Biomass energy subsidies in South Korea and Japan are threatening Southeast Asia’s tropical forests, warns a new report by environmental NGOs. Of particular concern is the nascent but rapidly growing woody biomass industry in Indonesia, where rainforests are already being cleared to make wood pellets to be burned for electricity.

The report, published in October by Earth Insight, Auriga Nusantara, Forest Watch Indonesia, Solutions for Our Climate (SFOC), Trend Asia, and Mighty Earth, notes that South Korea received around 62% and Japan 38% of Indonesian wood pellet exports over 2021-2023. During that same period, Indonesian wood biomass export volumes grew by orders of magnitude, rising from a trickle of just over 100 metric tons annually to more than 1,000 times that.

However, Indonesia’s biomass production isn’t only for export. Thanks to the support of Japanese businesses and government institutions, Indonesia has begun burning wood pellets alongside coal in many of its own power plants, a practice known as cofiring, in order to reduce its greenhouse gas emissions (at least on paper). Plans to further expand in-country biomass use are in the works. Meanwhile, deforestation for biomass projects has already arisen in the country’s Kalimantan, Sulawesi and Papua regions.

At the COP16 U.N. biodiversity summit held in Colombia several weeks ago, forest advocates urged policymakers to end forest biomass subsidies harmful to biodiversity, such as those now providing an incentive to bulldoze and burn Indonesian forests. But the conference ended without significant progress on redirecting these “perverse subsidies,” a label given to government giveaways that significantly harm the environment.

The clear-cutting of forests to supply biomass — falsely claimed to produce zero emissions when burned — is happening worldwide despite a rapidly escalating climate crisis in which intact forests, with their ability to store carbon, remain among the best means of slowing global warming.

Corporate interests and legacy subsidies

Although Indonesia didn’t track wood pellet exports until 2000, available data show how quickly the biomass industry has grown in the archipelagic country.

Between 2021 and 2023, Indonesian wood pellet exports to South Korea grew from roughly 50 metric tons to 68,025 metric tons, and exports to Japan grew from 54 metric tons to 52,735 metric tons, according to figures compiled by Indonesian NGO Auriga.

Biomass subsidies from the two importing Asian nations are driving this exponential rise, forest advocates say.

In South Korea, the Ministry of Trade, Industry and Energy’s (MOTIE) Renewable Energy Certificate (REC) program awards some of its highest subsidies to biomass. Despite previous tweaks to REC weightings, imported biomass is still heavily subsidized, and legacy coal/biomass cofiring projects still receive high subsidy levels, according to South Korean nonprofit SFOC. Biomass imported into South Korea isn’t subject to strict sustainability requirements, though it is checked for document-based proof of legality.

The South Korean government requires energy producers to gradually increase their ratio of renewable energy year by year. This requirement is “probably the biggest factor driving [biomass] consumption in South Korea” alongside the REC weightings, said Hansae Song, SFOC’s program lead for forests and land use. The South Korean government is set to review its REC weightings again this year.

In Song’s view, South Korean policymakers are increasingly aware of biomass’s harmful environmental impacts, a trend also tentatively seen in Japan. In fact, MOTIE’s energy plan aims to cap bioenergy generation capacity at 2023 levels. The ministry didn’t respond to Mongabay’s request for comment.

“I think the hidden drivers [of biomass use in South Korea] are not so much the government’s energy policy or what it wants our energy mix to be in 2030 or 2050. It’s more about the existing corporate interests that are blocking any sort of changes that could harm their existing biomass fleet [of power plants],” Song said.

Concern over biomass imports has reached South Korea’s National Assembly. In October, Moon Dae-Lim, a lawmaker with the opposition Democratic Party, presented a report on South Korean wood pellet imports driving the destruction of rainforest on Indonesia’s megadiverse Sulawesi Island. Moon has called for a moratorium on Indonesian wood pellet imports while the supply chain is investigated.

The pellets in Sulawesi are exported by Indonesian company PT Biomass Jaya Abadi (BJA), which buys them from a pair of palm-oil-turned-biomass-plantation companies operating nearby. The three companies were highlighted in Moon’s report, which claimed South Korea imports 65% of BJA’s wood pellets.

BJA also sends pellets to Japan, with major Japanese biomass importer Hanwa holding a 20% stake in BJA.

In an email exchange with Mongabay, Hanwa acknowledged that rainforest was being cleared as part of its Indonesian biomass venture. However, the company downplayed the significance of the rainforest in question, saying it was regenerating “secondary” forest rather than old-growth “primary” forest. The firm also said there was nothing illegal about its activities, responding to allegations that its exports have broken various laws.

Phil Aikman of U.S.-based NGO Mighty Earth disputed Hanwa’s characterization of the forest in question, telling Mongabay that while it’s “technically not untouched ‘primary forest’ as some logging may have taken place previously … from satellite imagery the entire area is high-quality secondary forest with minimal fragmentation from logging roads.”

Hanwa also acknowledged that wood pellets had been produced not just from the tree plantations set up in the deforested areas, but also from natural forest logs that were cut down to make way for the plantations.

The Hanwa rep added that in May 2021, BJA obtained a wood pellet processing license from the Indonesian government allowing it to produce 900,000 metric tons of wood pellets annually, seven times more than the volume Auriga reported BJA exported in 2023. The Hanwa representative also noted that one of BJA’s suppliers had planted approximately 11 million gamal (Gliricidia sepium) trees — ready for harvest after about four years — in its plantation as of last November.

“By making good use of industrial land that has been neglected and degraded over the years, biomass projects can produce wood pellets … without further clearing primary forests, thus contributing to the transition to net zero,” the Hanwa rep said.

Critics, though, point to studies showing that burning wood biomass emits more CO₂ than coal and other fossil fuels per megawatt of energy generated.

Aikman said he believes the vast majority of the rainforest in the Sulawesi concessions could be classified as “high-carbon stock,” a term used by companies and conservationists to denote valuable forests that should be kept standing. “Protecting such HCS forest areas for climate and biodiversity goals has become the standard of both the palm oil and pulp and paper industries in Indonesia,” he noted.

Facilitating Indonesia’s transition to biomass

Japan isn’t only importing a growing volume of Indonesian wood pellets. It is also helping set up biomass projects in Indonesia for that nation’s own energy production. Mighty Earth reported in December 2023 that Japanese organizations were involved in 49 biomass co-firing projects in Indonesia.

Domestically, Japan’s subsidy-approved forest biomass energy capacity has not grown since 2018, when the government amended its biomass subsidy scheme, although biomass power plants planned and approved up to 2018 continue to come online even now. However, Japanese fuel traders, utilities and power plant equipment manufacturers appear to be targeting wider Southeast Asia to further develop their biomass business.

This biomass push is assisted, in part, by the Japan-led Asia Zero Emission Community (AZEC), a government platform established in early 2023. AZEC aims to promote decarbonization across Southeast Asia via various technologies, including bioenergy.

AZEC has used top-level meetings and public-private investment forums to facilitate more than 150 memorandums of understanding with partners across the region. These agreements include nine biomass projects in Indonesia, out of a total of 30 projects in the region related to biomass or biofuel; in fact, biomass and biofuel projects outnumber those for any other technology.

AZEC’s biomass projects in Indonesia include establishing wood pellet mills, converting coal plants fully to biomass, or converting them to coal/biomass cofiring. Other project summaries refer only to “decarbonizing” Indonesia’s energy sector, without specifying how. Participants include major Japanese corporations like Mitsubishi Heavy Industries, Sumitomo Heavy Industries, and IHI, as well as public institutions such as the Japan International Cooperation Agency and Nippon Export and Investment Insurance.

In a written statement to Mongabay, a representative from Japan’s Ministry of Economy, Trade and Industry (METI), which sets Japan’s biomass policies and is one of AZEC’s managing agencies, declined to comment specifically on how rainforests could be protected as biomass projects proliferate across Southeast Asia, noting that the situation varies by country. The METI representative said that Japan, with regard to its own biomass fuel sourcing, takes measures to prevent illegal logging.

The AZEC projects, still largely in the research and planning stages, “are being considered while taking into account the needs and regulatory environment of the partner country,” the METI representative said. “For projects receiving specific financial support from the Japanese government, we will also separately confirm compliance with local government regulations.”

The METI rep also noted that AZEC MOUs don’t just consider forest biomass, namely wood pellets, but also nonforest biomass, such as rice husks and unused portions of coconut and palm plants, which are byproducts of separate industries.

Nevertheless, the majority of AZEC’s biomass and biofuel projects are likely “not green,” according to an analysis by Japanese NGO Global Environmental Forum (GEF) and published as part of a briefing by research group Zero Carbon Analytics.

“Every country is in a slightly different situation when it comes to what kind of bioenergy or biomass that we’re talking about,” Song, the South Korean forest campaigner, acknowledged. Some, including Indonesia, may have potential for nonforest biomass that could contribute to resource circulation and circular economies. For example, GEF viewed a handful of AZEC-supported methane-capture projects in the palm oil industry as beneficial for the environment.

However, Song is firm that forest biomass projects merely add more pressure to the already unsustainable level of deforestation in Indonesia. “A lot of it is coming from natural forests” rather than tree plantations, he said, “and that’s the red line that we should never cross.”

Banner image: Wood pellets produced by PT Gorontalo Citra Lestari, a biomass company operating in Gorontalo province. Image courtesy of Forest Watch Indonesia.

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