Japanese environmental NGOs conducted an evaluation of the wood investment and financing policies of 11 major Japanese financial institutions including insurance companies. This survey is timely as it comes just after the Ministry of Economy, Trade and Industry’s (METI) April revisions to the renewable energy feed-in tariff (FIT) subsidy program that will exclude new large-scale wood biomass from the FIT program starting in FY 2026. Companies and governments are reappraising wood biomass in light of concerns over emissions, harm to global forests, and high costs relative to other forms of renewable energy.
Below are translations of GEF Japan’s press release on their evaluation of woody biomass investments and financing policies. For the full evaluation, see their website here: https://www.gef.or.jp/news/info/250624biomasspolicy/
Woody biomass power generation is considered “carbon-neutral renewable energy” by METI who issues regulation around the FIT system. Scientists and NGOs are critical of the promotion of woody biomass, as the wood pellet industry is the culprit of thousands of legal violations for pollution, in addition to being responsible for respiratory and other health issues of communities living near plants. Furthermore, the deforestation required to maintain a high level of wood pellet production is not sustainable, nor is the practice of cofiring wood pellets with coal.
In the spring of 2024, three megabanks added standards around woody biomass power generation to their sustainability policies. In December of 2024, the Sumitomo Mitsui Trust Group followed suit, and in April of this year, the Mitsubishi UFJ Financial Group revised its policy. Some major life insurance companies and non-life insurance companies have also been formulating policies. More information on developments in Japanese company biomass policies can be found here.
Six Japanese environmental NGOs evaluated the woody biomass investment and financing policies of 11 major Japanese financial institutions. Even with the emergence of higher standards for biomass sourcing, the policies only apply to new projects, and Japanese companies continue to fail to count CO2 from biomass burning towards Japan’s GHG emissions.
The Japanese government supports biomass power generation through a Feed-In Tariff (FIT). Despite the FIT incentive, financial institutions and companies recognize the risk of investing in bioenergy. NGOs will continue to push for better sourcing standards and push for compliance with existing policies.
Evaluation of Policy & Application
Evaluation of environmental and social risks of fuel production areas