In a significant policy shift, South Korea has announced plans to reduce subsidies for biomass energy, particularly targeting imported wood pellets. This decision, driven by environmental concerns, is set to reshape the dynamics of the global wood industry. Effective January 2025, South Korea will:?
- Cease subsidies for all new biomass energy projects.?
- End support for six state-owned plants co-firing coal and biomass.?
- Gradually reduce subsidies for three state-owned dedicated biomass plants by 2027.?
- Phase out subsidies for six privately owned co-firing plants over the next decade.?
- Decrease subsidy weightings for 12 dedicated private biomass plants over the next 15 years.?

Notably, subsidies for domestically produced wood pellets and chips remain unchanged, including those co-fired with coal.

South Korea has heavily relied on imported wood pellets, with imports accounting for 82% of its demand in 2023, making it the world`s third-largest importer. A significant portion of these imports originated from Southeast Asia, particularly Indonesia. Reports have linked these imports to deforestation and carbon emissions, prompting environmental groups to advocate for policy changes. The reduction in subsidies is expected to decrease demand for imported biomass, potentially alleviating pressure on tropical forests. However, the continued support for domestic biomass raises concerns about increased logging within South Korea.?

South Korea`s policy shift may influence other nations, such as Japan, to reassess their biomass energy strategies. For the global wood industry, this change signals a potential decrease in demand for exported wood pellets, urging producers to explore alternative markets or diversify their product offerings.? Industry stakeholders should monitor these developments closely, as they may affect pricing, trade flows, and investment decisions in the biomass sector.

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Sources:
1. local10.com
2. apnews.com
3. news.mongabay.com
4. usnews.com
5. businessmirror.com.ph