The bioenergy market in Asia Pacific is still fairly immature compared to the European market. However, recent developments have led to expectations of significant demand&nbsp; that could lead to this region quickly surpassing the European market in terms of traded volumes. As of March 2017, the amount of certified capacity under &ldquo;general wood and agriculture waste&rdquo; has, with 11.4 GW, already far surpassed the bioenergy targets initially defined by the Japanese government (2.7 to 4.0 GWe). If all the projects awarded feed-in tariff (FIT) contracts under this category go ahead, biomass demand could reach 47 million oven dry metric tons (ODMT) by 2021. Announced bioenergy projects in South Korea are also expected to increase current wood biomass import demand from 2 million ODMT to up to 12 million ODMT by 2024. Biomass Sourcing Strategies Bioenergy projects in Asia Pacific are mainly targeting industrial wood pellets, woodchips and palm kernel shells (PKS) as biomass fuel. As these feedstocks all have different characteristics, the technical design of each bioenergy plant will need to be tailored according to the biomass feedstock mix, in order to maximize efficiencies and minimize operating costs. Detailed trade-off analysis, covering different biomass supply chains and technical designs, will afford developers and their investors a better understanding of expected returns and underlying risks, and help define risk mitigation strategies. Even though some project developers have already formulated biomass sourcing strategies, the actual implementation of these strategies may yet change in reaction to future market conditions and requirements brought forward by investors. The Japanese market is especially characterized by a high level of uncertainty regarding preferred biomass fuel assortments, and stakeholders will have to develop in-depth market knowledge and prepare strategies covering a range of potential future market scenarios. Despite a theoretical potential of approximately 15 million metric tons of PKS in Indonesia and Malaysia, only a limited share of these volumes will be available in the long run to meet demand from Japan and South Korea. The PKS market will experience considerable changes going forward; increased mobilization efforts from international buyers in combination with often challenging inland logistics, and further increasing domestic demand for PKS as biomass fuel, are likely to result in considerable price increases. The majority of biomass fuel imports into Japan and South Korea will need to come in the form of industrial wood pellets or wood chips, both of which largely come from the same fiber resource base. Thus, before defining long-term biomass sourcing strategies, a detailed understanding of current and future wood fiber availability in potential supply regions is required, in order to develop a clear understanding of the risk of upcoming fiber shortages and price increases. Such assessments will also need to consider competing demand from and market expectations of other wood consuming industries, such as pulp and paper, and wood products. For example, the Japanese and Chinese pulp and paper industries, both of which are currently importing around 10 million ODMT of wood chips per year, might be wary of the increasing demand pressure, and its effect on international wood chip markets. Supply Chain Opportunity Additional challenges come from the short timelines for developing and implementing sourcing strategies, as projects in Japan have a window of only three years from receiving a FIT contract to the start of operations. This does not allow for the development of significant additional forest plantation resources, and buyers will have to contend for the existing resource base in the short- to medium-term. Competition for existing supply opportunities will be intense, and buyers will have to mobilize resources from further afield, with associated higher transport costs. Not only could this increase supply costs, at least initially, it could also lead to less favorable carbon footprints, negating some of the positive impact bioenergy can have on net carbon emissions in the power sector. Project cancellations can also be expected, as developers are likely to struggle to secure long-term supply contracts for the required biomass assortments at affordable price levels. The expectation of significant demand increases in Japan and South Korea offers interesting opportunities for a range of stakeholders across wood pellet and wood chip supply chains. Indonesia, Malaysia, Thailand and Vietnam are attractive supply sources where production capacity can be expanded, drawing on a mixture of roundwood from fast-growing forestry plantations, residues from wood processing industries, and other residue sources such as rubber wood plantations. Other regions, such as the Russian Far East, western Canada, Brazil and Australia are also expected to play important roles as potential supply regions, due to an existing biomass surplus and the potential for establishment of new plantations. Several developers of bioenergy projects in Japan and South Korea have also shown intent to invest upstream, by acquiring or co-investing in existing biomass supply projects, or by developing their own greenfield projects. However, any upstream integration strategy that does not cover the full supply chain still leaves the risk of increasing biomass raw material prices, or even supply shortages, potentially increasing investors&rsquo; exposure to risk. Only full upstream integration strategies, similar to strategies employed by Japanese pulp and paper producers, can provide a high level of supply and price security. In any case, such ventures will require comprehensive project due diligence covering all aspects of the supply chain, followed by a sound implementation strategy to successfully secure financing. The Japanese and South Korean biopower sectors are set to be the driving force behind substantial changes in dynamics for international biomass markets, and stakeholders will have to tackle considerable uncertainties. Resource owners, biomass suppliers, and bioenergy producers need to develop a sound understanding of short-, medium- and long-term price trends for each biomass assortment to avoid entering into unfavorable or unsustainable long-term fuel supply agreements. &nbsp; Authors: Pedro Campilho Senior Consultant P&ouml;yry Management Consultancy Pedro.campilho@poyry.com www.poyry.com

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The bioenergy market in Asia Pacific is still fairly immature compared to the European market. However, recent developments have led to expectations of significant biomass demand.

The Asian Biomass Market: Challenges and Opportunities Ahead

The original idea for a research project at Queen&rsquo;s University in Kingston Canada, was to develop a wood pellet with the ideal characteristics for shipping in a pipeline. According Andrew Pollard, professor at the Department of Mechanical &amp; Materials Engineering at Queen&rsquo;s University in Kingston, to make that work, the pellet would require a spherical shape, to maximize packing within the pipeline. The pellet would also need to be highly durable, and resistant to impact and abrasion with the pipeline and with other pellets. And, of course, they would have to be capable of being submerged in water&mdash;the proposed carrier within the pipeline&mdash;for prolonged periods. At the time, such a pellet did not exist, and so the team at Queen&rsquo;s initiated a research project to develop its own. Immediately, torrefaction was of interest, as pellets made using this process not only had increased energy density, but also improved hardness and, perhaps most importantly, hydrophobicity. However, the cylindrical shape of existing torrefied pellets was not optimal for use in a pipeline, and the fractured ends served as sites for water ingress and the generation of particulates or fines. To survive being shipped through pipelines, the pellets would require a continuous, smooth and impervious outer surface that would minimize damage and water ingress. To achieve this, the team made pellets by compressing the biomass between two hemispherical dies, as opposed to extruding material through a die, as with conventional pellets. Another variation to conventional processing involved torrefying the biomass within the mold cavity prior to compressing, by heating the mold to a set temperature over a period of time, and then pressing the pellet. Interestingly, the team found that offgassing of the sample created an environment within the mold/die that prevented air from interacting with the heated sample, such that an inert atmosphere was not needed during the torrefaction step. The first pellets produced were dark brown in color, consistent with torrefied pellets, and had a smooth, hard and shiny outer surface. Unfortunately, they also had a weak equatorial plane, and were thus prone to breaking into two halves.&nbsp; Not deterred, because the other attributes of the pellet halves countered many of the weaknesses of cylindrical pellets, the team focused its attention on the interactions between the biomass particles within the mold during compression, and determined that the weak equatorial plane resulted from insufficient particle-to-particle contact. Improved mixing amongst the biomass fibers was needed, and Pollard and the team redesigned the mold/die to function similar to an ice cream scoop. Subsequent pellets had the same impervious outer surface, but were significantly more robust, as evident from a modified impact test&mdash;for example, throwing the pellets against a concrete floor; they bounced with no effect on integrity. However, torrefying the biomass within the mold/die makes scaling the process to an industrial capacity difficult, if not impossible, and so the team changed its focus to determining whether the steps of torrefaction and pelletization could be decoupled, while still achieving the same, robust pellets. To help, the team brought in David Strong, Queens professor and chair in design engineering at the Natural Sciences and Engineering Research Council. Strong&rsquo;s assessment was that to be relevant industrially, the team needed to minimize the time the biomass spent in the mold/die, meaning either pretorrefying the biomass and loading it into the mold while still hot, or significantly increasing the heating rate of the biomass within the mold. The first option was fraught with material handling challenges, particularly within a university lab setting, so the team focused on the latter. However, conventional thinking at the time was that the heating rate during torrefaction could not exceed 50 degrees Celsius, and that once cooled, the torrefied material was &ldquo;set,&rdquo; and could not be brought back to a state to form a robust pellet. The researchers challenged these assumptions, and through a series of experiments, demonstrated that biomass that had been previously torrefied and cooled could be rapidly reheated and compressed to form robust pellets consistent in quality with those obtained using the original process. This was a key finding that enabled the team to further develop the process to work equally well with either raw or pretorrefied biomass, with a near-zero hold time in the compression cycle. Multiple types of biomass, both woody and nonwoody, have been successfully used in this process including poplar, switch grass, weed canary grass, oat hulls and hemp. As it turns out, the properties of Queen&rsquo;s pellets, dubbed Q&rsquo;Pellets, are also ideally suited for more traditional applications, such as cofiring with coal in the generation of electricity, and as a low-carbon fuel alternative in the production of cement. As with conventional torrefied pellets, the Q&rsquo;Pellets, when compared to white or untorrefied pellets, have increased energy density, improved hardness and friability, and hydrophobicity. However, the compression molding process used for the Q&rsquo;Pellets results in increased density that, together with their spherical shape and improved packing, leads to an increase in bulk density and therefore, bulk energy density. The Q&rsquo;Pellets also have a continuous, smooth and impervious outer surface that minimizes the generation of dust, thereby mitigating the problem of dust explosions. And further, their shell-like surface minimizes the ingress of water&mdash;anecdotally, the team is aware of a Q&rsquo;Pellet that survived a year and a half while being submerged in water, without any loss of durability.&nbsp; To assess the commercial potential of the Q&rsquo;Pellets, a spreadsheet-based model was developed to enable a techno-economic analysis and a simplified life-cycle analysis of Q&rsquo;Pellets, cylindrical torrefied pellets and cylindrical white pellets. A case study based on a hypothetical, commercial-scale plant built in Williams Lake, British Columbia, with product delivery in Rotterdam, Netherlands, was developed to compare the production of each pellet type based on their internal rates of return, and life-cycle greenhouse gas emissions. The Q&rsquo;Pellets had the highest modeled internal rate of return at 12.7 percent, with white pellets at 11.1 percent, and torrefied pellets at 8 percent. The simplified life-cycle analysis showed that Q&rsquo;Pellets had the lowest life cycle greenhouse gas emissions of the three products, 6.96 kgCO2eq/GJ, compared to 21.50 kgCO2eq/GJ for white pellets and 10.08 kgCO2eq/GJ for torrefied pellets. At these levels of life-cycle greenhouse gas emissions, white pellets are above the maximum life cycle emissions to be considered sustainable under EU regulations. Sensitivity analysis was performed on the model by modifying input variables, indicating that white pellets are more sensitive to uncontrollable market variables, especially pellet sale prices, raw biomass prices and transportation costs. A Monte Carlo analysis was also performed, which showed that white pellet production is less predictable, and more likely to lead to a negative internal rate of return compared to Q&rsquo;Pellet production. The advantages of the Q&rsquo;Pellet are clear, with increased bulk energy density, superior properties and reduced life-cycle greenhouse gas emissions. However, the Q&rsquo;Pellet technology is still in a relatively early stage of development, and more work is needed to advance its technology readiness level. Both Pollard and Strong acknowledge that this will be best achieved by collaborating with an industrial partner that has a different, yet complimentary set of skills, to move the technology forward. As such, the university&rsquo;s technology transfer office has been working to help identify industrial partners interested in developing and commercializing the Q&rsquo;Pellet technology. With an issued U.S. patent covering the Q&rsquo;Pellet mold/die design, and significant processing knowhow and expertise, the team believes that it has built a strong foundation upon which a new and proprietary pelletizing platform can be built. &nbsp; Authors: Jason Hendry Assistant Director of Commercial Development Queens University, Office of Partnerships and Innovation 613-533-6000 Jason.hendry@queensu.ca

Queens University researchers have produced a spherical pellet that is highly durable, hydrophobic and resistant to impact and abrasion. Now, an industrial partner is sought to advance the technology..

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What began as a project focused on developing pellets that could be shipped via pipeline led to the development of a new type of torrefied pellet that has increased bulk energy density, durability, and resistance to moisture.

Molding a New Pellet Design

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Japanese refiner Showa Shell Sekiyu Kabushiki Kaishaâ€™s first biomass power project in Japan began operations in 2015. Like many projects approved under the FIT have proposed, the 49-MW facility uses wood pellets and palm kernel shells as fuel. 

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Demand for imported biomass is expected to surge in Japan, in the midst of an aggressive energy landscape overhaul.   

Biomass in Japan's Best  Energy Mix

Gardiner to replace Thompson as Drax CEO&nbsp; Drax Group plc recently announced that Will Gardiner will be named group chief executive, effective Jan. 1. His appointment follows Dorothy Thompson&rsquo;s decision to step down from the position at the end of the year. Gardiner joined Drax as group chief financial officer and member of the board in November 2015. A notice released by Drax states the board has kept succession planning well under review, and his appointment to group chief executive comes after a thorough selection process involving internal and external candidates. &ldquo;Drax Group plays a strategic role in the U.K. electricity sector generating around 16 percent of U.K. renewable electricity, is a world leader in the production of wood pellets and is a leading challenger brand in the supply of electricity to businesses,&rdquo; Thompson said. &ldquo;I retire knowing the group is in excellent shape. It has the right strategy, the right team and in Will, the right leader.&rdquo; The board will now begin the process to appoint a new group chief financial officer, and will review the option to make an appointment on an interim basis. Bulk pellet delivery capacity expands in Vermont In early November, Vermont Renewable Fuels purchased a new bulk pellet delivery truck. The 2017 Kenworth, capable of hauling 16 tons of pellets with fully pneumatic delivery system, was funded in part by a $94,000 grant from the Vermont Clean Energy Development Fund. Vermont Renewable Fuels delivers bulk wood pellets throughout Vermont and surrounding areas providing over 1,300 tons of heating fuel to customers each year. They travel over 25,000 miles every heating season delivering to both residential and commercial venues. Canada pellet exports nearly double Canada&rsquo;s National Energy Board reported that the country&rsquo;s wood pellet exports increased by 46 percent between 2015 and 2016. The growth is attributed to growing global demand for biomass-fired electricity generation to replace coal-fired generation. Over the past five years, NEB said Canadian wood pellet exports have increased by 73 percent, growing from just under 1.37 billion kilograms (1.369 million metric tons) in 2012 to 2.373 billion kilograms in 2016. By weight, Canada is now the second largest wood pellet exporter, following the U.S. The U.K. is the primary destination for Canadian wood pellets, followed by Japan and the U.S. Approximately 70 percent of Canadian exports are destined for the U.K., with 11 percent shipped to Japan and 7 percent supplied to the U.S. The remaining 12 percent of exports are split between 11 other countries. The NEB attributes growth in exports to the U.S., in part, to response to growing biomass electricity generation in the U.S. Drax sells Billington Bioenergy Drax has sold Billington Bioenergy&mdash;a distributor of wood pellets in the U.K. heating market&mdash;to Aggregated Micro Power Holdings, an AIM-listed energy company specializing in the sale of wood fuels and the development of distributed energy assets, including biomass boilers and battery storage. Consideration for the transaction is &pound;2 million ($263.8 million), comprised of &pound;1.6 million of shares in AMPH and &pound;400,000 of cash. The sale of BBE is aligned with Drax's retail strategy, focused on the I&amp;C and SME energy markets. However, through its shareholding in AMPH, Drax will retain an interest in the U.K. heating market, whilst gaining exposure to the development of small-scale distributed energy assets. Pinnacle Renewable Energy&rsquo;s McCurdy wins award Rob McCurdy, CEO of Pinnacle Renewable Energy Inc., has been named is Ernst &amp; Young Entrepreneur of the Year 2017 Pacific winner. Before joining Pinnacle, McCurdy held positions across the globe spanning chemical, construction materials and mining industries. Most recently, he was the India managing director for a world-leading producer of building materials. McCurdy became Pinnacle CEO in August 2012, leading major transformation and improvement changes in the organization&rsquo;s safety and culture. Under his leadership, Pinnacle has improved its safety rate by 90 percent, significantly increased employee engagement, and improved EBITDA results by over 100 percent. Today, Pinnacle is the world&rsquo;s third-largest producer of wood pellets, shipping over 1.4 million metric tons per year from its seven B.C. locations, and the company is currently expanding into Alberta. As the Pacific region&rsquo;s EY Entrepreneur of the Year 2017, Rob will compete with top entrepreneurs from other Canadian regions for the national honor of Canada&rsquo;s EY Entrepreneur of the Year 2017. Stefanik introduces tax credit for biomass, biogas Rep. Elise Stefanik, R-N.Y., recently introduced the Renewable Electricity Tax Credit Equalization Act, which aims to extend the Section 45 production tax credit (PTC) for electricity produced from closed-loop biomass, open-loop biomass, geothermal, municipal solid waste, qualified hydropower facilities and marine and hydrokinetic facilities. The Section 45 PTC for closed-loop biomass, open-loop biomass, geothermal, municipal solid waste, qualified hydropower facilities and marine and hydrokinetic facilities expired Dec. 31, 2016. However, production tax credits for wind and solar were granted long-term extensions in late 2015. Stefanik issued statements that explained the bill&rsquo;s extension would be on the same terms and for the same time and phase-out schedule as was provided to Section 48 solar energy property in 2015. The tax credit for solar currently stands at 30 percent for projects that begin construction before the end of 2019 and phases down to 10 percent for projects that begin construction before the end of 2022. The Biomass Power Association, American Biogas Council and Energy Recovery Council are among the groups that have spoken out in support of Stefanik&rsquo;s bill. Billington Bioenergy, Forest Fuels join forces Forest Fuels has joined forces with Billington Bioenergy, under the ownership of AMP plc, providing the U.K. with its most comprehensive wood fuel distribution network to date. While the two brands will continue to operate independently, behind the scenes they will immediately combine their expertise and distribution resources. &ldquo;This is an exceptional development, not only for Forest Fuels but also for the wood fuel industry as a whole,&rdquo; said Peter Solly, Forest Fuels managing director. &ldquo;Customers from both companies will now have access to an even more comprehensive and efficient wood fuel supply chain. We&rsquo;ll have more local depots, additional numbers of specialized delivery vehicles, and an increased number of specialists on hand to deal with enquiries. We are delighted to welcome Billington&rsquo;s 34 staff members to the team.&rdquo; Previously owned by Drax, Billington has built a strong and well-regarded business in the wood pellet market in England over the past 10 years. As well as supplying around 130,000 metric tons (MT) per year of wood pellets, Forest Fuels also supplies around 70,000 MT of wood chips.&nbsp; Billington Bioenergy supplies around 40,000 MT of wood pellets. "This is wonderful news for Billington and for our customers,&rdquo; said Roger Pearson, Billington Bioenergy managing director. &ldquo;Billington Bioenergy has always endeavored to provide and deliver the very highest-quality wood fuel for our customers&mdash;by joining forces with Forest Fuels we are in an even stronger position to do this.&rdquo; GREC sells 102.5-MW biomass facility to GRU Gainesville Renewable Energy Center, a partnership of Energy Management Inc., BayCorp Holdings, Starwood Energy and Fagen Power LLC, has sold its 102.5-MW biomass facility to Gainesville Regional Utilities for $750 million. The GREC facility reached commercial operation in 2013 and sold all of its energy, capacity and environmental attributes to GRU under a 30-year power purchase agreement. Jim Gordon, CEO of GREC, remarked, &ldquo;Our biomass project had an excellent safety, environmental, and operating history. The sale was prompted by the recognition that both GREC and GRU could unlock enhanced value through this transaction.&rdquo;

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Business Briefs

Wood pellet heat is a new and growing heating alternative in the U.S., and it has been proposed as a climate-beneficial energy source to replace fossil fuels, though little work has been done to assess this claim. The opportunity for switching to wood pellet heat is particularly great for the Northern Forest region of Maine, New Hampshire, Vermont and New York, which is home to more than 2 million people who live in rural communities, larger towns and small cities surrounded by the largest intact forest in the eastern U.S. Around 42 percent of all energy consumed is for space heating, and the predominance is derived from fossil fuels. A recent commentary I wrote emphasized the need to do the math to figure out if switching energy pathways from fossil to woody biomass will have the climate benefits that many assume it will. I have been working on this issue since the 2010 Manomet study, which addressed this question for proposed stand-alone biomass electric plants in Massachusetts. Through that study and subsequent work, we have learned three key lessons when it comes to the question of emissions generated by switching from fossil fuels to wood: It matters what kind of energy is being produced, and what kind of fossil fuel is being replaced, if at all; where the energy feedstocks come from matters (e.g., tops and limbs from harvests already happening, or new harvests of whole trees); and how we manage the forest&mdash;at both the stand and landscape scales&mdash;will influence whether emissions benefits will accrue in the short term, long term, or not at all.&nbsp;&nbsp; Much of the research conducted to date to study the potential greenhouse gas (GHG) impacts of switching from fossil-fuel derived energy to woody biomass energy has focused on the electricity sector, and has not addressed comprehensively the thermal uses of wood. The new paper I co-authored with colleagues from the Spatial Informatics Group&ndash;Natural Assets Laboratory in the journal Energy explores these first two points when the heating source of homes in New England is switched from fossil fuels such as heating oil and propane to wood pellets derived from local mills. This work was conducted at the request of the Northern Forest Center, a Concord, New Hampshire-based NGO that promotes wood pellet heat as an economic development tool that reduces heating costs, supports local forest sector jobs, and reduces dependence on fossil fuels. The Northern Forest Center wanted to know if it can feel confident about the atmospheric benefits of using wood pellets for heat in the region. Our conclusions support that notion. Some key findings from the research include: &bull; Pellets from sawmill residues showed strongest GHG benefits compared to fossil fuel. &bull; Making pellets from up to 75 percent pulpwood and 25 percent sawmill residue produced benefits. &bull; Shifting existing harvest of pulpwood volume to pellets is climate beneficial. &bull; Market scenarios decreasing or increasing harvest levels greatly affected results. This work was supported by funding from the Northern Forest Center, USDA Rural Development, and in-kind support by Spatial Informatics Group LLC. Partial funding was provided by the New Hampshire Agricultural Experiment Station. The paper is available for download or pdf&mdash;contact me for a copy. Author: John Gunn Research Assistant Professor of Forest Management NH Agricultural Experiment Station &amp; UNH Cooperative Extension 603-862-2353 John.Gunn@unh.edu

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Wood pellet heat is a new and growing heating alternative in the U.S., and it has been proposed as a climate-beneficial energy source to replace fossil fuels, though little work has been done to assess this claim. 

Assessing the Climate  Benefits of Wood Heat

Japan&rsquo;s energy system has undergone several transitions over the past century, in response to changing market conditions and political and environmental shocks, and is experiencing one such transition right now. Regulators are balancing sensitive political, economic and environmental challenges as they look to build a &ldquo;Best Energy Mix&rdquo; for the year 2030. The Best Energy Mix, revealed in an energy plan by the Ministry of Economy, Trade and Industry earlier this year, includes plans to restart selected nuclear facilities, new coal development, and a renewable energy goal of 23 percent by 2030. Excluding hydroelectric generation, which has been stable for decades, Japan&rsquo;s generation from wind, solar, biomass and geothermal is set to increase from less than 1 percent in 2010 to 14 percent in 2030. Biomass is projected to account for nearly 30 percent of Japan&rsquo;s renewable power in 2030, and over 4 percent of the nation&rsquo;s total power. Much of that will likely come from imported wood pellets. Before World War II, Japan relied heavily on domestic coal as its primary energy source. It was imported oil, however, that fueled Japan&rsquo;s rapid economic growth from the mid-1950s until the oil crisis of 1973. By then, imported oil accounted for 73 percent of Japan&rsquo;s electricity production. The oil crisis led to Japan diversifying its electricity mix with nuclear power, imported coal and liquefied natural gas (LNG), displacing much of its reliance on oil. By 2010, oil accounted for just 7 percent of electricity generation with nuclear, LNG and coal representing 84 percent. Japan&rsquo;s energy system faced another shock on March 11, 2011, when the Great East Japan Earthquake struck off the coast of Miyagi prefecture. The earthquake and ensuing tsunamis caused massive destruction, killing nearly 16,000 people and damaging over 400,000 buildings, including the Fukushima Daiichi Nuclear Power Plant. At the Fukushima NPP, cooling systems failed, leading to a meltdown of three of the plant&rsquo;s six reactors and a reevaluation of nuclear power by the Japanese public and regulators. After the Fukushima Daiichi Nuclear Disaster, regulators began the process of shutting down the country&rsquo;s NPP, all 54 of which were closed in two years. In August 2015, regulators started allowing recommissioning of selected, low-risk reactors, beginning with the restart of the Sendai NPP. As of early November, a total of five NPPs have resumed operation. In the aftermath of the disaster, Japan significantly increased its use of LNG imports to supplement displaced nuclear energy. In the five years since the disaster, LNG imports have increased 28 percent, compared to the five years prior to the disaster. In 2016, LNG accounted for 42 percent of Japan&rsquo;s electricity, up from 29 percent in 2010. Moving forward, METI has laid out a plan called the &ldquo;Best Energy Mix&rdquo; for 2030, which includes 21 percent nuclear energy, 27 percent LNG, 26 percent coal, 3 percent oil and 23 percent renewables. Renewable energy in Japan is promoted by the country&rsquo;s feed-in tariff (FIT) system, which provides independent power producers (IPP) a set power price over an extended contract period. The FIT for larger (greater than 2 MW) biomass power plants is a 20-year contract with prices ranging from 20 &yen;/kWh ($0.18/kWh) for &ldquo;general wood,&rdquo; which includes wood pellets, to 32 &yen;/kWh ($0.28/kWh) for domestic, unutilized biomass. Due to an overwhelming response, the FIT for general wood was lowered in October from 24 &yen;/kWh ($0.21/kWh), though dozens of projects have already been awarded FITs, and will enjoy the higher rate. In a new FutureMetrics study, more than 130 biomass IPP projects are analyzed. These projects, if successful, would use 4.5 million metric tons (MT) of pellets, 3.3 million MT of palm kernel shells and 10.2 million MT of domestic and imported wood chips. In addition to pellet demand from biomass IPPs, Japan could see a significant market for pellet cofiring at its coal plants. As a way of making Japan&rsquo;s increasing reliance on coal more politically and environmentally palatable, regulators have set Best Available Technology standards for thermal power plants. The BAT for coal plants is considered Ultra-Supercritical generation. About two-thirds of Japan&rsquo;s current coal fleet does not meet the USC standard, and one way to comply is cofiring wood pellets. Plant efficiency is calculated by dividing energy output by energy input. METI has allowed energy input from biomass cofiring to be deducted from coal fuel input. Essentially, the plant&rsquo;s efficiency is calculated by only its coal input. Just to meet this standard, Japan&rsquo;s existing fleet would need to cofire nearly 4 million MT of wood pellets. Japanese regulators are in a difficult situation, balancing sensitive political, economic and environmental concerns, while planning for the future composition of the country&rsquo;s electricity grid. In the post-Fukushima era, a balanced approach to energy will take shape, one that is likely to include a significant amount of biomass and wood pellets. Author: Seth Walker Senior Economist, FutureMetrics LLC sethwalker@futuremetrics.com 617-702-2418

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Japan's energy system has undergone several transitions over the past century, in response to changing market conditions and political and environmental shocks, and is experiencing one such transition right now

Japan's Energy Industry Embraces Biomass

For the second time in two years, Japanese wood pellet demand dominated the conversations at the U.S. Industrial Pellet Association&rsquo;s annual conference. This year, the conference was moved to Las Vegas, and most attendees attributed this to an interest in making the conference a little easier for, and a little more attractive to, Japanese attendees. While never officially confirmed by anyone from USIPA, deliberately shaping the conference to foster more dialogue with buyers in Japan would be hard to argue against. On the conference&rsquo;s opening day, Bill Strauss with FutureMetrics, quoted in our comprehensive review of the Japanese market inside this issue, presented a bar graph charting the growth of industrial wood pellet sector through 2025. The graph projected the industry to grow aggressively, at a rate of nearly 3 million tons per year. A closer examination of the chart reveals that this impressive growth trajectory hinges on Asian demand, predominantly in Japan and South Korea. His analysis shows pellet volumes in South Korea and Japan swelling to over 17 million tons by 2025, or roughly the size of the entire industrial market right now. This issue of Pellet Mill Magazine makes it clear that while the policy drivers behind these anticipated volumes support industrywide excitement about the opportunity, the practical reality of growing these markets to their exciting potential is another thing altogether. Throughout the discussions in Vegas, I found myself comparing and contrasting the opportunity for the industrial pellet industry in Japan to the market that can be credited for the rise of industrial pellet production in North America in the first place&mdash;the United Kingdom. While the industry may not have said so at the time, it could not have asked for a better customer to build itself upon than the Drax Power Station. Together, Drax&rsquo;s scale and singularity answered many of the questions the industry is still struggling with in Japan. The investments that needed to be made in port logistics and rail transport could all be tied to Drax, and by extension, the financial support of the conversion by the British government. This derisking catalyzed massive investments and the expected volumes began to flow. The Japanese market will look nothing like the market in the U.K. There is no Japanese equivalent of Drax, and as a result, the industry and its logistical partners will have to find new ways to answer the same questions. Author: Tim Portz Vice President of Content &amp; Executive Editor tportz@bbiinternational.com &nbsp;

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The Japanese market will look nothing like the market in the U.K. There is no Japanese equivalent of Drax, and as a result, the industry and its logistical partners will have to find new ways to answer the same questions. 

November/December PMM

Business Briefs

Business Briefs

Columns

Assessing the Climate Benefits of Wood Heat

Japan's Energy Industry Embraces Biomass

The Industry's Second, More Challenging Act

Featured

Biomass in Japan's Best Energy Mix

Contributions

The Asian Biomass Market: Challenges and Opportunities Ahead

Molding a New Pellet Design

November/December PMM.css-7jxktu{position:absolute;bottom:0px;left:0px;right:0px;height:3px;border-radius:3px;background-color:var(--chakra-colors-brandBlack);}

Business Briefs

Business Briefs

Columns

Assessing the Climate Benefits of Wood Heat

Japan's Energy Industry Embraces Biomass

The Industry's Second, More Challenging Act

Featured

Biomass in Japan's Best Energy Mix

Contributions

The Asian Biomass Market: Challenges and Opportunities Ahead

Molding a New Pellet Design

November/December PMM