A 14-day mission to Japan is at an end. The round trip, which included conferences, a tradeshow along with a number of study visits to a variety of sites on the main island of Honshu was not the only biomass “mission” to Japan.
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Other overseas biomass related organisations and agencies such as Advantage Austrian, Finland Trade Centre, Wood Pellet Association of Canada (WPAC), World Bioenergy Association (WBA) and US Industrial Pellet Association (USIPA) together with member companies all had missions of their own and our paths crossed on one or more occasions over the period.
CMT’s recently concluded 8th Biomass Power conference in Tokyo was one such occasion. The well-attended two-day conference with optional dinner and post-conference study tour was preceded by a workshop.
In last year’s conference review, I suggested that (primarily) North American pellet producers had “hopes pinned on that Japan will soon emerge as the new go to market”. Twelve months later at the close of this year’s edition, it seemed almost more like a call for last orders; those that attended the post-conference CIY (cook it yourself) dinner at Kirin Brewery, a most pleasurable conference rounding-off by all accounts or the post-conference drive by tour get the drift.
The world’s largest pellet producer US-based Enviva revealed that it has recently set-up shop in Japan with a representative office. For BC Canada based Pinnacle Renewable Energy, currently the world’s third-largest wood pellet producer, Japan is not a “new” go to market but rather a “develop further” market as it has supplied into the Japanese market for a number of years.
Apart from its geographical proximity with 12 – 14 days shipping, its recent confirmation to go ahead and build its Entwistle 475 000 tonne-per-annum capacity plant, its first facility in Alberta, suggests getting the house in order given that much of its existing production capacity is already spoken for in long-term contracts.
Those that had also participated in the Asia workshop at Argus Biomass in London a few weeks prior would have heard some overlap in Tokyo yet here it was more vivid in context. The hint of urgency, expressed by Japanese representatives at Argus as being ready to sign long-term pellet supply agreements, was more tangible in Tokyo – the end of September deadline approaches after which the 20-year feed-in tariff (FIT) for large-scale (>2MWe) biomass power projects based on imported biomass drops JPY3/kWh.
Underlining readiness were the pitches from North American pellet producers and representatives – with potential deals in the offering words were being weighed. An ill-considered, indeed unnecessary remark from one camp about feedstock quality of the other ignited a brief public spat that potentially bewildered a large part of the audience highlighted the intensity.
Such a remark may have been taken with humour and collegial banter, as perhaps it was intended, at an event like Argus in a mature industrial pellet market where everyone is familiar with the products and players but not at an event in a market where a collective effort from the entire industry is needed to educate, reassure and develop it.
Whilst stakeholders in the wood pellet industry value chain, including producers, traders and utility end-users have gone to considerable lengths to establish pellets as a commodity like product with standardised quality, contract and shipping specifications along with sustainability certification schemes, it would seem that much remains to be done on the palm kernel shell (PKS) value chain.
Though there are significant differences between the two not least that PKS is almost exclusively a regional fuel aggregated from oil palm mills into shipping volumes by third-parties and that contracts tend to be short-term or spot-like, issues surrounding sustainability and how to demonstrate it back to the oil palm plantation will sooner rather than later become a hot topic. Especially seeing the rapid year-on-year growth of PKS imports to Japan since 2012.
However, judging from the presentations and discussions from PKS suppliers, some seemed unperturbed even unaware of sustainability debates and unwilling to consider it a factor moving forward confident in PKS being a residue – after all, “nobody plants oil palm to produce PKS for fuel”. True and the same can be said of wood pellets, nobody plants trees or logs forest just to produce pellets yet in a subsidised market it has had to and continues to have to prove its license to operate.
This “not our problem” stance seems odd given that the oil palm industry itself, from growers to suppliers of crude palm oil (CPO), oleochemicals and residues like PKS and Palm Oil Fatty Acid (PFAD) are all currently engaged in high-profile and infected sustainability debates, albeit primarily in Europe, that now transcends all uses and its derivatives, not just biofuels and subsidised markets.
It does seem unlikely that Japanese regulators will place sourcing and sustainability demands on imported woodchips and wood pellets as a qualifier for feed-in tariff (FIT) but give carte blanche to PKS. And if only partial ferocity of European environmental non-governmental organisations (ENGO’s) were to gain a foothold amongst Asian counterparts then unsuspecting PKS suppliers will be in for a very rude awakening indeed.
