Japan`s rapidly growing demand for wood biomass, wood pellets and wood chips is beginning to have significant effects on international wood raw material flows. Recent satellite-based analysis indicates that expanding biomass production for export could become an additional driver of deforestation in Indonesia, home to some of the world`s most important tropical forests.

🌲 Japan uses biomass as part of its strategy to diversify energy production and reduce dependence on fossil fuels. However, the rapid expansion of wood pellet imports is generating increasing demand for wood raw material from Southeast Asia.

According to data cited by the Associated Press, Japan imported a record approximately 8.64 million tonnes of wood pellets in 2025, around 35% more than in the previous year.

Japan`s wood pellet imports from Indonesia increased by more than 500%

One of the most significant developments can be seen in the wood trade between Japan and Indonesia. Japanese imports of wood pellets from Indonesia increased from approximately 66,460 tonnes in 2023 to more than 402,000 tonnes in 2025.

This represents growth of more than 500% in only two years and has made Japan one of the most important destinations for Indonesian wood biomass exports.

🪵 According to recent bioenergy market data, Japan accounted for close to 75% of Indonesia`s wood pellet exports in 2025, highlighting the influence that Japanese energy policy can have on regional wood and biomass markets.

More than 750,000 hectares covered by biomass concessions

Analysis conducted by Earth Insight together with Indonesian organisations Auriga Nusantara and the Indigenous Peoples` Alliance of the Archipelago - AMAN - indicates that Indonesia has granted at least 45 concessions associated with biomass production, covering more than 750,000 hectares of natural forest.

Environmental organisations warn that expanding production of wood pellets, wood chips and other forms of biomass could lead to the conversion of natural forests into energy plantations dedicated to producing wood raw material.

The risks are not limited to forest loss. Expansion of biomass production may also affect biodiversity, vulnerable wildlife habitats and local communities that depend economically and socially on forests.

Wood biomass: renewable energy, but under specific conditions

📊 Biomass is classified as a renewable energy source in many energy systems, but its climate and environmental impact depends heavily on the origin of the wood, harvesting methods, forest regeneration and the type of raw material used.

Using sawdust, residues from the wood industry, forestry residues and other wood-processing by-products can have a very different sustainability profile compared with harvesting natural forests or converting forest areas specifically for energy production.

The International Energy Agency supports the sustainable development of bioenergy, particularly through the use of residues and waste materials, while environmental organisations warn about the risks that can emerge when stronger demand for biomass results in additional pressure on forests.

A growing market for the global wood industry

From a commercial perspective, rising Asian demand for biomass could reshape international flows of wood, timber, wood pellets, wood chips and wood residues.

For European wood producers and traders, the development of the Asian bioenergy sector deserves close attention because it may indirectly influence wood prices, international trade flows and the availability of raw material across global markets.

For a broader perspective on raw material costs, wood demand and market conditions, professionals can consult WoodBusinessPortal.com`s analysis of the wood market in 2026, including wood prices, demand and industry trends.

Wood traceability is becoming essential

The central issue for the market is not biomass itself as an energy source, but the origin of the wood raw material.

For international buyers of wood pellets and biomass, traceability systems, certification and supply-chain verification are becoming increasingly important. Companies able to demonstrate the legal and sustainable origin of wood may gain a commercial advantage in markets where environmental requirements are becoming stricter.

🌎 This trend is highly relevant to European wood companies as well, particularly as regulatory and customer requirements increasingly focus on forest origin, timber traceability and deforestation risk.

For more information on the growing importance of technology and supply-chain transparency, see WoodBusinessPortal.com`s coverage of technology, traceability and added value in the wood industry.

High raw material prices add another dimension

The growth of the biomass market is occurring at a time when parts of the international wood and timber market are already experiencing elevated raw material costs.

For sawmills, timber traders and wood processors, competition for raw material from the energy sector can become particularly important when log availability is limited or when wood prices remain high.

European producers are already dealing with a significant gap between the cost of logs and the prices that buyers are willing to pay for sawn timber and processed wood products.

A detailed overview is available in WoodBusinessPortal.com`s analysis of high European log prices and current lumber market trends.

What does the biomass boom mean for the wood industry?

For professionals across the forestry and wood sector, the expansion of Asian biomass energy markets could have several commercial consequences:

🪵 stronger international demand for wood pellets and wood biomass;
🌲 additional pressure on forests and timber traceability systems;
📈 new wood trade flows between Southeast Asia and major importing economies;
📦 increased demand for sawdust, wood residues and wood-processing by-products;
🌎 stricter sustainability and origin requirements for forest products.

For wood pellet producers, sawmills, forestry companies and timber traders, these developments demonstrate that the biomass market is becoming increasingly interconnected with the global wood market.

Competition for raw material can affect not only energy wood but also pulpwood, industrial roundwood and some assortments used by sawmills and other wood-processing companies.

Outlook for the global wood and biomass market

Over the medium term, continued expansion of biomass energy production in Japan and other Asian economies could support demand for wood pellets, wood chips, sawdust and other wood residues.

However, increasing concerns about deforestation could also result in stricter sustainability standards, stronger traceability requirements and greater scrutiny of international wood biomass supply chains.

For companies operating in the wood industry, this development creates both opportunities and risks. Additional biomass demand may open new export markets, but access to these markets is likely to depend increasingly on the ability of suppliers to demonstrate the legal and sustainable origin of wood.

Wood market intelligence becomes increasingly important

Companies operating in forestry, sawmilling, wood processing, biomass and international timber trade therefore need to monitor wood prices, timber supply, wood pellet demand, wood imports, wood exports, forest regulations and international trade flows.

Changes in the biomass market can quickly influence other segments of the wood industry. Increased energy demand for wood can affect raw material availability, while logistics costs, energy prices, forestry regulation and sustainability requirements can alter the competitiveness of suppliers across different regions.

📊 Follow the global wood market with WoodBusinessPortal.com
WoodBusinessPortal.com provides market intelligence for professionals across forestry, sawmilling, timber trading, wood processing, biomass, furniture and other segments of the international wood industry.

🪵 Monitor wood prices, timber prices and wood pellet market developments.
🌲 Follow changes in forestry, biomass and wood raw material supply.
📈 Analyse wood imports, exports and changing international trade flows.
🌎 Identify suppliers, buyers and B2B opportunities across the global wood industry.

Visit WoodBusinessPortal.com for wood industry news, wood prices, timber market analysis, wood imports and exports, statistics, forecasts and international B2B opportunities.

Sources

Associated Press
Bioenergy Insight
Friends of the Earth Japan