In a significant policy shift, South Korea announced on December 18, 2024, that it would end renewable energy subsidies for new biomass projects and for state-owned coal and biomass power plants starting January 2025.
The statement also included South Korea’s commitment to gradually phase out subsidies that currently support existing power plants using imported forest biomass fuel.
This shift has been described as the “largest biomass policy rollback in Asia,” according to South Korean environmental nonprofit Solutions for Our Climate (SFOC). South Korea is currently the second-largest consumer of forest biomass in Asia, having imported 3.9 million metric tons of wood pellets as of April 2024.
Environmental activists have welcomed the move, asserting that reducing support for imported biomass will help ease pressure on forests threatened by the biomass market, particularly tropical forests in Southeast Asia.
Moving Away from Imported Wood Pellet Dependence
South Korea’s biomass policy reform stems from a joint initiative between the Ministry of Trade, Industry, and Energy (MOTIE), the Korea Forest Service, and the Ministry of Environment.
Together, they have decided to curb the country’s reliance on imported wood pellets in response to criticism about the negative impact of biomass on forests and the climate.
Until the end of 2024, South Korea had subsidized biomass through its Renewable Energy Certificate (REC) program. Over the past year alone, the government allocated around USD 688 million to support power plants using biomass to meet electricity quotas.
Under the new policy, subsidies for six state-owned power plants using coal and biomass will cease in January 2025. Meanwhile, the REC weighting for three state-owned dedicated biomass power plants will be phased out by 2027.
For privately owned power plants, REC weighting for biomass co-fired with coal will be gradually removed over the next 10 years, while the REC weighting for dedicated biomass plants will be reduced over the next 15 years.
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Indonesia’s Role in South Korea’s Pellet Imports
By early 2024, South Korea imported 84% of its wood pellets, with 71% of those imports coming from Southeast Asia, particularly Vietnam. However, it has also been increasing biomass wood pellet imports from Indonesia.
In October 2024, Moon Dae-Lim, a lawmaker from South Korea’s opposition Democratic Party, criticized wood pellet imports sourced from natural forests cleared in Gorontalo Province, Indonesia.
Moon called for a temporary moratorium on Indonesian wood pellet imports while supply chain investigations were carried out.
It was reported that the wood pellets from Gorontalo were exported by PT Biomass Jaya Abadi (BJA), which purchased raw material from two palm plantation companies converting biomass in the same area. All three companies were highlighted in Moon’s report, which stated that South Korea imported 65% of its wood pellets from BJA.
In addition to South Korea, BJA also exports pellets to Japan, where Hanwa, a Japanese company, owns a 20% stake in BJA.
An October 2024 report by a coalition of NGOs, Earth Insight, Auriga Nusantara, Forest Watch Indonesia, Solutions for Our Climate (SFOC), Trend Asia, and Mighty Earth—revealed that between 2021 and 2023, South Korea received approximately 62% and Japan 38% of Indonesia’s wood pellet exports.
Between 2021 and 2023, Indonesia’s wood pellet exports to South Korea grew from about 50 metric tons to 68,025 metric tons, while exports to Japan rose from 54 metric tons to 52,735 metric tons, according to data gathered by Auriga Nusantara.
Plans to expand domestic biomass use are currently in the works. Meanwhile, deforestation for biomass projects has emerged in regions such as Kalimantan, Sulawesi, and Papua.
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A Policy Divergence with Japan
While South Korea has taken steps to reduce subsidies, its neighbor Japan is on track to become the world’s largest importer of wood pellets by 2030.
Countries exporting biomass fuel to Japan include Vietnam, Canada, Indonesia (with rising volumes), and potentially the state of California in the United States.
Although the Japanese government has removed financial incentives for new biomass projects, it has not committed to phasing out existing subsidies. Biomass power plants already in the pipeline will continue to be eligible for government support.
Japan is not only increasing imports of Indonesian wood pellets but is also actively involved in developing biomass projects in Indonesia for its own energy use. In December 2023, Mighty Earth reported that Japanese entities were involved in 49 biomass cofiring projects in Indonesia.
“When South Korean lawmakers called for a moratorium on biomass imports from Indonesia, Japanese policymakers did the opposite,” said Roger Smith, Director of Mighty Earth Japan, in an email to Mongabay.
The push for various biomass projects is partly supported by the Asia Zero Emission Community (AZEC), an alliance led by the Japanese government established in early 2023. AZEC aims to promote decarbonization across Southeast Asia through a range of technologies, including bioenergy.
This agreement includes nine biomass-related projects in Indonesia, out of 30 total biomass or biofuel projects in the region. These include building wood pellet plants, converting coal-fired power plants to fully biomass-based operations, or partial coal/biomass cofiring conversions.
Several Japanese industrial giants and financial institutions are involved in these projects, such as Mitsubishi Heavy Industries, Sumitomo Heavy Industries, and IHI, along with public agencies like the Japan International Cooperation Agency (JICA) and Nippon Export and Investment Insurance (NEXI).
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