For Immediate March 14, 2023

New analysis reveals top 20 Japanese companies for wood biomass GHG emissions and identified the 20 leading financial institutions engaged in biomass project finance

Tokyo– On March 8, a coalition of six citizen and environmental groups,  HUTAN Group, Mighty Earth, Japan Tropical Forest Action Network, Plantation Watch, Fair Finance Guide Japan, and Fridays For Future Sendai, issued a letter to 20 companies engaged in biomass power generation in Japan using imported biomass warning them of climate and forest impacts from wood biomass and urging them to rethink their projects. These companies had large-scale biomass power plants with a capacity of 50 MW or greater certified under the FIT (Feed-In Tariff) renewable energy incentive system. The groups also sent 20 financial institutions that provide project finance for wood biomass a letter of request for engagement with project developers and a request to reconsider investments and loans for such projects.

Wood Biomass Power Plants Emit Large Amounts of GHGs and are not Carbon Neutral

Although there are claims that woody biomass power generation is carbon neutral because trees absorb CO₂ from the atmosphere as they grow, greenhouse gas (GHG) emissions are immediately released when biomass is burned, and its emission factor is higher than that of coal-fired power generation.^[1] In addition, many researchers report that cutting down and burning trees exacerbates global warming for decades or centuries, as it takes growing trees many years to reabsorb the emitted GHGs.^[2] There is also the risk that if reforestation does not occur after logging, the natural environment will not recover and there will be no carbon sequestration.

Wood Pellet and Chip Production is Linked to Forest and Ecosystem Destruction in N. America and S. Asia with Negative Impacts on Local Communities

In 2022, representatives of the above organizations visited sites producing wood pellets in the United States and British Columbia, Canada and confirmed primary and old-growth natural forests are being cut down to produce biomass fuel^[3][3-2[3-3 (see the attached summary, “Overview of Pellet Production Sites”).

Biomass Power Fails to Contribute to Japan’s Energy Security; Risks of Business Failure are Increasing; Further burden on Energy Consumers Should be Reduced

We recently calculated the CO₂ emissions of Japanese biomass power plants, including emissions from combustion, certified under the FIT system with a capacity of 50 MW or more. Kansai Electric Power Company (KEPCO) was the top biomass power producer, with a total capacity of approximately 250 MW from its three power plants, and its CO₂ emissions were 2.74 million tons. Following them in the ranking were Osaka Gas, Tokyo Gas, Chubu Electric Power, Mitsubishi Corporation, Kyushu Electric Power, Renova, Sumitomo Corporation, and Japan Petroleum Exploration Co. (see figure 1).

The top financial institution providing project finance for biomass power generation is Sumitomo Mitsui Financial Group (SMFG), which has financed eight power plants totaling approximately 730 MW and emits approximately 8 million tons of CO2 annually. SMFG was followed by Japanese megabanks (public and private), regional banks, and life insurance companies, including Mizuho, Sumitomo Mitsui Trust, Mitsubishi UFJ, Yamaguchi Bank, Iyogin, Resona, Daishi Hokuriku Bank, Bank of Yokohama Concordia, and Nippon Life Insurance (see figure 2).

In the request letter we sent, we detailed the above-mentioned issues and asked the power generation companies, “Do you count emissions from combustion in your GHG protocol and SBTi reporting?”, “How do you ensure traceability when procuring fuel?”, and “Will you reconsider your business if you identify problems?” For the financial institutions, we asked “Do you plan to develop a policy regarding wood biomass power generation projects?”, “How will you engage with power generators you invest in?”, etc. We have requested responses by March 24 (see the attached factsheet, “Calculation Method for CO2 Emissions from Woody Biomass Combustion”).

The recent depreciation of Japanese yen and high transportation costs have driven up the cost of procuring biomass fuel. In September 2022, HIS Super Power, which was engaged in palm oil power generation, became insolvent and gave up their business. In Vietnam, the largest producing country of wood pellets, its largest exporter An Viet Phat Energy, was found to have committed certification fraud and was suspended from the FSC certification system,^[4] which Japan uses to demonstrate legality under the Feed-In Tariffsystem. Many wood-burning biomass power plants are not yet operational, and their projects can be reconsidered. We will continue our dialogue with power generation companies and financial institutions.

Figure 1: Top 20 Biomass Power Generators Using Imported Fuel

(in order of total greenhouse gas emissions)

Figure 2: Biomass power generation capacity and its CO₂ emissions by financial institutions 

*Only plants with a capacity of 50 MW or more are counted. 

*1) Total generation capacity of power plants in which each financial institution is involved.

*2) Total emissions from power plants in which each financial institution is involved.

For more information (English or Japanese): Ishizaki, HUTAN Group. Email: contact-hutan@hutangroup.org

^[1] Manabu Utagawa. “CO2 Emissions from Biomass Power Generation,”(National Institute of Advanced Industrial Science and Technology., p.6 https://www.gef.or.jp/wp- content/uploads/2022/12/bbd4731754105f73e348ee35cca7119c.pdf  

^[2] See Global Environmental Forum (Japanese): “Imported Woody Biomass Worse than Coal – The Importance of Carbon Sequestration through Forest Conservation.”

^[3] See the seminars hosted by Global Environmental Forum (Japanese): “Visit Report – Forestry and Wood Pellet Production in British Columbia, Canada”, “The Impact of Wood Pellet Production on Forest Ecosystem in the South East U.S.”, “Visit Report – Wood Pellet Production in the U.S.”

^[4] https://www.argusmedia.com/es/news/2386288-fsc-suspends-vietnamese-wood-pellet-producer-avp?amp=1

and https://toyokeizai.net/articles/-/633934