of a massive amount of wood to Japan. The scary thing is that at least on that coal plant side of just adding wood, there's no clear limit to it. The only real limit is what's financially and physically feasible to import to Japan.

Alasdair: 5:29

Was the kind of the construction of these incentives similar to what was going on in the EU with the Renewable Energy Directive back in 2009?

Roger: 5:38

Absolutely. So Japan had fact finding missions to Europe at the time. This is literally back around 2010. So they very closely studied European energy policy and then like when 2011 happened. So March 11th, 9.0 earthquake, massive tsunami, overnight, all the nation's nuclear power plants are shut down. The Fukushima Daiichi nuclear power plant itself had hydrogen explosions. I mean, Japan was in a crisis. Tokyo, they were doing planned rolling blackouts in order to keep the grid going. It was out of that the Diet decided, okay, we've been studying this issue, we need to just do it. Almost like the next day they pass the feed in tariff into law and then it goes to the agency to implement and within a year there's this new feed in tariff incentive program. They definitely did it under a lot of duress, a lot of pressure, and in some ways it's been a tremendous success. Again, Japan became a world leader in solar power. I think biomass was in part an unintended consequence. I think in their minds they were still thinking of what the biomass industry was like at this point, 1520 years ago. I mean, this was a small industry in Japan taking waste from local forestry operations and generally using it locally for heat, maybe of power. But in reality, the incentive that they structured was such that it became a whole lot more attractive to try to think large scale. The only way you can actually do that and fuel such a power plant is through imports. And that's where Japan's trading companies, your Mitsubishis, your Sumitomos, came in, scouring the world looking for where there's opportunity for large scale biomass. And very quickly they realised that Canada, British Columbia, Canada, the southeastern United States, Vietnam, Russia, these are places where they can import fuel at a reasonable cost at the scale that they need.

Alasdair: 7:31

In the UK, there's Drax Power Station, which is the UK's single biggest emitter of carbon. It similar then in Japan that the biggest emitters are coming from biomass burning?

Roger: 7:42

No. I think there's pretty big differences between the EU, UK and Japan. So in places like the EU, you see a huge amount of biomass being used for heat, like community level heat, for example, that doesn't exist in Japan. The feedin tariff, even though it's a large amount of wood, I mean, at this point we're talking the equivalent about 6 million tonnes a year being imported. That is really just a couple of percent of the overall energy mix. Japan's real problem is you've got a fleet of coal plants that were renewed a decade ago, so they're not going away anytime soon. They're small and inefficient to begin with to try to get in through holes in Japan's clean air laws. On top of that, you've got a couple of hundred biomass plants that range from tiny to large to in the hundreds of megawatts in size. The overall emissions, it's really natural gas, coal and coal that are the big drivers of CO2 in the power sector here. For biomass, like, you're getting a large amount of pollution for the amount of power that it's producing, I would say, and even greater impacts on foreign forests. So that's really, I think, our concern.

Alasdair: 8:45

The kind of picture for where biomass burning could go in Japan. Can you give us of an idea of how that's developing? Because I know you've done some work on that.

Roger: 8:53

Absolutely, and I think here it's really the scale that's the scariest thing. So, overall, researchers estimated that if the world's met additional 2% of its energy needs from biomass, you'd have to double all commercial wood harvest. So that's like the potential threat here. In Japan too, so we're not even talking about a lot of energy necessarily. You go from 2% to 4%. What does that mean? Well, today, we're literally at just a couple percent of energy use from biomass. We're at about the equivalent of 6 million tonnes of wood pellets. I say equivalent because there's other things. They're also importing other woody type products. So not us, but industry themselves are projecting that Japan will be somewhere in the 910 million tonne range by 2027. That's essentially the same as the UK. The eyes of the world have been on Drax for years for good reason, but you may not be paying attention, but over here, Japan is going to be on par or potentially even surpassing Drax in the very near future. I think for us, the scary thing is there's not an upper bound. While the feed in tariff is limited as an incentive, only so many projects get chosen. This whole burning biomass in coal plants doesn't have a clear ceiling to it. We think industry is likely pushing for a new type of subsidy now to support that, because these coal plant owners, they don't want to get rid of these plants, they don't want to phase them out. That's the scary thing, because you could very quickly have Japan consuming more than the world produces today in biomass. In 2020, the world is producing about 20 million tonnes. By the end of the decade, it'll be closer to 40 million tonnes. That's not a lot of time to see this type of increase. Japan could easily be in the 20 to 40 million tonne range itself if the policies support it. That's what we're scared of. And that's why Mighty Earth, Friends of the Earth Japan and a whole coalition of groups are working together so we don't repeat the mistakes of the UK and EU.

Alasdair: 10:44

How does the Japanese government and maybe society view wood burning and wood burning for power?

Roger: 10:50

Biomass is kind of a new thing and kind of an old thing in Japan. If you think of Japan, I mean, it's an island chain that's covered by forests, but a lot of those forests are actually planted. They're essentially cedar monocultures. You do have an industry that is sustainable in the sense that they're not cutting down more than they're producing. And in fact, with the urbanisation of society, there's a lot of trees that are hanging out for decades longer than they're supposed to. I think the original promise of biomass was that it was going to help sustain really rural, small scale forestry operations and give value to wood that would other buyers be wasted. I think there's this mental model of thinking, oh, this is something good. It's helping people in rural Japan who are already struggling with depopulation and a lot of other issues. The reality is, though, the way that this program was structured, it's doing nothing of the sort. What it's really supporting are these big trading companies like Sumitomo Company that's going abroad, that's signing contracts with biomass suppliers like in Viva and Drax, and then importing fuel by the millions of tonnes to Japan. They're doing some of that for their own facilities, but then they're also traders, so they're selling that to local companies here. That's where I think there's questions by Japanese policymakers. They're sending a lot of yen outside the country, and for what? So this isn't helping their districts, this isn't helping rural foresters in Japan, this is going abroad, it's going into the pockets of Japanese trading companies and now they're getting criticised environmental groups, but also scientists and academics who are saying it's actually worsening Japan's greenhouse gas problem. You're simply hiding it. You're hiding it from the power sector, but you're dumping it abroad and essentially someone else's books. Really, like, what are we doing here? I'm a ratepayer in Japan. I pay every month on my electric bill to support renewable energy. It's not voluntary. Why should my money or our money be spent in this manner that worsens climate change, harms forests and really does nothing for the country's energy security. I think we're starting to see some pushback by Diet leaders, members of the parliament here against that. But it's hard to change anything. I think, as in the UK, once you create a system and there is people getting subsidy, it's hard to take something away. I think that's a big challenge going forward is how do you get an agency that created a policy which worked in some respects, but then had really negative, unintended consequences in the case of biomass, how do you get them to change path and do they have to admit that they didn't get it right to begin with? Those are some of the issues that we're grappling with here now, in terms.

Alasdair: 13:18

Of what the kind of long term policy solutions we should be looking at, then? What would you say they are?

Roger: 13:25

I think for policies thinking broadly, there's different paths Japan can take. It shouldn't be subsidising any new biomass going forward. I think that's pretty clear. For the same investment of yen, you can get so much more energy output without environmental destruction. If you go with, say, on and offshore wind, solar, in my opinion, I like competition. Create a system that gives subsidy based on which renewable energy can reduce the most CO2 for the lowest cost. If you rejigger it that way, biomass loses every single time. It just becomes a non starter. I'm not saying Japanese government is really going to follow, that my advice, but that's what I would do. But on biomass, yeah, absolutely. Stop the bleeding, stop investing in it, I think is one. I think that's not as hard to ask. The biggest challenge is what happens to all of these old and not so old coal plants whose owners don't want to retire them. That's where I really think that there needs to be stringent life cycle greenhouse gas standards. They shouldn't be claiming benefit for something that's actually increasing emissions and they should really spend their energies figuring out a more long term transition plan than just trying to prop up existing power plants.

Alasdair: 14:35

There's been a lot of focus in the UK, for example, and now a lot in the European Commission level on greenhouse gas removals and greenhouse gas removal technologies. Therefore there's been this focus on using the potential of biomass, or the implied potential of biomass with carbon capture and storage. So, BECCS, what's going on in Japan on that?

Roger: 14:55

So BECCS, I think, is part of the overall carbon capture discussion here. You have to understand. Japan is a technology leader in some areas, but generally dirty areas. If you went back 20 years, who are the big solar makers in the world? It's companies like Sharp and Kyocera. They don't even exist anymore as solar manufacturers. Unfortunately, Japan has really lost its leadership in the past 15 years. And what does it have? It has government led export policies that are really built around fossil fuels. Japan's been going around the world competing with China, really, on dirty infrastructure. That means coal plants, that means gas terminals, natural gas plants, mining, I mean, all this type of thing. For CCS, for carbon capture, that's something where Japan actually is a technological leader. You've got companies like Mitsubishi Heavy Industries that have some of the best engineers working on this and they've gotten to a point where the technology itself is viable. I think it's the implementation of It that's just a massive question mark. So Japan wants it to work. The same coal plant owners that in the short run want to just toss a bunch of wood in their power plant in the long run still want to use their power plant. They think adding carbon capturer and storage to that is going to make that viable reality is, at least within Japan, is that it's a country that's prone to earthquakes, as you might have heard, doesn't really have any history of gas or oil reserves. There isn't an obvious place to pump the CO2 back into. Very limited. And not only does the power sector want access to whatever CO2 reservoirs there are, also heavy industry does. There just isn't enough to go around. So it's wishful thinking at best. At worst, they're setting themselves up for failure by being unwilling to change paths. Ultimately the path they're on is a dead end. And I think our real fear is that come 20 35, 20 40, 20 50, you realise that this carbon capture pathway is just not going to work, it's not going to pencil out. Japan's blown through whatever carbon budget it had and is going to actually set the world back on, attempting to keep the temperature increases to 1.5 degrees. That's our real fear. And you know, Japan's got other pie in the sky plans of, 'okay, well, if we can't store it here, let's sign MoUs with nations in Southeast Asia, put the CO2 onto ships, ship it to Southeast Asia and then dump it under the sea there'. And yeah, maybe technically that's possible, but what is that going to cost? Does Southeast Asia really want to be a dumping ground for Japan's CO2? Really want to be a dumping ground for Japan CO2? Does any of this make sense or is it just industries basically rent seeking, taken care of by the government for themselves, but at the expense of Japanese society as a whole?

Alasdair: 17:33

I'll come back to you on the point you made about the general focus of Japan on this kind of dirty energy infrastructure, I think you put it as. Why do you think that's happened?

Roger: 17:43

Well, so with Japanese politics, you have to look at who's in charge and who has the ear of those who are in charge. So industry, Japanese industry isn't a monolith and actually overall is relatively clean and not even backwards looking as maybe its reputation is. So, I mean, in Japan you've got like the Sonys of the world, for example. I mean, these are global companies. They understand global markets, they understand they have to reduce their emissions. You have these other energy consumer companies like that, these high tech product type companies. In terms of who actually has influence, it's the ones who maybe have a more historic connection to Japan's really economic miracle. That's the steel industry, that's the auto industry, and to a somewhat lesser extent, also the power industry. I mean, these are the industries that built post war Japan that overtook Britain as a shipbuilding nation out of the ruins of World War II, then overtook the US auto industry a couple of decades later. This is a country everyone had written off. So there's kind of maybe this historical legacy. And if you look at the trade groups, t. It's the chamber of commerce in Japan. They're really dominated by industries like that. It's Toyota, it's the steel manufacturers and others. These really aren't the drivers of the modern Japanese economy. There's of a mismatch in whose voice is the loudest and who's getting heard and who's actually relevant in terms of Japan's future. So the Japanese government has these export infrastructure plans that were really designed to compete with China's Belt and Road. And they thought that, 'well, Japan's great at building boilers. We can build nuclear boilers for nuclear reactors, we can build it for coal plants, or we can do it for gas plants. We give you some great combined cycle turbines. Let's sell that'. If were in a world where climate change weren't happening, or if it weren't significant, then this business model would make sense. Ultimately they continued on this path longer than any other developed country. By 2022, they still have a pipeline of Japanese government backed overseas coal plants. But the world has changed. Banks are pulling out, other governments have pulled out. Ultimately, Japanese banks followed suit, and then the trading companies. The Japanese government is literally left there in Matabari, Bangladesh in 2022 with a 1200 megawatt power plant proposal that it can't find a single company to build. That's when it pulled funding for it and decided, yeah, I guess we're not going to build any more coal plants on natural gas. They haven't given up. They're still pushing gas terminals, you name it, actual extraction infrastructure in places like Canada. I think it's now there's two minds. There's dirty Japan infrastructure and then there's also 'okay, but maybe we need to think a little bit more in a little more forward looking fashion'. They're still arguing that things like CCS, hydrogen, ammonia, things like that, are part of Japan's green transformation. In addition to solar, wind, electric vehicles and the like, there's a real reluctance just to let go of basically failed business models or technologies that are of the past. I think CCS, whether for coal plants or for biomass plants, are really just emblematic of a past and have little viability or relevance in any kind of future, as far as I see it.

Alasdair: 20:48

There anything else that you wanted to talk about that you feel you haven't mentioned?

Roger: 20:52

I know there's been a lot of discussion around BECCS in the Drax context. They're going to prove that this technology works. They're going to add it to the Yorkshire plant, and it's going to be a great model for the world. And realistically, this model only works to the extent that governments are willing to subsidise it. And then I think there's a question of that versus what else? Public resources aren't unlimited. I think the other part of Drax's future business model is in this pellet production side. The Yorkshire power station I think is of decreasing importance to Drax as a company, if you look at pellets. So they've created this model in a sense of you can take a coal plant, convert it to biomass, and then they figured out how to actually handle the pellet production and trading side too. They've created this model in a sense of you can take a coal plant, convert it to biomass, and then they figured out how to actually handle the pellet production and trading side too. So they're in Asia now, really trying to tell other power companies, 'you can do what we did', and they established a Tokyo sales office last summer. They're clearly looking at other places, for example in Southeast Asia, that have coal infrastructure and at the same time they bought up British Columbia's pellet industry. So the two major makers there, Pinnacle and Pacifica Bioenergy, are now part of Drax. So, for me, sitting here in Japan, what I see is that this British company is showing up, trying to sell as many pellets as they can to Japanese buyers and I think is really betting their future on Asia. Like the Yorkshire power station isn't a growth market. Their growth seems to be on exporting this business model with the know how, but then also the pellet supply chain along with it. I think that's also a tremendous vulnerability for Drax. They're assuming that Japan and other countries are going to keep signing long term agreements for these pellets. They're assuming that there is supply in places like British Columbia where there's tremendous, I think, public and other pressure to stop logging their old growth in primary forests so much. Really, I guess I would encourage anyone to think about Drax in a more holistic sense and then keep an eye on Asia because Drax is already pivoted there. Its sales to Asia are in its own shareholder filings on the same level to the amount of pellets it is using itself. Watch what's happening here and if the winds change. If Japan and Korea and other countries decide that maybe sending out tremendous amounts of money to foreign companies to chop down trees isn't a great thing, I think a company like Drax might be left holding the bag.

Alasdair: 23:14

Thanks very much to Roger Smith for his time. If you'd like to learn more about this topic and also about how the Japanese energy sector is developing, there are further reading links provided in the blurb and also on the Land and Climate Review website. In a few weeks time, Lauren will be chatting to Thane Gustafsson about Russian energy politics and climate change. If you did enjoy listening to this or other episodes, do like us or give us feedback on the podcast app that you use. Thanks for listening.