SUMITOMO CORPORATION’SDIRTY ENERGY TRADE
Biomass, Coal and Japan’s Energy FutureDECEMBER 2019

SUMITOMO CORPORATION’SDIRTY ENERGY TRADE
Biomass, Coal and Japan’s Energy Future
CONTRIBUTORS
Authors: Roger Smith, Jessie Mannisto, Ryan Cunningham of Mighty Earth
Translation: EcoNetworks Co.
Design: Cecily Anderson, anagramdesignstudio.com
Any errors or inaccuracies remain the responsibility of Mighty Earth.

2© Jan-Joseph Stok / Greenpeace

CONTENTS
4 Introduction
7 Japan’s Embrace of Dirty Energy

7 Coal vs the Climate
11 Biomass Burning: Missing the Forest for the Trees

22 Sumitomo Corporation’s Coal Business:
Unrepentant Polluter

22 Feeding Japan’s Coal Reliance
23 Building Dirty Power Plants Abroad and at Home27 Sumitomo Corporation, climate laggard

29 Sumitomo Corporation’s Biomass Business:
Trashing Forests for Fuel

29 Global Forests at Risk
34 Sumitomo and Southeastern Forests
39 Canadian Wood Pellet Production
42 Vietnam
44 Sumitomo Corporation and Japanese Biomass Power Plants

47 Sumitomo Corporation and You
47 TBC Corporation
49 National Tire Wholesale

50 Sumitomo Corporation: Needed Policy Changes

3Wetland forest logging tied to Enviva’s biomass plantin Southampton, North Carolina. Dogwood Alliance

INTRODUCTIONSUMITOMO CORPORATION’S DIRTY ENERGYTRADE—AND ITS OPPORTUNITY TO CHANGE
While the rest of the developed world accelerates its deployment of clean,renewable energy, Japan is running backwards. It is putting in place policies
which double down on its reliance on coal, and indiscriminately subsidize
biomass power technologies that accelerate climate change.
Government policy is not the only driver of Japan’s dirty energy expansion –the private sector also plays a pivotal role in growing the country’s energy
carbon footprint.
Global trading company Sumitomo Corporation, headquartered in Tokyo, isa company at the center of global coal and biomass networks that mine, chop,finance, ship and burn the most destructive fuels on earth.
The 2011 Great East Japan Earthquake and meltdowns at the Fukushima Daiichi
nuclear power plant changed the nation’s energy landscape. The government

4

launched a feed-in-tariff renewable energy incentive program in 2012, opened up
the electricity sector to new producers leading to a surge in power plant projects,
and also set out energy mix targets which encouraged the construction of a newwave of coal plants. While the renewable energy incentives made Japan the second
largest market for solar in the world, it also led to a boom in biomass power plants
whose feedstocks – palm oil, wood chips, wood pellets and palm kernel shells(PKS)– contribute directly to the loss and degradation of forests in Southeast Asia,
Canada, the United States and beyond, and worsen climate change.
Sumitomo Corporation stands at the center of these two damaging trends. The
massive trading company is involved in coal mining, importing coal into Japanand building coal-fired power plants. It also is the largest importer of wood
into Japan for biomass energy and a leading builder of wood-burning power
plants. Other members of the Sumitomo Group are also implicated in related
environmentally-destructive practices, including Sumitomo Forestry whichis active in the wood pellet import business, and Sumitomo Mitsui Banking
Corporation, a leading financer of coal power plant projects.

Sumitomo Corporation is a company at the centerof global coal and biomass networks that mine,chop, finance, ship and burn the mostdestructive fuels on earth.

Open pit coal mine. Mark Agnor/Shutterstock.com

5

Sumitomo Corporation is also the majority owner of a number of companies
overseas, including the Midas and National Tire & Battery auto care stores
where millions of North Americans shop every day. In an environment of rapidly
increasing consumer awareness of the threats to climate posed by coal anddeforestation, the risk to the reputations of Sumitomo Corporation’s subsidiaries
created by their parent company’s actions is clear.
In August 2019, Sumitomo Corporation communicated an updated climate policythat it will reduce the share of coal in its portfolio; will not develop new coal-fired
plants; and will cap thermal coal production at current levels. This was a positive
development, but it fell short of what it should do. Loopholes allow for continued
coal plant construction, and the policy does not ensure real reductions in coalmining or coal generation.1
It doesn’t have to be this way, of course. Given its size and breadth of businessventures, Sumitomo Corporation can have a profoundly positive impact on the
climate. Sumitomo needs to choose a clean energy path. If Sumitomo steps
up and strengthens its commitment to no longer develop coal power plants,
announces it will exit coal mining, and invest in clean renewable energy insteadof destructive large-scale biomass, it can stand out from its peers. Sumitomo
Corporation can further show leadership by supporting smart, effective reforms
to Japan’s domestic and international energy policies.
The choice is clear.

1

See the section starting on page 27 for a more detailed discussion of this climate policy.

Solar panels, Okinawa. imacoconut/Shutterstock.com

6

Coal plant in Ube, Japan. Yangxiong/Shutterstock.com

JAPAN’S EMBRACE
OF DIRTY ENERGYCOAL VS THE CLIMATE
Despite convening the landmark Kyoto Protocol agreement on global warming,
over the past two decades Japan has steadily increased its reliance on coal.
Between 1990 and 2017, coal consumption from Japan’s coal plants more thantripled, climbing from 26 million tons in 1990 to 83 million tons in 2015.2
Correspondingly, from 1990 to 2016, carbon dioxide emissions from coal plants
in Japan soared 169%, resulting in coal accounting for more than half theelectricity generation-related emissions in Japan. 3

JAPAN’S SURGE IN DOMESTIC COAL PLANT CONSTRUCTION
Following the 2011 Great East Japan Earthquake and meltdowns at the
Fukushima Daiichi nuclear power plant, Japan embarked upon a coal-building
boom, with some 50 plants (23 GW) planned domestically at the peak. At the2
3

Renewable Energy Institute. Proposal for Energy Strategy Toward a Decarbonized Society—Achieving a CarbonNeutral Japan by 2050. (Executive Summary), Apr. 16, 2019. p. 4.
Climate Analytics. Science Based Coal Phase-Out Timeline for Japan, Implications for Policymakers and Investors
May 2018. pp. 5, 6.
https://climateanalytics.org/publications/2018/science-based-coal-phase-out-timeline-for-japan/

7

time, Japan’s average age of coal units was 25 years. As the world average forcoal plant retirement is 40 years, there was a relatively near-term sunset date
for Japan’s dirtiest energy.4 However, the recent boom in coal plant construction
threatens to re-orient a coal fleet headed for retirement into one that could
continue for decades to come. Fierce public opposition has helped spur thecancellation of 13 units,5 but Japan still remains the only G7 nation adding to its
domestic coal generation capacity.6
Japan’s trading companies, including Sumitomo Corporation, are actively
leading the development of coal plants domestically. For example, Sumitomo hadplanned to build a 112 MW coal plant in Sendai, before opposition derailed it. See
the section beginning on page 22 for a full discussion of Sumitomo Corporation’s
coal businesses.
For Japan to live up to its climate leadership and achieve its national
commitments under the Paris Agreement (reduce greenhouse gases by 26%
below 2013 levels by 2030),7 it must end its coal dependency. Building newcoal plants makes reducing emissions much harder.8 Technological solutions
to reduce emissions from power plants remain a fantasy, with no country
successfully deploying carbon capture and storage technologies. This technology
is expensive, uncommercialized, and geological restrictions on undergroundstorage of carbon dioxide make it infeasible as a retrofit for many coal plants.
Alternatively, to meet emissions limits, coal power plants may have to be retired
before the ends of their useful lives, creating risks of stranded assets for coal
operators and utilities.

Japan still remains the only G7 nation adding
to its domestic coal generation capacity.

4
5
6
7
8

Science Based Coal Phase-Out Timeline for Japan, Implications for Policymakers and Investors. p. 10.
Japan Coal Plant Tracker. Accessed Sep. 12, 2019. https://sekitan.jp/plant-map/en
Influence Map. “Japan’s Energy Choices to 2020.” Nov. 2017.  
https://influencemap.org/report/Solving-Climate-Change-Can-Japan-Show-Leadership-ac0c71365ca3e2cf3c6cb
bd5ecd1a914
Climate Action Tracker. “Japan.” Accessed Sep. 15, 2019. https://climateactiontracker.org/countries/japan/
Trencher, Gregory, Noah Healey, Koichi Hasegawa and Jusen Asuka. “Discursive resistance to phasing out coalfired electricity: Narratives in Japan's coal regime.” Energy Policy. p. 1.

8

MINING AND IMPORTS SUPPORTJAPAN’S COAL BOOM
Almost all of Japan’s coal is imported, withtrading companies like Sumitomo Corporation
playing a central role in imports. As of 2017,
Japan imported coal primarily from Australia(73%), Indonesia (12%), Russia (10%), theUnited States (2%), Canada (2%) and China(1%).9 Sumitomo has a comprehensive
coal business from coal mining and related
infrastructure to coal processing andtransporting, and supplies Japan with aclaimed 6 million tons per year.10 More on
Sumitomo’s coal mining business is available
on page 22 of this report.

Japan Coal Imports (2017)112%
1%
2% Canada
China
USA

10%
Russia12%
Indonesia

Thermal Coal
Import Amounts
114 million tons

73%
Australia

11

EXPORTING DIRTY POWER
With backing from the Japanese government(the Japan Bank for International Cooperation or JBIC) and major Japanesecommercial banks, Japanese companies, including Sumitomo Corporation, arebuilding coal-fired power plants across the world. Research found that Mizuho
Financial, Mitsubishi UFJ Financial, and Sumitomo Mitsui Financial Group were
the first-, second-, and fourth-largest lenders, respectively, to the world’s top coaldevelopers between 2016 and September 2018.12
This lending has gone to companies including Marubeni, Sumitomo
Corporation, Mitsubishi and J-Power for coal plant development. Sumitomo
Corporation itself has large-scale plants recently completed or in planning or
construction in Bangladesh, Vietnam, Taiwan, Malaysia, and Indonesia. See thesection beginning on page 23 for a full discussion of Sumitomo Corporation’s
coal power plant business.
9
10
11
12

Ministry of Economy, Trade, and Industry. “Reappraising the Role of Coal in Japan” Jun. 19, 2018. (Japanese)
Accessed Aug. 1, 2019. https://www.enecho.meti.go.jp/about/special/johoteikyo/sekitanyakuwari.html
Sumitomo Corporation. “Sumitomo Corporation’s coal business pursuing responsible and stable supply ofenergy.” Webpage. Accessed Sep. 2, 2019.  https://www.sumitomocorp.com/en/africa/business/case/group/242
Chart adapted from METI, “Reappraising the Role of Coal in Japan” Jun. 19, 2018. (Japanese).
English captions added.
Urgewald. “COP24: New Research Reveals the Banks and Investors Financing the Expansion of the Global Coal
Plant Fleet.” Media Briefing. Dec. 5, 2018. p. 5 https://coalexit.org/sites/default/files/download_public/Media%20
Briefing%20BankTrack_Urgewald%20-%20COP24_final%20web.pdf

9In addition to creating more climate-warming carbon pollution, power plant
construction has been linked to human rights violations in local communities,
and increased fine particle pollution which causes respiratory illness and evenpremature death. A recent study estimated that the coal expansion in southeast
Asia would increase air pollution deaths from approximately 20,000 annuallyat present to 70,000 by 2030.13 Japanese companies are also building plants
in countries with much weaker air pollution standards than would be allowed
domestically,14 with a proposed Sumitomo plant in Vietnam projected to pollute
up to nine times more than a new modern coal plant built in Japan.15 Sumitomo
Corporation explicitly exempted this plant from its August 2019 announcement
to stop building new coal plants.16
13
14

15
16

Koplitz, Shannon, Daniel Jacob et. al. “Burden of Disease from Rising Coal-Fired Power Plant Emissions inSoutheast Asia.” Environmental Science Technology Jan. 12, 2017. https://pubs.acs.org/doi/abs/10.1021/acs.
est.6b03731
Greenpeace Southeast Asia and Greenpeace Japan. A Deadly Double Standard — How Japan’s Financing ofHighly Polluting Overseas Coal Plants Endangers Public Health. Aug. 20, 2019. https://www.greenpeace.org/
southeastasia/publication/2887/double-standard-how-japans-financing-of-highly-polluting-overseas-coal-plantsendangers-public-health/Market Forces. “Sumitomo-sponsored coal plant in Vietnam would cause 1,900 premature deaths.” Jun. 6, 2019.
http://www.nocoaljapan.org/sumitomo-sponsored-coal-plant-in-vietnam-would-cause-1900-premature-deaths/
Sumitomo Corporation. “Construction Commences on Van Phong 1 Coal-fired Power Project in Vietnam.” News
Release. Aug. 26, 2019. https://www.sumitomocorp.com/en/jp/news/release/2019/group/12310

Smog over Tokyo. Capricornis Photographic Inc./Shutterstock.com

10BIOMASS BURNING:MISSING THE FOREST FOR THE TREESCLIMATE DISASTER: FOREST BIOMASS AND CARBON DIOXIDE
Biomass fuel is derived from contemporary vegetation, as contrasted with fossil
fuels made from ancient organic material, and is therefore considered to be“renewable.” Emissions of heat-trapping carbon dioxide (CO2) from biomass
combustion has not been counted at power plants under the Kyoto Protocol andsuccessor agreements.
This means that while biomass is officially credited as reducing CO2 from power
plants, the reality is that biomass increases atmospheric levels of carbon dioxide
for some period of time. In the case of forest biomass, the lengthy period required
for trees to grow to maturity and reabsorb carbon from the atmosphere results inan extended period of carbon debt. During this period, the carbon dioxide frombiomass is adding to the problem of climate change.17 This “debt” of increased
17

Norton, Michael, Andras Baldi, Vicas Bruna et. al. “Serious mismatches continue between science and policy inforest bioenergy.” Global Change Biology Bioenergy. Aug. 9, 2019. pp. 1-3.
https://onlinelibrary.wiley.com/doi/full/10.1111/gcbb.12643

The debt of increased atmospheric CO2from burning wood biomass requires
decades or centuries to repay,
and even then, only if trees
are allowed to regrow.

Enviva wood pellet plant, Ahoskie, North Carolina. Dogwood Alliance11

atmospheric CO2 requires decades or centuries to repay, and even then, only iftrees are allowed to regrow.18
As the August 2019 Intergovernmental Panel on Climate Change (IPCC)
special report on land noted: “Where wood carbon is transferred to harvested
wood products, these can store carbon over the long-term and can substitutefor emissions-intensive materials reducing emissions in other sectors (highconfidence). Where biomass is used for energy, e.g., as a mitigation strategy, thecarbon is released back into the atmosphere more quickly (high confidence).”19
A 2018 dynamic lifecycle analysis by researchers at MIT and UMass Lowellconcluded that the use of biomass from forests in the eastern United States inUnited Kingdom power plants increases atmospheric carbon dioxide for 44104 years as new trees grow and slowly remove it from the atmosphere. They
also analyzed conversion of natural hardwood forests to faster-growing pine
plantations, and found worse impacts from the managed plantations as they
stored less carbon.20
Furthermore, to meet the goals of the Paris Agreement and achieve no morethan a 1.5-degree Celsius global temperature increase, a greater role is needed
for forests to serve as sinks and long-term stores of carbon today. Achieving
this means existing forests must be protected, the conversion of older forests tointensively managed short-rotation forests must be stopped, and deforested anddegraded areas must be ecologically restored.21
Fundamentally, the problem is one of scale. As demand for biomass fuel soars,
forest-derived fuels like wood pellets and wood chips are preferred over otherbiomass fuels for their ability to be stored and transported, their energy density,and relative consistency of quality. The scale of global demand for biomass meansthat rather than utilizing waste from existing mills involved in timber or paper
production, there is increasing pressure to log natural forests more intensively,
convert natural forests to tree plantations, and even to deforest land.

18
19
20
21

European Academy of Sciences Advisory Committee. Forest Sustainability and Multifunctionality. Apr. 2017. p. 21.
https://easac.eu/fileadmin/PDF_s/reports_statements/Forests/EASAC_Forests_web_complete.pdf
Intergovernmental Panel on Climate Change. Climate Change and Land: an IPCC Special Report on Climate
Change, Desertification, Land Degradation, Sustainable Land Management, Food Security, and Greenhouse Gas
Fluxes in Terrestrial Ecosystems. Summary for Policymakers. Aug. 7, 2019. p. 25 https://www.ipcc.ch/report/srccl/
Sterman, John, Lori Siegel and Juliette Rooney-Varga. “Does replacing coal with wood lower CO2 emissions?
Dynamic lifecycle analysis of wood bioenergy.” Environmental Research Letters. Jan. 18, 2018. p. 1.
https://iopscience.iop.org/article/10.1088/1748-9326/aaa512/pdf
Moomaw, William, Susan Masino and Edward Faison. “Intact Forests in the United States: Proforestation Mitigates
Climate Change and Serves the Greatest Good.” Frontiers for Global Change. Jun. 11, 2019.
https://www.frontiersin.org/articles/10.3389/ffgc.2019.00027/full

12

In 2017,
the global trade in industrial wood pellets
In 2017, the global trade in industrial wood pellets exceeded 14
milliontons
and is projected
to risemore than 36to
millionbyexceeded
14
milliontons andistoprojected
risetons
to more2027, with Japan, South Korea, and Europe responsible for the bulk
than 36
million tons by 2027, with Japan, South Korea,of the increase.
and Europe responsible for the bulk of the increase.
22

22

Environmental Paper Network ©2018

Environmental Paper Network ©2018
22
23

23

Wolfgang Kuhlmann, Peg Putt. “Are Forests the New Coal? A Global Threat Map of Biomass Energy Development.”
Environmental Paper Network. Nov. 2018.
“Are Forests the New Coal?” Note this illustration only shows transnational flows of wood pellets from supplier toconsumer countries. It excludes wood chips, or pellets produced and consumed in a single country. Projectedamounts in 2027 are based on government policies, such as Japan’s feed-in-tariff.
13

Wood chips and pellets are made from tree limbs, tree-tops, logs and stumps, andincreasingly whole trees.24 The IPCC’s August 2019 Special Report noted that,“The use of residues and organic waste as bioenergy feedstock can mitigate land
use change pressures associated with bioenergy deployment, but residues arelimited and the removal of residues that would otherwise be left on the soil could
lead to soil degradation.”25
Wood pellets and wood chips provide a low-value, but high-volume, use for lowergrade trees unfit for use as lumber. This is how biomass drives the logging of foreststhat would otherwise be non-economical to cut.26 This transformation of forest
carbon, stored in trees, into biomass fuel that is burned and quickly enters theatmosphere, means that wood biomass has negative climate implications today.27
It goes without saying that in addition to climate impacts, forest ecosystems
are critical to protect biodiversity; play an important role in limiting erosion
and protecting soil from rainfall; are essential to freshwater management; andsupport a range of livelihoods for people, including indigenous people, living inor near forested areas. Japan’s biomass power policies imperil all of this.

EXPLOITING JAPAN’S BIOMASS CO2 LOOPHOLE
Following the 2011 Great East Japan Earthquake and nuclear disaster, theJapanese parliament approved a new feed-in-tariff incentive (FiT) for renewableenergy. The Ministry of Economy, Technology and Industry (METI) quickly
moved to draft the rules and launched the incentive program in 2012.
Shutterstock.com

The eligibility rules for the “general wood” category of biomass allowed for theuse of forest wood (in the form of wood chips or mechanically compressed woodpellets), palm oil, and palm kernel shells. Whereas Japan’s biofuel standard for
liquid fuels (ethanol) required greater than 50% reductions in lifecycle greenhousegases compared to gasoline (recently strengthened to 55%),28 with biomass forelectricity generation, the drafters of the feed-in-tariff omitted greenhouse gas
reduction criteria.29 In addition to carbon present in the wood itself, cutting
24
25
26
27
28
29

“Are Forests the New Coal?” p. 4.
IPCC Special Report. Aug. 2019. p. 22
See section starting on pg 30, regarding the Southeastern United States, for an in-depth example of how biomass
drives logging by providing an income stream for lower-value forest products.
Sterman, John, Lori Siegel and Juliette Rooney-Varga. “Does replacing coal with wood lower CO2 emissions?
Dynamic lifecycle analysis of wood bioenergy.” Environmental Research Letters. Jan. 18, 2018, p. 1.
https://iopscience.iop.org/article/10.1088/1748-9326/aaa512/pdf
Ministry of Economy, Trade, and Industry. "Provisions related to the Sophisticated Methods of Energy Supply
Structure Act." (Japanese) Nov. 2010. p.49  https://www.enecho.meti.go.jp/notice/topics/017/pdf/topics_017_002.pdf
The April 2018 revisions to the Agency for Natural Resources and Energy’s “Business Plan Development
Guidelines- Biomass” added a requirement to submit legality/ resource sustainability certifications for imported
biomass, but lacks a system of verifications or third-party inspections. Source: Biomass Industrial Society Network,
Biomass White Paper 2018. pp. 6, 17.
14

trees, transporting wood to mills, drying and converting wood to chips or pellets,
transporting fuel across oceans to Japan, and then moving the fuel within Japan all
require significant amounts of carbon dioxide-emitting fossil fuels.
The Japanese government periodically publishes ideal energy mixes (“Long-term
Energy Supply and Demand Projection”) based upon the goals and policies of themost recent national Strategic Energy Plan. The most recent projection targets
3.7% to 4.6% of total electricity to be met by biomass generation by 2030.30 If
this were met entirely by wood pellets, it would be equivalent to an estimated 20
million metric tons per year.31 For comparison, industry analysts estimate total
global production of just 22 million metric tons of pellets in 2019.32
Many power producers entered Japan’s new biomass power market, lured
by incentives which began at 24 yen/kilowatt-hour (~$.22USD/kWh) for the“general wood” category of biomass, paid out over a 20-year period. At its peakin 2017, more than 13 GW of biomass projects were certified under the feed-intariff. 92% of them were in the “general wood” category, which included woodpellets, wood chips, palm kernel shells and palm oil.33
However, many projects were unable to secure stable long-term supplies ofbiomass fuel and were unable to proceed. By March 2019, 48 facilities with a
combined capacity of 1 GW had begun operation.34 Trading companies’ ability to
procure fuel made them essential to the success of biomass plants, especially themarket-leader Sumitomo Corporation, which aims to control 40% of all imported
biomass fuel by 2021.35
A modest biomass heat and power industry existed in Japan prior to thereorientation in energy policy. It primarily was supplied by tree thinnings,
other local forest management activities, and agricultural wastes. This could
have developed into a boon for rural areas struggling to retain employment
opportunities. Domestic wood pellet production remained flat at 120,000 tons
per year as demand under the feed-in-tariff incentive created a boom whichquickly outstripped the domestic supply.36
30

31
32
33
34
35
36

Original in Japanese: Ministry of Economy, Trade, and Industry, “Long-term Energy Supply and Demand
Projection” Jul. 2015. https://www.enecho.meti.go.jp/committee/council/basic_policy_subcommittee/mitoshi/
pdf/report_01.pdf For English summaries, see Ministry of Economy, Trade, and Industry, Japan’s Energy Plan 2015
https://www.enecho.meti.go.jp/en/category/brochures/pdf/energy_plan_2015.pdf and METI, “Japan’s Energy
2018.” Jun. 2019. https://www.enecho.meti.go.jp/en/category/brochures/pdf/japan_energy_2018.pdf“Pinnacle adds new off-take agreements in Japan and South Korea.” Canadian Biomass Magazine. Jul. 15, 2019.
“https://www.canadianbiomassmagazine.ca/pinnacle-adds-new-off-take-agreements-in-japan-and-south-korea/
Hawkins Wright. “The Outlook for Wood Pellets, No. 17 Q3 2018.” as cited by Pinnacle Renewable Energy:
https://pinnaclepellet.com/wp-content/uploads/2019/04/Pinnacle-April-2019.pdf
Biomass White Paper 2018. p. 4.
Biomass Industrial Society Network. Biomass White Paper 2019. http://www.npobin.net/hakusho/2019/topix_01.html
Sumitomo Corporation. “Providing Stable Supplies of Biomass Fuel for a Low-Carbon Society.” Case study.
Accessed Sep. 11, 2019. https://www.sumitomocorp.com/en/jp/business/case/group/biomass
Nakano, Satoshi, Akito Murano and Ayu Washizu. “Economic and Environmental Effects of Utilizing Unused
Woody Biomass.” Journal of the Japan Institute of Energy Vol. 94, No. 6. 2015. p. 530
https://www.jstage.jst.go.jp/article/jie/94/6/94_522/_pdf
15

The amount of wood pellets imported into Japan increased five-fold between
2014 and 2017, with Canada and Vietnam as the key suppliers of overall biomass
imports.37 Currently the United States, particularly the southeastern region, isemerging as a major supplier. The United States is the world’s largest supplier ofwood pellets, producing them almost exclusively for export.38

Japanese wood pellet imports 39

37
38
39

Japan Woody Bioenergy Association. Wood Biomass Data Book 2018. p. 20. https://www.jwba.or.jp/app/
download/13159696992/Data+book+2018+%28English+version%29.pdf?t=1523342683“Over 22M tons of wood pellets shipped in 2018.” Canadian Biomass Magazine. May 1, 2019.
https://www.canadianbiomassmagazine.ca/over-22m-tons-of-wood-pellets-shipped-in-2018-7364/
Wood Biomass Data Book 2018. p 20.

The amount of wood pellets imported into Japan
increased five-fold between 2014 and 2017.

Enviva wood pellet plant, Ahoskie, North Carolina. Dogwood Alliance

16

JUST ADD WOOD: COFIRING AS A LIFELINEFOR INEFFICIENT COAL PLANTS
Japan’s energy policies are resulting in the development of new coal plants, andalso allow existing inefficient plants to keep running by burning biomass together
with coal, a practice known as “cofiring.” Prolonging the life of coal plants itself
is negative for the climate. Japan’s greenhouse gas accounting for power plants
excludes the carbon dioxide released when biomass fuel is burned and ignoresthe carbon used to produce and transport the biomass.
Based upon the Act on the Rational Use of Energy (2013 revisions), METI set
voluntary efficiency standards for coal power plants. It targets utilities to achieve
the efficiency levels of ultra-supercritical (USC) coal technology (42%) for all
new plants, and a combined average efficiency of 41% for new and old coal plants
together.40 The Fifth Strategic Energy Plan, approved by the cabinet in 2018,suggested possible future enforcement measures: “including the consideration ofa mechanism to encourage fadeout for inefficient coal-fired power plants (withthe power generation efficiency below supercritical),41 including an imposition
40
41

Trencher, et. al., “Discursive resistance to phasing out coal-fired electricity: Narratives in Japan's coal regime.” p. 8.
The government’s English translation incorrectly cites ultra-supercritical, whereas the Japanese original states
below supercritical. Ultra-supercritical coal refers to a technology which is marginally more efficient (~42%)compared to supercritical (~40%), which in turn is more efficient than subcritical coal plants (~38%). Power plant
efficiency refers to the ratio of electricity produced to the quantity of fuel input.

Japan’s energy policies are resulting in thedevelopment of new coal plants, and allowing
existing inefficient plants to keep running by
burning biomass together with coal.

Wood pellets mixed with coal. FabrikaSimf/Shutterstock.com

17

of restriction on new construction of such inefficient coal thermal power plants,
and the establishment of criteria for interim assessment to encourage the [sic]steady progress toward the FY 2030.”42
However, the government also threw existing dirty coal plants a lifeline, offeringa biomass alternative. If a coal plant burns biomass along with coal (“cofiring”),
the energy created by burning biomass is credited towards the plant’s efficiency.
However, the biomass fuel is subtracted from the total fuel input, making theplant appear to generate more power from the same amount of coal, and thus bemeeting a higher efficiency standard.43 A biomass industry analyst estimated ifthey did nothing, two-thirds of existing plants would not meet this standard. Ifthey all met it by cofiring with wood, Japan would need to burn another 2 million
tons of biomass per year.44 Furthermore, METI has engaged the Japan Coal
Energy Center to study the feasibility of increasing cofiring with wood pellets
from 2% to 20%, a potential increase to 30 million tons per year.45
The feed-in-tariff, intended as a renewable energy incentive, instead subsidized
the burning of wood biomass at coal plants. By making their fuel cheaper itfunctioned as a subsidy to the coal plants themselves (at least until the FY 2019
feed-in-tariff procurement).46 Outside the feed-in-tariff, not only are there no
greenhouse gas standards, but there are not even any basic legality or traceability
standards for cofired biomass fuel.47 The potential climate and sustainability
implications for such a massive increase in demand for forest biomass are severe.
42
43
44
45
46
47

Fifth Strategic Energy Plan (Provisional Translation), July 2018. p. 70.
Electrical energy output/ (energy input – biomass energy input)
Source: Ministry of Economy, Trade, and Industry. “Fossil Fuel Generation Efficiency Guideline A.” (Japanese) p. 4  
https://www.enecho.meti.go.jp/category/saving_and_new/saving/procedure/pdf/karyoku.pdf
Strauss, William. “Policies will drive Japanese demand for industrial wood pellets” Canadian Biomass Magazine.
Nov. 1 2017.
https://www.canadianbiomassmagazine.ca/policies-will-drive-japanese-demand-for-industrial-wood-pellets-6569/
Murray, Gordon. “Japan looks to increase wood pellet imports from Canada.” Canadian Biomass Magazine. Feb. 4.
2019.
https://www.canadianbiomassmagazine.ca/japan-looks-to-increase-wood-pellet-imports-from-canada-7234/
Agency for Natural Resources and Energy. “Business Plan Development Guidelines- Biomass.” Revised April 2019.
(Japanese) p. 9.
Unlike the feed-in tariff, which requires documentation demonstrating legality (which forest sustainability
certifications can fulfill), the only requirements for cofiring are to report the country of origin and general typeof fuel used. Source: Ministry of Economy, Trade and Industry. Advisory Committee for Natural Resources andEnergy, Committee on Energy Efficiency and Renewable Energy, New and Renewable Energy Subcommittee.
“Working Group Report on Criteria for Thermal Power Generation.” Mar. 30, 2018. p. 26. https://www.meti.go.jp/
shingikai/enecho/shoene_shinene/sho_energy/karyoku_hatsuden/pdf/20180330005_01.pdf

The feed-in-tariff, intended as a renewableenergy incentive, instead subsidized the burningof wood biomass at coal plants.
18

The problem with palm oil
Food and personal care products already drive significant deforestation forpalm oil. Using palm oil for bioenergy creates an additional, unsustainableburden through deforestation and indirect land use change. In key
producing countries such as Indonesia and Malaysia, this has led to humanrights violations including forced labor and conflicts over land.164 Severe
environmental damage has resulted from the destruction of wildlife habitat
and the burning of forests and peatland results in regular periods of high air
pollution.165 Regarding climate change, an analysis done by Mitsubishi UFJ
Research for the Ministry of Economy, Trade and Industry showed that even
without counting emissions from changes in land use, palm oil had the highest
greenhouse emissions of every biofuel they compared it to, making it worse
than some fossil fuels.166
When used for power generation, immense quantities of palm oil are required.
Japan currently imports only 750,000 tons of palm oil for use in products andfood annually. If all the power plants which received certification to use palm oilunder the feed-in-tariff were to be constructed, Japan would have to import 3.4
million tons of palm oil per year.167 A single 10 MW plant is estimated to consume
20,000 tons of oil per year, the annual amount used by all detergent producers
in Japan.168
High-profile palm oil plants, including the Maizuru plant in Kyoto Prefectureand H.I.S. Super Energy plant in Miyagi, have faced strong public opposition.
Globally, nearly 150,000 people have called upon H.I.S. to drop its plans tobuild this plant.169
Japan’s inclusion of palm oil as renewable under the feed-in-tariff is an environmental disaster. Sumitomo Corporation can be a leader by publicly refusing totake part in the procurement of palm oil for power and the construction of palm
oil power plants, and calling for an end to public subsidies for burning palm oil.
164 Whoriskey, Peter. “Mars, Nestle, other food companies face complaints of forced labor at palm oil supplier.”
Washington Post. Aug. 19, 2019. https://www.washingtonpost.com/business/2019/08/15/mars-nestle-otherswere-supplied-by-malaysian-company-using-forced-labor-such-imports-should-stop-groups-say/
165 “Indonesia blames planters for raging wildfires and horrible air quality.” The Straits Times, Sep. 20, 2019.
https://www.straitstimes.com/asia/se-asia/indonesia-blames-planters-for-raging-wildfires-and-horrible-air-quality  
166 Mitsubishi UFJ Research and Consulting. Survey Report Regarding the Procurement of Stable Supplies of Biomass
Fuel and Sustainability. Feb. 2019. p. 112 (Japanese)
167 Friends of the Earth Japan. “Joint Recommendations Regarding Biomass Power Generation.” Jul. 16, 2019.
http://www.foejapan.org/en/forest/190716.html
168 Aikawa, Takanobu. “Great Risks Involved in Palm Oil Power Generation: Sustainability Standards are Urgently Needed.”
Renewable Energy Institute. Sep. 4, 2017. https://www.renewable-ei.org/en/column/column_20170912.php
169 Friends of the Earth Japan. “Submitted 148,000 signatures to H.I.S. - Please do not destroy tropical forests withyour palm oil power plant!” News Release. Jul. 30, 2019.  http://www.foejapan.org/en/forest/190730.html

19

REDUCED ENERGY SECURITY AND NEGLECTED LOCAL RESOURCES
Sumitomo Corporation is exploiting design flaws in Japan’s energy policies
through the large-scale importation of wood biomass. While two-thirds ofthe island nation is covered by forests, about 40% are planted monoculturesof conifers, especially cedar trees, with potential to be replanted to support
biodiversity.48 Researchers note that while Japan has the world’s fifth largest
biomass production potential, its forests are poorly managed, residues fromthe domestic timber industry are underutilized, and more effort has gone into
securing supplies of imported wood than improving supply chains within Japan.49
In 2002, the government created the Biomass Japan General Strategy, whichlooked to biomass as not just a global warming measure but a way for various
types of biomass, including agricultural waste, to create value for farmers andforesters, provide affordable heating and power for remote communities, andrevitalize rural communities.50 The government’s expectation was for plants 5
megawatts in size to be built, sourcing 100,000 m3 of material from a range of
50 km from each plant. The program was to accomplish three aims: provide
environmental benefit, support the economy and stabilize rural populations.51
The Japanese government’s Fifth Strategic Energy Plan (2018) continues toreference these goals: “Biomass power generation, including woody biomass
using unutilized materials, can be used as a stable power source which may also
contribute to local revitalization. Particularly, regarding woody biomass power
generation and heat utilization, it plays the role of a regionally-distributed andlocal production for local consumption-type energy source as well as keeping up
Japan’s precious forest and revitalizing the forestry industry.”52

48
49
50
51
52

Bird, Winifred. “For Japan’s Eagles, Hope Lies in ‘Rewilding’ Long-Tamed Forests.” Yale Environment 360, Jun. 12,2017. https://e360.yale.edu/features/for-japans-eagles-hope-lies-in-rewilding-long-tamed-forests
Amanda Ahl, Eklunda Johanna, etc. al. “Balancing formal and informal success factors perceived by supplychain
stakeholders: A study of woody biomass energy systems in Japan.” Journal of Cleaner Production, Issue 175, Nov. 2017.
Ministry of Agriculture, Forestry and Fisheries, Forestry Agency. “Biomass Generation Business Overview.” Chapter
2. 2014. p. 26. http://www.rinya.maff.go.jp/j/sanson/kassei/pdf/shishin_s2-2_1~2.pdf
Biomass White Paper 2018. p. 10.
Fifth Strategic Energy Plan. p. 22.

Sumitomo Corporation is exploiting design flaws
in Japan’s energy policies through the large-scale
importation of wood biomass.
20

Of course, biomass from domestic forests has the same carbon debt
implications as that sourced from abroad, making a reliance on true residues,
agricultural wastes, and other local resources with fast carbon paybacks
essential. The Renewable Energy Institute also cautions that the Japanese
Forestry Act alone may be inadequate to ensure sustainable harvesting andprevent deterioration of domestic forests.53 As intensive harvesting for purposes
including biomass drives clearcutting in national forests, reports have alreadyemerged of “bald mountains.”54
With that said, Sumitomo and the other trading companies are turning theirbacks on Japan by overwhelmingly focusing on imported fuel. This forgoes rural
economic development, deprives local farming communities of an affordable
source for both heating and power, and misses opportunities to reinvigorate
Japan’s monoculture forests to better support biodiversity. This increasing
reliance on imported foreign fuels runs counter to Japan’s energy security goals.
Trading companies continue to enrich themselves at expense of Japanese energy
consumers and the residents of rural Japan.
53
54

Aikawa, Takanobu. Restructuring Japan’s Bioenergy Strategy. Renewable Energy Institute. Jun. 2018. p. 29
https://www.renewable-ei.org/en/activities/reports/img/pdf/20180628_01/REI_BioenergStrategy_EN_180628.pdf“National forests stripped bare. ’No data’ on replanting says Forestry Agency.” Mainichi Shimbun. Tokyo Morning
Edition, May 25, 2019. (Japanese) https://mainichi.jp/articles/20190525/ddm/003/010/127000c

Sumitomo and the other trading
companies are turning their backs on
Japan by overwhelmingly focusing
on imported fuel.

Planted pine forest, Tanzawa, Japan. Ryan McBride

21

Coal-fired power plant.  kamilpetran/Shutterstock.com

SUMITOMO CORPORATION’SCOAL BUSINESS:UNREPENTANT POLLUTER
FEEDING JAPAN’S COAL RELIANCE
Coal will maintain its significance as a global energy source for the time being,
particularly in emerging regions. By expanding its coal business, Sumitomo

Corporation will strive to ensure a stable supply of coal worldwide in order tocontribute to the steady development of the global economy.
—Sumitomo Corporation website55

Sumitomo Corporation plays a major role in Japan’s return to coal as a major
importer of coal. In spite of Sumitomo’s announcement in August 2019 that it
would not expand coal mining, as this report goes to print, the website continues
to state that Sumitomo Corporation’s strategic priorities are to ensure steadyproduction at operating mines and to examine and carry out development plansfor undeveloped mines.
55

Sumitomo Corporation. “Sumitomo Corporation’s coal business pursuing responsible and stable supply ofenergy.” Website. Accessed Nov. 26, 2019.  https://www.sumitomocorp.com/en/africa/business/case/group/242

22

As a direct investor, Sumitomo Corporation Group supplies 6 million tons ofthermal and metallurgical coal annually (including through joint ventures)from mines which include Oaky Creek, Hail Creek, Rolleston and Clermont
in Australia. Sumitomo is also active as a coal trader: they cite a long history
importing Russian coal to Japan, reporting an annual trading volume of four
million tons. Sumitomo named Russia, Mongolia and Indonesia as importantsites for their coal development projects, stating that “they offer many promisingcoal mines yet to be developed,” and “we are endeavoring to foster our coalmining business in these countries into one of our future core businesses basedon a long-range perspective.”56

BUILDING DIRTY POWER PLANTS
ABROAD AND AT HOME
Sumitomo Corporation is at the forefront of the construction of dirty coal plants
abroad. In the case of several plants it is a project sponsor, but primarily serves in
the role of engineering, procurement and construction (EPC), working to manage
these complex projects in partnership with Japanese equipment suppliers.
Currently, Sumitomo Corporation is involved in the construction of three new
power plants including the high-profile, controversial Van Phong 1 project.
This under-construction 1,320 MW coal plant in Vietnam uses lower-efficiency“supercritical” coal technology. An analysis of the Environmental and Social
Impact Assessment (ESIA) by the Greenpeace Global Air Pollution Unitestimated that the Van Phong plant’s release of health-harming air pollutants
would be much higher than that of a new plant built in Japan, emitting up to
five times the particulate matter and sulfur dioxide and up to nine times theunhealthy nitrogen oxide pollution. Over the plant’s lifetime, an estimated 1,900
people would die prematurely due to exposure to these pollutants.57
Furthermore, the ESIA does not indicate that local community members wereconsulted as part of project development, and local community members haveexpressed concerns about handling of coal ash and impacts of discharge water onfish in the local bay.58 From a human rights perspective, the project is connected

56
57
58

Sumitomo Corporation. “Sumitomo Corporation’s coal business pursuing responsible and stable supply of energy.”
Market Forces. “Japan-funded coal power project would cause 1,900 premature deaths in Vietnam.”https://www.marketforces.org.au/japan-funded-coal-power-project-would-cause-1900-premature-deaths/
Market Forces. “Van Phong 1 Project Brief for Investors.” Apr. 8, 2019. pp. 1, 2.

23

Van Phong 1 emissions compared to new coal plants in other countries59

Source: Greenpeace
Global Air Pollution Unit

China

Japan

(Permit

Conditions)

South
Korea

U.S.

EU

Van
Phong 1

to troubling examples of forced relocation, with several hundred villagers
required to leave. One of their stories has been told in the international media:
a 99-year old woman, known as “Grandma Ca” (Pham Thi Ca), refused to leave
her house even after it was bulldozed to make way for the Sumitomo power
plant. Her son said the area they were directed to relocate to was not suitable forfarming: “We cannot work there, there is no land for cultivation.”60
59
60

Market Forces. “Japan-funded coal power project would cause 1,900 premature deaths in Vietnam.”Tran Thi Minh Ha, Jenny Vaughan. “Grandma Ca: the 99-year-old standing up to Vietnam's coal rush.” AFP. May 22,
2019. https://news.yahoo.com/grandma-ca-99-old-standing-vietnams-coal-rush-040702651.html

The area they were directed to relocate
to was not suitable for farming: “We cannot
work there, there is no land for cultivation.”

Van Phong, Vietnam. Friends of the Earth Japan24

Sumitomo has similar projects in the works in the region, including the Tanjung
Jati B coal-fired power plant Units 5 & 6 Expansion Project in Indonesia, whichbegan construction in March, 2017.61 Indonesia is already beset with high levelsof pollution. Air pollution from the existing four Tanjung Jati B units, also
developed by Sumitomo Corporation, have been estimated to cause more than
1000 premature deaths per year, prompting complaints by local residents about
issues from breathing problems to declining fish catch. These complaints havedeveloped into protests against the expanded plant. Residents demand an overall
reduction in pollution and treatment for their health problems.62
As of this report’s publication, Sumitomo has announced no plans todiscontinue its investment in any of these projects, in spite of their August 2019
announcement which stated: “We will not have new development in the coal-fired
power generation business.”63

Sumitomo Corporation International Coal Power Plant Portfolio
Plant Name

Place, Country

CapacityType

Completion
Date

Role

Matarbari Units 1 & 264

Matabari Island,
Bangladesh

1200 MW

Ultrasupercritical

Under
construction(projected 2024)

EPC

Van Phong 1

Khanh Hoa
Province, Vietnam

1320 MW

Supercritical

Delayed until
2023-2465 66

BOT

Tanjung Jati B
Expansion Units 5-667

Central Java,
Indonesia

2000 MW

Ultrasupercritical

September 2021

SponsorDuyen Hai 3
Extension68

Duyen Hai district,
Vietnam

688 MW

Supercritical

Delayed until
2019

EPC

Lontar Coal Fired
Steam Power Plant
Unit 469

Banten Province,
Java, Indonesia

315 MW

Ultrasupercritical

2019

EPC

61
62
63
64
65
66
67
68
69

Sumitomo Corporation. “Construction of Tanjung Jati B coal-fired power plant Units 5 & 6 Expansion Project(2,000MW) commences in Indonesia.” News Release. Mar. 31, 2017. https://www.sumitomocorp.com/en/jp/news/
release/2017/group/20170331_2  Accessed Jun 13., 2019.
Hakko, Hana and Marina Lou. Uncertain and Harmful: Japanese Coal Investments in Indonesia. Greenpeace report.
Dec. 2018. p. 16. https://www.greenpeace.org/japan/sustainable/publication/2018/12/06/6544/
Sumitomo Corporation “Construction Commences on Van Phong 1 Coal-fired Power Project in Vietnam.” News
Release. Aug. 26, 2019. https://www.sumitomocorp.com/en/jp/news/release/2019/group/12310
https://www.sourcewatch.org/index.php/Matarbari_power_station
http://vepg.vn/wp-content/uploads/2019/06/MOIT_Report_58_BC_BCT.pdf
https://www.sumitomocorp.com/en/jp/news/release/2019/group/12310
https://www.sumitomocorp.com/en/jp/news/release/2017/group/20170331_2
https://www.sumitomocorp.com/en/jp/news/release/2014/group/20141126
https://www.sumitomocorp.com/en/jp/news/release/2015/group/20150924_1

25

Talin Thermal Power
Plant Units 1 & 270

Kaohsiung, Taiwan

1600 MW

Ultrasupercritical

2018

EPC

3A Coal Fired Power
Plant71

Manjung, Perak,
Malaysia

1000 MW

Ultrasupercritical

Sept. 201772

EPC

Tanjung Jati B Units
3-473

Central Java,
Indonesia

1320 MW

Subcritical

2011; 2012

SponsorBluewaters Coal-fired
Power station 1 and 274

Collie, Western
Australia, Australia

458 MW

Subcritical

2009

SponsorJimah Units 1 & 275

Negeri Sembilan,
Malaysia

1400 MW2009

EPC

Tanjung Jati B Units
1-2

Central Java,
Indonesia

1320 MWOct. 2006; Nov.
2006

SponsorPha Lai 2 Power
Station76

Pha Lai, Vietnam

600 MW

2002

EPC

EPC = engineering, procurement and construction
BOT = build, operate, transfer

Domestically, as of February 2018, Japan had 45 gigawatts (GW) of operating
coal plants at more than 100 facilities, with another 13 GW planned or inconstruction.77
Sumitomo had plans to build a 112 MW coal and biomass power plant in the Cityof Sendai (Miyagi Prefecture), but opposition from the city and local residents led
to its cancellation and resurrection as a 100% biomass plant.78
Wholly-owned subsidiary Summit Energy is a power generator and electricity
retailer. It is joint-owner of the Onahama Power Station (Iwaki, Fukushima), a
50MW subcritical coal plant completed in 2004.79

70
71
72
73
74
75
76
77
78
79

https://www.sumitomocorp.com/en/jp/news/release/2012/group/20120521_1 andhttps://www.toshiba.co.jp/about/press/2012_05/pr2101.htm
https://www.sumitomocorp.com/en/jp/news/release/2013/group/20130822
http://www.daelim.co.kr/eng/daelim/pr/NewsView.do?keyword=&searchword=&currentPage=1&cd_
mnu=&idx=18045
https://www.sumitomocorp.com/en/jp/news/release/2012/group/20120207
https://www.aurecongroup.com/projects/energy/bluewaters-power-station andhttps://www.epa.wa.gov.au/proposals/bluewaters-power-station-phase-i
https://www.ihi.co.jp/ihiap/project-highlights/jimah_power_station/index.html
https://www.hadek.com/industrial-chimney/pha-lai-power-station/
Climate Analytics. Science Based Coal Phase-Out Timeline for Japan. May 2018, p. 9.
Kiko Network. “Small Scale Power Plant in Sendai Switched from Coal to Biomass.” News Release. Jun 1. 2018.  
https://www.kikonet.org/eng/press-release-en/2018-06-01/small-scale-power-plant-in-sendai-switched-from-coalto-biomass
http://www.summit-onahama-power.ecnet.jp/26

SUMITOMO CORPORATION,
CLIMATE LAGGARD
Sumitomo Corporation is very much a laggard among trading houses when it
comes to coal – even after its August 2019 announcement. In 2018, Japanesetrading company Itochu took a leadership position when it announced it would
not build any more coal plants in Japan. This was the strongest commitment by a
trading company to date. Marubeni announced it would cut its 3 GW coal portfolio in half by 2030.80 Mitsui divested from thermal coal mining in 2018, andJapan’s largest trading company, Mitsubishi did the same in December 2018. In
February 2019, Itochu announced it would no longer invest in new coal power
plants or thermal coal mines and began to sell of its stake in several coal mines.81
Sojitz sold off its thermal mines in March 2019.82 In contrast, when competitor
Mitsubishi Corporation sold its 31% stake in Australia’s Clermont coal mine aspart of their effort to exit the upstream thermal coal business, Sumitomo Corporation and Glencore purchased it.83
In the 2019 Integrated Report, Sumitomo Corporation unveiled its policy on coal.84
It reiterated a modest existing target to reduce the relative share of coal capacity
in its generation portfolio from 50% to 30%, and to raise renewable energy from
20-30% by 2035.85 86 Unlike Marubeni’s commitment, which was stated in termsof capacity (gigawatts), Sumitomo expressed a coal reduction in percentages. If
Sumitomo’s gas and renewable generation expands from current levels, this could
mean no actual reduction in coal generation and pollution.
Sumitomo added they will not develop new coal-fired power plants but included
a loophole rendering the commitment no better than business as usual: “[W]emake a decision individually about new development in cases where the project isessential to the economic and industrial development of the local community and
80
81
82
83
84
85
86

Marubeni Corporation. “Notification Regarding Business Policies Pertaining to Sustainability.” News Release. Sep.
18, 2018. https://www.marubeni.com/en/news/2018/release/00028.html
Itochu. “Coal-related business policy.” Sustainability News. Feb. 14, 2019.  
https://www.itochu.co.jp/en/csr/news/2019/190214.html
Institute for Energy Economics and Financial Analysis. “Marubeni’s coal exit announcement a good first step but
increased commitment needed.” March 12, 2019.  
http://ieefa.org/marubenis-coal-exit-announcement-a-good-first-step-but-increased-commitment-needed/
Obayashi, Yuka. “Mitsubishi exits thermal coal sector, sells stakes in Australia mines.” Reuters. Dec. 18, 2018.
https://www.reuters.com/article/us-mitsubishi-coal-glencore-idUSKBN1OH0QK  and also Sumitomo’s website:
https://www.sumitomocorp.com/en/jp/news/release/2018/group/11130
Sumitomo Corporation. Integrated Report 2019. (Japanese). Aug. 2019.
https://www.sumitomocorp.com/ja/jp/ir/financial/investors-guide/2019“Decarbonization Survey Responses.” Toyo Keizai Shimbun. (Japanese) May 10, 2019. https://toyokeizai.net/sp/
visual/tkp/decarbonization-survey/ and Sumitomo Corporation Integrated Report 2018. p. 113.
Sumitomo Corporation. “Construction Commences on Van Phong 1 Coal-fired Power Project in Vietnam.” News
Release. Aug. 26, 2019. https://www.sumitomocorp.com/en/jp/news/release/2019/group/12310

27

where the project is complying with the policies of the Japanese and host country
governments based on the international initiatives to mitigate climate change
issues.” There was no specificity given as to what criteria make a project “essential,”
and the Van Phong project in Vietnam moved forward under this loophole.
In addition, Sumitomo Corporation also pledged to continue thermal coalproduction at current levels and not to develop new mine projects.87 On theother hand, Sumitomo Corporation’s website states they have a continued
commitment to developing infrastructure that brings coal to market. “Coal is
expected to enjoy steady growth in demand mainly in emerging countries inthe years to come, and to maintain its significance in the world’s energy mix.”
Furthermore, Sumitomo boasts of the breadth of its coal-related services, frommining and developing rail and port infrastructure for coal exports, to its rolein distributing coal within Japan. “Going forward, we will aim to contributeto Japan’s industry by launching a full value chain business for the supply ofcoal. At the same time, we also pursue our basic strategy of contributing tostable supplies of coal in Asia, where demand is expected to increase along withongoing and future economic growth.”88
Coal mining is now beset with global risks. As the United States and European Union countries slashed their reliance on coal generation, it contributed to volatility
and price drops in international coal markets. 89 A collapse of coal prices between
2013 and 2016 led to large losses for Sumitomo Corporation, Mitsubishi Corporation and Mitsui Bussan.90 Sumitomo has borne the brunt of this risk in the past,with a market downturn prompting them to close the Isaac Plains mine in Australia
in 2015.91 Sumitomo Corporation should reduce its exposure to financial risks andenvironmental damage from coal by exiting the thermal coal market entirely.

87
88
89
90
91

Sumitomo Corporation. “Construction Commences on Van Phong 1 Coal-fired Power Project in Vietnam.”“Sumitomo Corporation’s coal business pursuing responsible and stable supply of energy.” Accessed Nov. 26,
2019. https://www.sumitomocorp.com/en/jp/business/case/group/242
IEA “Coal.” Accessed Aug. 7 2019. https://www.iea.org/topics/coal/
Trencher, et. al. “Discursive resistance to phasing out coal-fired electricity: Narratives in Japan's coal regime.”  p. 13.
Sumitomo Corporation. “Isaac Plains Coal Mine to cease production.” News Release. Sep. 29, 2014.
https://www.sumitomocorp.com/en/jp/news/release/2014/group/20140929_3“Going forward, we will aim to contribute toJapan’s industry by launching a full value chain
business for the supply of coal”

28

Wetland clearcut near Meherrin River tied to Enviva’s
Southampton Virginia pellet plant. Dogwood Alliance

SUMITOMO CORPORATION’SBIOMASS BUSINESS:
TRASHING FORESTSFOR FUELGLOBAL FORESTS AT RISKAt its peak in 2017, Japan had approved a tremendous 13 GW of biomass power
under the feed-in-tariff incentive program, with some additional quantities tobe co-fired with coal outside this program. In comparison, the current global
biomass capacity is estimated at 130 GW, with the largest biomass power
producer, the United States, at 16.7 GW in 2018.92 As of March 2019, 48 Japanesebiomass power plants in the “general wood” category totaling more than 1 GW ofcapacity are operational.93
Sumitomo Corporation has a long history of importing biomass fuel for power
generation, dating back to 2008. Currently the company boasts it has a 55%
market share for imported wood pellets, and intends to control 40% (1.6 million
tons) of all imported biomass fuel by 2021.94
92
93
94

Statista. “Capacity of biomass power plants in selected countries and worldwide in 2018 (in gigawatts)”  
https://www.statista.com/statistics/264637/world-biomass-energy-capacity/
Biomass Industrial Society Network. Biomass White Paper 2019.  http://www.npobin.net/hakusho/2019/topix_01.html.
Sumitomo Corporation. “Providing Stable Supplies of Biomass Fuel for a Low-Carbon Society.” Case study
Accessed Sep. 11, 2019. https://www.sumitomocorp.com/en/jp/business/case/group/biomass

29

While significant policy attention is paid to degradation and deforestation oftropical forests (REDD+, etc.), degradation, conversion to plantations, andintensive industrial use of forests is also a problem for temperate and boreal
forests, including in North America. Harm to all of these types of forests threatens
species biodiversity and increases carbon dioxide levels in the atmosphere.95

SOUTHEASTERN UNITED STATES:DEGRADED FORESTS FROM INTENSIVE LOGGINGThe US south has emerged as the largest wood producing region in the globe.
Intensive logging is estimated to be four times the rate of rainforests in SouthAmerica.96 Over the past 60 years, 30 million acres of natural forests havebeen lost, overtaken by 40 million acres of new pine plantations.97 Youngforests are able to store less carbon than mature ones and also contribute lessto water management and flood control.98 These features of natural forests are
increasingly important as climate change contributes to more powerful storms
and hurricanes.
This increase in logging for biomass is not for domestic consumption. In October
2019, the state of North Carolina (NC), a key location for wood pellet production,
released its clean energy plan to reduce greenhouse gas pollution. The state’s plan
was openly critical about biomass: “Currently, the wood pellet industry does notcontribute to NC’s energy generation portfolio and does not advance NC’s clean
energy economy. There are currently no known plans for the industry to become
a contributor to NC’s energy sector in the coming years. If this trend reverses, NC
should not support activities that would increase emissions from its electricity
generation sector for the reasons cited below.”99
Specifically, the state clean energy plan criticized the export-oriented wood
95
96
97
98
99

Moomaw, Bill and Janice Smith. The Great American Stand. Dogwood Alliance. p. 12-14.
The Great American Stand. p. 26.
The Great American Stand. p. 28.
The Great American Stand. p. 27.
North Carolina Department of Environmental Quality. North Carolina Clean Energy Plan. Oct. 2019. p. 25.

Sumitomo boasts it has a 55% market share forimported wood pellets, and intends to control 40%(1.6 million tons) of all imported biomass fuel by 2021.
30

pellet industry from a carbon perspective. “The wood pellets harvested from NC
increase the state’s carbon output during logging, processing and transportation
and are burned for fuel elsewhere, mostly Europe... [L]arge scale use of NC’s
natural resources to meet foreign markets’ carbon reduction goals by taking
advantage of current accounting of methodology (sic) should be challenged at thenational and international level.”100
In North Carolina and other southeastern states, foreign demand for wood pellets
has placed additional pressure on an already highly degraded landscape. Equallyas important as deforestation, but often overlooked, is the ongoing degradation offorests from logging. Degradation compromises critical ecological functions, suchas water storage and natural flood control, which buffer vulnerable communities
against the worst effects of natural disasters. In fact, a recent report found that intropical forests, degradation could be as severe a problem as deforestation whenit comes to carbon emissions.101 No similar analysis has been conducted relative
to the degradation of forests in the United States, though logging rates in the
U.S. are the highest in the world.102 The new market demand for wood pellets isdriving increased logging of ecologically important forests.
100 North Carolina Clean Energy Plan. Oct. 2019. p. 26.
101 Yeo, S. “Forest degradation as bad for climate as deforestation, says report” Carbon Brief (2015).
https://www.carbonbrief.org/forest-degradation-as-bad-for-climate-as-deforestation-says-report.
102 Moomaw, Bill and Janice Smith. The Great American Stand. Dogwood Alliance. p. 12

Clearcut North Carolina wetland forest tied to Enviva’s facilities. Dogwood Alliance
31

The United States has its share of governance challenges regarding sustainable forestry. In the Southeastern United States, forested land is largely in the hands of private owners. There are no state laws specifically regulating privately owned forestsin the southern states, and while there are some forest management guidelines andstate foresters involved in forest management, clearcutting, logging of old-growthforests, clearing wetland forests, the destruction of species’ habitats, and conversions of forests to tree plantations are mostly unregulated by government.103
In addition to weak or nonexistent government regulation, the various forest
and timber industry certification programs, including weak guidelines under the
Sustainable Forestry Initiative and American Tree Farm System, allow naturalforests rich with species diversity and carbon to be converted into industrial
forests. Even the strongest of these programs, the Forest Stewardship Council(FSC), lacks a standard for protecting the carbon storage ability of forests.
Additionally, FSC has only certified a small percentage of southeastern forests.
For example, in North Carolina, out of 18.6 million total acres of forest, 15.5
million acres are in private hands, and only 47,000 acres are FSC certified. In
Virginia, 13 million of 15.7 million acres are in private hands and 2% (264,000
acres) are FSC certified.104
Foreign demand for pellets is putting additional pressure on already stressed
forests. European demand has led to the creation of biomass pellet facilities
capable of producing 10.6 million tons in 2019, and is projected to increase to
15 million tons by 2030. 9 million acres (3.6 million ha) needed to supply thisbiomass today is expected to increase to 10.5 million acres (4.2 million ha) in
managed forests by 2030.105

103 Natural Resources Defense Council. “The Truth About the Biomass Industry: How Wood Pellet Exports Pollute
Our Climate and Damage Our Forests.” Aug. 2014. p. 1-3. https://www.nrdc.org/resources/truth-about-biomassindustry-how-wood-pellet-exports-pollute-our-climate-and-damage-our
104 “The Truth About the Biomass Industry: How Wood Pellet Exports Pollute Our Climate and Damage Our Forests.” p. 5.
105 Dogwood Alliance. “Destroying Southern Forests for International Export.” 2017.
https://www.dogwoodalliance.org/wp-content/uploads/2017/08/Acres-of-Pellets-Fact-Sheet.pdf

Clearcutting, logging of old-growth forests, clearing
wetland forests, the destruction of species’ habitats,and conversions of forests to tree plantations aremostly unregulated by government.

32

By 2030, 280,000 acres of southeastern forests
will be cut annually 106

While the main market for southeastern forest biomass has been the EU,
especially the Drax power station in the U.K., in August 2018 the United
Kingdom’s Contract for Difference incentive program put strict restrictions
on lifecycle greenhouse gas emissions (it uses the EU RED LCA methodology
and does not include power plant smokestack emissions). It reduced allowable
emissions from the biomass supply chain from 200 kg CO2/MWh to 29 kg/
MWh.107 This change effectively ends additional biomass imports into the UK
market under this incentive program, as fuel transport emissions are likely too
great to meet the standard. This makes Japanese demand a significant driverof future forest losses from increased biomass production. Japanese trading
companies, including Sumitomo Corporation, form the key link between USpellets and Japanese power plants.

106 “Destroying Southern Forests for International Export.” p. 1.
107 United Kingdom, Department for Business, Energy & Industrial Strategy. “Contracts for Difference Scheme for
Renewable Electricity Generation.” Aug. 2018. p. 35, 37. https://assets.publishing.service.gov.uk/government/
uploads/system/uploads/attachment_data/file/736640/Consultation_document.pdf

33

SUMITOMO AND SOUTHEASTERN FORESTSIn the US southeast, Sumitomo Corporation contracts for large quantities ofwood biomass from third-party suppliers. The resulting lack of control oversourcing, and absence of a Sumitomo corporate policy of “no deforestation”
covering the entire supply chain, results in even greater environmental risks.

OVERVIEW OF ENVIVA PARTNERS, LP
Enviva Partners, LP is the largest exporter of wood pellets in thesoutheastern US, operating eight wood pellet plants with plansto build another thirteen. All of its North Carolina mills are indisadvantaged environmental justice communities.108 Woodsupplies in this region are dominated by small private landowners – Enviva
estimates more than 65,000.109 As of summer 2019, Enviva is developing acontroversial new mill in Mississippi, which would become the world’s largest,
and also a nearby port to export pellets to foreign markets, especially Asia.110
Numerous investigations have tied Enviva pellet manufacturing to the use ofwhole trees and logging of natural forests. Enviva’s “Track & Trace” monitoring
program reports that 83% of their wood is sourced from hard or softwood forests,
and only 17% is from sawdust or other residuals from wood manufacturing.111
Enviva facilities are located by Southeastern Mixed Forests and Middle Atlantic
Coastal Forests, both designated by the World Wildlife Fund as Critical/
Endangered, because of their biodiversity and numerous threats including
fragmentation and conversion.112 The Critical Ecosystem Partnership Fund, of
which the Government of Japan is a donor partner, labeled the North America
Coastal Plain a biodiversity hotspot because of the variety of plant and animal
life, and its significant habitat loss from causes including deforestation.113
108 Hitt, Mary Anne and Danna Smith. “Chopping down and burning our forests for electricity is not a climate
solution.” The Hill. Aug. 10, 2019. https://thehill.com/blogs/congress-blog/energy-environment/456977chopping-down-and-burning-our-forests-for-electricity
109 Enviva Presentation to Shareholders, Jun. 18, 2019. J.P. Morgan Energy Conference. p. 9.
https://ir.envivapartners.com/sites/envivabiomass.investorhq.businesswire.com/files/doc_library/file/EVA_Invest
or_Presentation_JPM_Energy_June_2019_vFinal.pdf
110 Perez, Mary. “One of the world’s largest pellet plants planned in Lucedale. Residents, environmental activists at
odds.” SunHerald. May 16, 2019.
https://www.sunherald.com/news/local/counties/george-county/article230375599.html
111 Enviva. “Track & Trace®”  http://www.envivabiomass.com/%20sustainability/track-and-trace/
112 Dogwood Alliance, NRDC, “Enviva’s Wood Pellet Mill in Ahoskie, North Carolina Threatens Endangered
Ecosystems and Wildlife.” Sept. 2014.
https://www.dogwoodalliance.org/wp-content/uploads/2013/05/Enviva-Mill-in-Ahoskie-Dogwood-Report.pdf
113 Critical Ecosystem Partnership Fund. “North American Coastal Plain.” Accessed Sep. 15, 2019.
https://www.cepf.net/our-work/biodiversity-hotspots/north-american-coastal-plain

34

ENVIVA AND SUMITOMO CORPORATION
These southern forests were stressed already from European demand forbiomass. Now there is additional pressure from Japan. Enviva has already signed
contracts with major Japanese corporations, including Sumitomo Corporation,
Marubeni,114 and Mitsubishi.115

Enviva: Wood Pellet Contract Mix (2023)
MarubeniToyota Tsusho

Mitsubishi
Drax

Sumitomo
MGT

Engie
RWE
Orsted~5.7 million MTPY

Lynemouth

Sumitomo Corporation signed
an 18-year contract for woodpellets beginning in 2022 to
supply 440,000 metric tons per
year for a new power plant inFukushima prefecture,116 and a 15year contract beginning in 2021
for 250,000 metric tons per yearof wood pellets.117 Enviva’s June2019 presentation for investors
showed that of Japan’s trading
houses, Sumitomo Corporation has
the largest share of contracts. The
combined Japanese demand is
expected to account for 35% of total
demand for Enviva products
by 2023.118

114 “Enviva enters contract to supply wood pellets to Japanese plant.” Biomass Magazine. http://www.biomassmagazine.
com/articles/15097/enviva-enters-contract-to-supply-wood-pellets-to-japanese-plant Accessed Jun. 14, 2019.
115 “Enviva Announces Off-Take Contracts with Mitsubishi Corporation are Firm.” News Release. Oct. 31, 2018.
https://ir.envivapartners.com/press-release/enviva-announces-take-contracts-mitsubishi-corporation-are-firm  
Accessed 16 June 2019.
116 “Enviva Partners, LP Reports Financial Results for First Quarter 2019 and Announces Fifteenth Consecutive
Distribution Increase.” Business Wire. 5/8/19. https://www.businesswire.com/news/home/20190508005950/en/
Enviva-Partners-LP-Reports-Financial-Results-Quarter
117 Enviva. “Enviva Holdings, LP’s Off-Take Contract with Sumitomo Becomes Firm.” News Release. Sep. 13, 2018.
http://www.envivabiomass.com/media-center/enviva-holdings-lps-off-take-contract-with-sumitomo-becomesfirm/ Accessed 16 June 2019.
118 Enviva Presentation to Shareholders, Jun. 18, 2019. J.P. Morgan Energy Conference https://ir.envivapartners.com/
sites/envivabiomass.investorhq.businesswire.com/files/doc_library/file/EVA_Investor_Presentation_JPM_Energy_
June_2019_vFinal.pdf

Sumitomo signed an 18-year contract with Enviva
to supply a new power plant in Fukushima with
440,000 metric tons of wood pellets per year.
35

AHOSKIE (NORTH CAROLINA) MILL
Enviva’s Ahoskie, North Carolina pellet facility is surrounded by pine plantations,natural pine hardwoods and forested wetlands. The Wall Street Journal has
documented Enviva sourcing wood for this plant by clearcutting wetland forests in
the Mid-Atlantic. These are forests that were already in serious decline, which harms
wildlife and nearby communities which rely upon the forests to maintain water quality
and offer flood protection.119

Wetland Hardwood Forests

Ahoskie, N.C.

LegendWetland Hardwood Forests

Ahoskie, N.C. Enviva Pellet Factory
Ahoskie 75mile buffer

Data Derived from:
USDA Forest Service - Forest Inventory and Analysis (FIA) Programand Remote Sensing Application Center (RSAC).
Dataset portrayals of 28 forest type groups across the contiguous United States.
These data were derived from MODIS composite images from the 2002
and 2003 growing seasons in combination with nearly 100 other geospatial data
layers, including elevation, slope, aspect, ecoregions, and PRISM climate data.
Copyright: ©2012 Esri, DeLorme, NAVTEQ

122

In March 2016, investigators fromregional conservation organization Dogwood Alliance further
identified and linked clear-cuts inNorth Carolina coastal wetland
forests in the Roanoke River Basin directly to Enviva’s Ahoskie
wood pellet facility. Enviva had
cut down whole hardwood trees
and other large diameter woodleaving a wetland area devoid oftrees. These trees are critical forbiodiversity but had been considered less commercially desirable
until the pellet industry created ademand for them.120
The surviving forested wetlands
are anchors for biodiversity,and are at risk from increased
industrial logging. Once cut,
restoring bottomland hardwood
wetlands is difficult because
these forests take many decades
to mature. Once flood patterns
are altered, the diversity of trees
and plants changes when theforest regenerates.121

119 “Europe's Green-Fuel Search Turns to America's Forests.” The Wall Street Journal. May 27, 2013.
https://www.wsj.com/articles/SB10001424127887324082604578485491298208114 Accessed Jun. 16, 2019.
120 Natural Resources Defense Council, Dogwood Alliance, “Enviva’s Wood Pellet Mill in Ahoskie, North Carolina
Threatens Endangered Ecosystems and Wildlife.” Aug. 2013. p. 2. https://www.nrdc.org/resources/envivas-woodpellet-mill-ahoskie-north-carolina-threatens-endangered-ecosystems-and
121 Natural Resources Defense Council, Dogwood Alliance, “Enviva’s Wood Pellet Mill in Ahoskie, North Carolina
Threatens Endangered Ecosystems and Wildlife.” Aug. 2013. p. 13.
121 “Enviva’s Wood Pellet Mill in Ahoskie.” p. 5.

36

Reporters documented the clearing ofwhole hardwood trees from a mature
wetland forest and 100 acres ofsurrounding natural hardwood forests.

Forested wetlands are anchors for biodiversity.
Above: Clearcut tied to Enviva Ahoskie, NC, plant. Dogwood Alliance
Below: Cypress Bog in Southern U.S. Winnie Helton Harmon

37

ENVIVA SOUTHAMPTON (VIRGINIA) MILL
In January 2018, reporters from the UK Channel 4 news program Dispatches
documented the clearing of whole hardwood trees from a mature wetland forestand 100 acres of surrounding natural hardwood forests.123

GREATER SCALE, GREATER RISK
Enviva’s long-term contracts with Japanese trading companies are propelling
their expansion. To facilitate this growth, Enviva is investing in capacity. In
2019 there has been extensive local opposition to an Enviva wood pellet plant
proposed for Lucedale, Mississippi. In addition to the threat of deforestation, airmodeling showed air pollution from the plant would put the area in violation offederal air quality standards. Enviva Partners LP is also investing in a ship-loading
facility in Pascagoula, Mississippi to support pellet exports.124
123 Natural Resources Defense Council, Dogwood Alliance. “Global Markets for Biomass Energy are Devastating U.S.
Forests.” Jun. 2019. p.6
https://www.nrdc.org/resources/global-markets-biomass-energy-are-devastating-us-forests
124 Amy, Jeff. “Board Approves Air Permit for Wood Pellet Plant.” Associated Press. Jul. 10, 2019. Accessed Aug. 1,
2019. https://news.yahoo.com/board-approves-air-pollution-permit-232407372.html

Wetland clearcut near Meherrin River tied to Enviva’s Southampton facility. Dogwood Alliance38CANADIAN WOOD PELLET PRODUCTION
Canada is a major wood producer and is the largest supplier of biomass wood toJapan.125 Since 2000, Canada has experienced a loss of 9.2% in tree cover (38.6
million hectares), releasing 1.5 billion tons of CO2 into the atmosphere.126 Its
forest cover is under pressure from pulp production and now also biomass. Muchof its forests are high-latitude boreal forests that are sensitive to environmental
disturbances, and take more than a century to replace themselves, leading to a
century-long carbon debt.

Annual Canadian Wood Pellet Exports by Destination 127
2,500

Other

Million Kilograms

2,000

United States
Japan

1,500

United Kingdon

1,000
500
0

2012

2013

2014

2015

2016

Source: Statistics Canada

The large North American boreal forest is home to wildlife including grizzly
bears, wolves and boreal woodland caribou.128 These caribou are designated by
the Canadian government as “threatened,” with 81% in decline primarily due topredation and habitat loss.129 Woodland caribou depend on arboreal lichen as afood source, which grows on mature coniferous trees. The survival of this species
depends on maintaining the health of primary forests.130
125 Biomass Industrial Society Network, Biomass White Paper 2019. (Japanese)
http://www.npobin.net/hakusho/2019/topix_02.html
126 STAND. “Stand.earth joins worldwide movement calling biomass energy a ‘dangerous delusion.’” Oct. 24, 2018. https://www.stand.earth/latest/forest-conservation/primary-forests/standearth-joins-worldwide-movement-calling-biomass
127 Canada Energy Regulator. “Market Snapshot: Canadian wood pellet exports grew 46% between 2015 and 2016.”
https://www.cer-rec.gc.ca/nrg/ntgrtd/mrkt/snpsht/2017/11-03cndnwdplltxprts-eng.html
128 STAND. “Protecting North America’s Boreal Forest.” Web page. Accessed Aug. 8, 2019.
https://www.stand.earth/about/achievements/protecting-north-americas-boreal-forest
129 https://wildlife-species.canada.ca/species-risk-registry/species/speciesDetails_e.cfm?sid=636
130 STAND. “Is Charmin toilet paper endangering the caribou?” Blog article. May 6, 2019. https://www.stand.earth/blog/forest-conservation/charmin-toilet-paper/charmin-toilet-paper-endangering-caribou

39

BRITISH COLUMBIA
Within Canada, the province of British Columbia has emerged as a leader inbiomass wood production, accounting for approximately half of production.131
The United Kingdom, followed by Japan, are British Columbia’s primary export
markets, with 1.5 million and 622,000 metric tons of wood pellets shipped
respectively in 2018.132 Canadian pellet exports more than doubled between
2012 and 2014 and are expected to double again by 2023.133 It is an open
question as to the extent which pellet facilities in British Columbia can continue
to increase output before having to harvest additional trees from nearby forests.

Sumitomo as both pellet buyer and producer
Sumitomo Corporation sources wood pellets from British Columbia throughsuppliers. It has three contracts with Pinnacle Renewable Energy, Inc.134
Pinnacle operates eight wood pellet factories in western Canada, with sevenin British Columbia.135 The company states that in 2022, 48% of its contracted
sales will be to customers in Asia. Pinnacle’s most recent contract with
131 The non-profit, STAND, made calculations based on the “Canadian Biomass 2018 Pellet Map.”
www.canadianbiomassmagazine.ca/images/cbm_pelletmap2018.pdf
132 Statistics Canada. Domestic Exports of wood pellets, agglomerated (440131) from British Columbia.
https://www5.statcan.gc.ca/
133 Walker, Seth and William Strauss. “2019 global wood pellet markets outlook” Canadian Biomass Online. Jan 7,
2019. www.canadianbiomassmagazine.ca/pellets/2019-wood-pellet-markets-outlook-7190
134 Pinnacle Renewable Energy. “Investor Presentation April 2019.” p. 5
https://pinnaclepellet.com/wp-content/uploads/2019/04/Pinnacle-April-2019.pdf
135 Pinnacle Renewable Energy. “Our Locations.” Accessed Sep. 9, 2019. https://pinnaclepellet.com/about-us/

British Columbia. Canada has lost 9.2% of its tree cover since 2000. Sam Beebe
40

British Columbia Inland Temperate Rainforest(ITR) and Pellet and Pulp Mills

Sumitomo was concluded
in March 2019 to supply
200,000 metric tons per
year beginning in 2022.136
In 2017, Sumitomo
Corporation entered thewood pellet production
business directly with its
purchase of a 48% shareof Pacific BioEnergy.
This Canadian-based
biomass producer has
long supplied markets in
Europe, and increasingly
Japan, throughSumitomo. Its plants havethe capacity to produce
550,000 tons of pellets
per year.137
In 2019, industry press
reported contracts
totaling 170,000 tons
per year of pellets
from Pacific BioEnergy
intended for two
undisclosed new biomass
power plants in Japan.138

The harvest areas for
Pinnacle’s Strathnaver
facility and Pacific BioEnergy’s facilities in Prince George and Chetwynd (#4,
#1 and #11 on the map) may include caribou habitat as well as proposed
Indigenous Protected and Conserved Areas.139

136 Pinnacle Renewable Energy. “Pinnacle Renewable Energy Resumes Production at Entwistle Facility and Announces
New Off-Take Contract in Japan.” News Release. Mar. 31, 2019. https://pinnaclepellet.com/cision/?nrid=122514
137 Sumitomo Corporation. “Sumitomo Corporation Acquires Stake in Canadian Wood Pellet Manufacturer.” News
Release. Jul. 21, 2017. https://www.sumitomocorp.com/en/jp/news/release/2017/group/20170721_1
138 “Pacific BioEnergy announces two new long-term supply contracts to Japan,” Jan. 22, 2019. Accessed Jul. 24,
2019. https://bioenergyinternational.com/pellets-solid-fuels/pacific-bioenergy-announces-two-new-long-termsupply-contracts-to-japan
139 Map provided by STAND, Aug. 2019.

41

VIETNAM
Japan is the second largest market after South Korea for Vietnamese woodpellets, consuming 25% of exported wood pellets in 2019.140 Conversely, Vietnam
is also the second largest supplier of woody biomass to Japan, behind only
Canada for quantity shipped in 2018.141
Quality control is an ongoing problem, however. While Vietnam imposed a logging
ban from natural forests in 2016, it has emerged as a major processor for imported
wood, but is also accused of laundering illegally-logged timber from SE Asia andAfrica and then exporting it to the United States, European Union and Japan.142
South Korea has imported the majority of their wood pellets from Vietnam. WhenSouth Korea required chain-of-custody certificates to improve traceability ofVietnamese pellet producers, they were found to present fraudulent credentials.143
South Korea even had to specify that the pellets be composed of wood, due to theinclusion of non-wood waste products and other inappropriate materials.144 In June
2018, Korean program changes increased REC incentives for domestically-sourced
pellets to encourage the development of domestic biomass resources, yet anothercountry to belatedly change policies to limit the role of biomass imports.145
In summer 2019, Japanese environmental NGOs began investigating allegationsof Vietnamese pellet suppliers abusing Forest Stewardship Council “Chain of
Custody” forestry certifications. They allegedly claim to ship FSC-certified materials
140 Vietnam Customs data, compiled by VIFORES, HAWA, FPA Binh Dinh and Forest Trends.
141 Biomass Industrial Society Network. Biomass White Paper 2019. http://www.npobin.net/hakusho/2019/topix_02.html
142 ScoutAsia Research. “Vietnam Under Pressure to Clear Out Illegal Wood.” Financial Times. Jun. 25, 2019.
https://app.ft.com/content/ee27cc88-941f-11e9-aea1-2b1d33ac3271
143 IEA Bioenergy. “Global Wood Pellet Industry and Trade Study 2017.” Jun. 2017. pp. 192, 206.  
http://task40.ieabioenergy.com/wp-content/uploads/2013/09/IEA-Wood-Pellet-Study_final-2017-06.pdf   
144 Portz, Tim. “Southeast Asia’s Low-Cost Pellet Player” Biomass Magazine. Nov. 17, 2015.
http://biomassmagazine.com/articles/12542/southeast-asiaundefineds-low-cost-pellet-player
145 Strauss, William. “Recent Developments in the South Korean Industrial Wood Pellet Markets,” FutureMetrics LLC
White Paper. Jul. 29, 2019. pp. 1, 9.

Vietnam has emerged as a major processor forimported wood, but is also accused of laundering
illegally-logged timber from SE Asia and Africa
and then exporting it to the United States,
European Union and Japan.

42while lacking the accompanying “Forest Management” certifications which arenecessary to demonstrate the material is wood sustainably sourced from forests. If
suppliers and Japanese trading companies are fraudulently claiming biomass madefrom ineligible waste is “general wood,” they would receive a much higher incentive
under Japan’s feed-in-tariff. In addition, Vietnamese pellets are alleged to containhighly toxic substances, and a lack of adequate testing by trading companies could
expose the public to these potent pollutants.146

SUMITOMO CORPORATION AND VIETNAM
Sumitomo has long-since contracted with Vietnamese suppliers, though contract
details are sparse. Nikkei Asian Review cited that as of 2017, Sumitomo Corporation
imported a total of 200,000 tons of wood chips and pellets annual from Canada
and Vietnam.147 In recent correspondence, Sumitomo stated that at present they
have one short-term contract with a Vietnamese supplier.148
146 Correspondence with Japanese environmental organizations, July 2019.
147 “Japan trading houses, power companies raise biomass imports.” Nikkei Asian Review. Feb. 24, 2017.
https://asia.nikkei.com/Business/Japan-trading-houses-power-companies-raise-biomass-imports
148 Corporate Sustainability Dept., Sumitomo Corporation. “Written correspondence with Mighty Earth.”
Nov.18, 2019.

Vietnamese pellets are alleged to contain highly
toxic substances, and a lack of adequate testing bytrading companies could expose the public to thesepotent pollutants.

43

Sumitomo Corporation and JapaneseBiomass Power Plants
Sumitomo Corporation is an owner and investor in biomass power plants inJapan, including through its 100% owned subsidiary, Summit Energy.
Facility Information

Environmental Risk Factors

Plant
Name

Fuel

Size

In
service

Location(City,
Prefecture)

SendaiTakamatsu
Power
StationWood pellets
from N. America(primary fuel),pellets from
Oceania, PKS

112MW

2023

Sendai,
Miyagi

SakataBiomass
Power
Plant

40% wood chips(local) and 60%
wood pellets(imported,
Canada)150

50MW

2018

Sakata,Yamagata

SummitHanda
Biomass
Power
Plant151

Wood chips(primarily
imported) &PKS15275MW

2017

Handa,
Aichi

SummitMyojo
Power
Itoigawa
Biomass
Plant153

Constructionwaste,154 woodchips, 30% coal155

50MW

2005

Itoigawa,
Niigata

Low-riskHigh-risk

Medium-risk

Unknown(projected)

Long
supplychainsPlant
efficiency

Longdistancefueltransport

149

156

149 Estimated plant efficiency 40%. Sendai Takamatsu Biomass Plant Q&A with Sumitomo Corporation. Aug. 3, 2019.
150 https://www.sumitomocorp.com/ja/jp/news/release/2018/group/10640 andhttps://www.sumitomocorp.com/ja/jp/business/case/group/cc-181101
151 https://www.sumitomocorp.com/en/jp/business/case/group/cc-30482 and https://www.sumitomocorp.com/en/
jp/business/case/group/retail-electricity
152 https://www.sumitomocorp.com/-/media/Files/hq/ir/explain/business/20190405-Handa.pdf  
153 Sonoyama, Kaoru. “Utilization of Biomass Energy.” Japan Trade Association, Monthly Newsletter. No. 632. Dec.
2005. (Japanese) http://www.jftc.jp/monthly/archives/001/201802/5ded35d689aad6698050fd513444bc81.pdf
154 The biomass plant is co-located with the Myojo cement plant that turns construction wood waste from the regionand other wood from central Japan into fuel on site. One potential problem is that formwork wood used forpaneling on concrete buildings has been sourced from vulnerable forests in southeast Asia.
155 http://www.maff.go.jp/hokuriku/environment/bio/pdf/jirei_h19_16.pdf
156 Plant efficiency is 35%. http://www.summit-myojyo-power.co.jp/power.html

44Long supply chains and risk					When Sumitomo Corporation imports fuelfrom third parties, it does not have direct control over how the fuel is sourced.
For example, Sumitomo contracts with US wood pellet supplier Enviva, which inturn purchases wood from individual landowners on private lands. Vietnamesepellet producers may source wood and other materials from various countries.
This lack of control, traceability, and accountability increases the risk of
deforestation, degradation, and conversion of natural forests to plantations.
Voluntary industry certification programs are not adequate to ensure forest
protection, as some schemes such as the Sustainable Biomass Program usedby Enviva are riddled with loopholes,157 and even more stringent protocols
such as the Forest Stewardship Council (FSC) were never intended for use withbiomass fuel, and can be abused by suppliers.158 Environmental organizations
criticized FSC for a lack of carbon standards, and weakness in preserving intact
forest landscapes, which led to the withdrawal of Greenpeace International
as a member.159 While Sumitomo Corporation cites transparency as a core
principle,160 there is little information publicly available about the sources of its
biomass fuel for any given power plant.

Plant efficiency

		Biomass power plants are notoriously inefficient, withsmaller units capturing roughly 20-30% of the energy value of the fuel andeven larger coal-like power plants (50MW+) capturing less than 40%. The bestpractice is to capture and use the waste heat from combustion, leading toplants with efficiencies approaching 80%. While efficiency data is not available
for several of the biomass plants, their sizes and locations preclude the use ofsignificant quantities of waste heat.

Long-distance fuel transport					The full carbon dioxide emissions associatedwith biomass power plants includes both the loss of stored forest carbon, butalso the fuel used for processing wood into chips or pellets and transportationfrom the source to the power plant. Locally-sourced biomass has far less carbon
emissions than fuel transported thousands of kilometers.
157 Natural Resources Defense Council. The Sustainable Biomass Program: A Smokescreen for Forest Destruction andCorporate Non-accountability. 2017. https://www.nrdc.org/resources/sustainable-biomass-program-smokescreenforest-destruction-and-corporate-non
158 See FSC July 2019 findings of violations by major wood supplier to Japan, Korindo: http://www.mightyearth.org/
two-year-investigation-finds-major-palm-oil-producer-korindo-guilty-of-rainforest-destruction-and-human-rightsabuse/
159 Markets for Change & JATAN. Walking on the Devastation of Tropical Forests. May 2018. p. 21.
160 Sumitomo Corporation Group's Corporate Mission Statement https://www.sumitomocorp.com/en/jp/about/policy/principles

45

Sendai Takamatsu Power Station:
Too Large to be Sustainable
Sumitomo Corporation has developed some of the largest-scale biomass
facilities in Japan. Its latest massive plant, the Sendai Takamatsu Power Station,
began as a 112 MW coal plant, sized just below the trigger for mandatory
national Environmental Impact Assessment requirements. Opposition from local
citizens, and eventually new environmental guidance from the city government in
December 2017, resulted in Sumitomo announcing the facility would be built as a
100% biomass plant of the same capacity. Sumitomo stated it would become oneof the largest dedicated biomass plants in the country.161
Sendai area residents and professors at nearby Tohoku University sued a separate
proposed coal plant for the city. They vigorously opposed Sendai Takamatsu as a
combined coal and biomass plant, holding a series of workshops and local events
about sustainability, and continued to oppose it in its reincarnation as a biomassonly plant.162
As a converted coal plant, Sendai Takamatsu’s size is large for a biomass
plant. This means higher greenhouse gas emissions, as the utilization of heatfrom combustion is infeasible with such great quantities of heat produced.
Furthermore, Sumitomo stated that the primary fuel would be imported pellets, as
the project size made it unrealistic to procure stable supplies of fuel locally. The
pellets would primarily be sourced from North America, with associated use offossil fuel for production and transportation over great distances. No information
was provided as to the supplier of the pellets, or the specific region from which
the wood would be procured from.163
The reliance on pellets shipped across the world, and low efficiencies from losing
more than half the energy value of the pellets as heat, and unknown impacts on
North American forests, are the results of inappropriate scale for this coal-turnedbiomass plant.
Sumitomo intends to start full operations at the Takamatsu plant in 2023.

161 Sumitomo Corporation. “Sendai Takamatsu Power Plant Construction Plan Briefing Document.” Environmental
Assessment Preparatory Document. Jul. 2019. (Japanese) pp. 1, 2. https://www.city.sendai.jp/kankyochose/kurashi/
machi/kankyohozen/kurashi/kankyo/ekyo/jore/takamatu/junbisyo.html
162 Association to Consider the Problems with Coal Plant Construction at Sendai Port. “Citizen’s Voices Stopped
Sumitomo Corporation Coal Plant” News Release. Jun. 4, 2018. (Japanese) https://sendaisekitan.wordpress.
com/2018/06/05/180604seimei-sumitomo/
163 In person Q&A with Sumitomo Corporation at “Information Session re: Environmental Impact Assessment
Preparatory Document for Sendai Takamatsu Power Plant.” Sendai, Japan. Aug. 3, 201946

Midas, a subsidiary of Sumitomo Corp. Mike Mozart

SUMITOMO CORPORATIONAND YOU
Sumitomo’s pursuit of biomass and coal energy makes them a leading climate
offender—and one of the least responsive of all the major Japanese trading
companies.
And while Sumitomo Corporation may not be a household name in North
America, many Americans and Canadians consume their products. Car owners
across the US and Canada are likely to be doing business with Sumitomo without
knowing it.

TBC CORPORATION
In 2005, Sumitomo Corporation of America (SCOA, a wholly-owned subsidiaryof the Tokyo-based Sumitomo Corporation) purchased TBC Corporation,170 avertically-integrated tire marketing company headquartered in Palm Beach
Gardens, Florida.171
170 “Sumitomo Corporation of America Announces Agreement to Acquire TBC Corporation”PR Newswire. Sep. 19, 2005. p 1.
171 “TBC Corporation: Company Profile and SWOT Analysis.” Timetric. Apr. 26, 2018.

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TBC owns several well-known automotive brands, including National Tire andBattery (NTB), Big O Tires, Tire Kingdom, and Midas, with over 3,200
franchised and company-operated locations in all,172 173 as well as online retailer
TireAmerica.com.174

Additionally, TBC Brands is largest marketer of private brand tires in North
America. TBC distributes their tires to independent retailers and wholesalers in
the US, Canada, and Mexico under the brands Advance, Eldorado, Sailun,
Towstar, CrossWind, Harvest King, Sierra, Trailer King, Delta, MultiMile, Sumitomo, Vanderbilt, Deluxe Tubes, Power King, and Towmax.175

172 https://www.sumitomocorpofamericas.com/Key-industrial-Areas/Infrastructure/Transportation-ConstructionSystems-Group/Tire-Business
173 https://www.sumitomocorp.com/en/jp/news/release/2012/group/20120501
174 http://www.tbccorp.com/retail-brands#tire-america
175 http://www.tbcbrands.com/ Accessed Jun. 15, 2019.

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NATIONAL TIRE WHOLESALE
Another TBC company, National Tire Wholesale (NTW), is joint venture
between SCOA and Michelin that merged the two companies’ tire wholesale
units to create the second-largest wholesale tire supplier in the United States,
according to the companies’ press release.176
In 2016, Michelin announced its own commitment to zero-deforestation rubber
sources and to working with plantations that protect and preserve forests withhigh conservation value and high carbon stock.177
To live up to this commitment, it is incumbent upon Michelin to pressure its
partner Sumitomo to engage in business practices that keep carbon safely stored
in the forest and the ground—not in burning forests and coal for fuel.

176 https://www.moderntiredealer.com/news/727937/a-jumbo-joint-venture-michelin-and-sumitomo-s-tbc
177 https://michelinmedia.com/zero-deforestation/

To live up to its environmental commitments,
Michelin should pressure its partner Sumitomo not
to burn forests and coal for fuel.

Loren Kerns

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Winnie Helton Harmon

SUMITOMOCORPORATION:
NEEDED POLICY CHANGES
Mighty Earth calls upon Sumitomo Corporation to implement substantial newpolicies regarding its coal and biomass programs and close the loopholes in its
August 2019 coal policy immediately.

Adopt a responsible energy policy that includes
the following key provisions:

COAL
1 COMMIT TO A COAL EXIT
Make a public commitment to end involvement in all coal generationand mining of thermal coal globally by 2030. The commitment
should include the cancellation of coal projects currently in planningor under construction (including Matabari, Van Phong and Tanjung
Jati B.); no investment in or construction of new coal plants or coalmines; and a phase-out of existing plants and coal mines. Publicly
release an implementation plan by the 152nd Ordinary General
Meeting in June 2020.

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2 END COAL FINANCINGWork within the Sumitomo family of companies, including Sumitomo
Mitsui Banking Corporation, to end project financing for coal andcorporate financing for coal developers; and to shift all Sumitomo
Group companies’ energy project financing to be in line with the Paris
Agreement goals.

3 SUPPORT AN END TO PRO-COAL POLICIESAdvocate for an end to Japanese public policies which support coaldomestically and abroad. Ensure no new coal is built in Japan andphase out all coal by 2030. Support policies to expand renewableelectricity generation across Japan.

4 HUMAN RIGHTS
Avoid violations of local communities’ human rights and conduct
appropriate dialogue with residents. Promptly address concerns raisedby stakeholders, including residents and non-profit organizations.

Sumitomo should make a public commitment to
end involvement in all coal generation and miningof thermal coal globally by 2030.

Piles of coal at the Port of Hyūga, Miyazaki. Ted McGrath

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BIOMASS
1 NO DEFORESTATION, NO PEAT, NO EXPLOITATION
Immediately adopt and implement a responsible forest products policy
which applies to all of Sumitomo Corporation’s global operations,subsidiaries, joint venture and supply chain partners. Work within the
Sumitomo Group to ensure each company adopts the same standards.
The policy should prohibit the degradation of natural forests or theirconversion to plantations; prohibit forestry operations in primary forest,
peatland forests, or high carbon stock landscapes; and ensure no loss offorest cover. Ensure no labor abuses or human rights violations in thedevelopment of or investment in any biomass feedstock, whether for
Sumitomo Corporation’s own biomass facilities, or for sale to other power
plants. Stop the importation of forest biomass from North America andVietnam which are linked to forest degradation and deforestation.Only
use biomass which regenerates quickly and has climate benefits over thecritical next 10 year period.

2 NO PALM OIL
No involvement or investment in current or future biomass plants that use
palm oil as a feedstock. No involvement or investment in the developmentof palm oil as a fuel source for power plants. Food and personal careproducts already drive significant deforestation for palm oil. Using palm
oil for bioenergy creates an additional, unsustainable burden throughdeforestation and indirect land use change.

3 TRANSPARENCY AND TRACEABILITY
Publicly disclose and regularly update the sources and types of biomass fuelused in all Sumitomo Corporation power plants which burn biomass.

4 GRIEVANCE PROCEDURE
Adopt a grievance procedure and public grievance mechanism.

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5 VERIFICATION
Commit to independent verification of compliance with the forest
protection policy.

6 SUPPORT BIOMASS POLICY REFORMS
Advocate publicly for reform of Japan’s renewable energy policies inline with the “Joint Recommendations on Biomass Generation” (July
2019) to refocus the industry on local use of local organic wastes.178 The
recommendations call for policies to ensure that biomass power generationin Japan results in real greenhouse gas reductions (at least 50% over its
lifecycle compared to natural gas); does not contribute to deforestation;
degradation or loss of biodiversity; does not use palm or other plant oils;
does not violate human rights; does not compete with food supplies; avoids
emissions of hazardous or radioactive materials with adequate monitoring;ensures transparency and traceability; and ensures projects are subject toenvironmental impact assessments and community consent.

7 CLEAN ENERGY POLICY REFORMS
Join other leading corporations in calling for reforms to Japan’s energy
system to enable Japan to achieve 50% renewable electricity by 2030.179
178 Friends of the Earth Japan. “Joint Recommendations Regarding Biomass Power Generation.” Jul. 16, 2019.
http://www.foejapan.org/en/forest/190716.html
179 Japan Climate Leaders' Partnership. “Proposal from Corporate Consumers Aiming to Sourcing 100% Power from
Renewable Electricity.” Jun. 17, 2019. Accessed Oct. 8, 2019. https://japan-clp.jp/archives/3453

Nunobiki wind farm. flickr user This is Fukushima
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ABOUT MIGHTY EARTH
Mighty Earth is a global campaign organization that works to protect lands,
oceans, and the climate. We aspire to be the most effective environmentalorganization in the world. We have played a leading role in persuading
the world’s largest food and agriculture companies to adopt policies toeliminate deforestation and human rights abuse from their supply chains,and driven adoption of multi-billion dollar shifts to clean energy. Whether
we’re rallying for change internationally or locally, Mighty Earth is building a
movement to protect our environment.
Mighty Earth is a fiscally sponsored project of the Center for International
Policy, a 501(c)3 non-profit organization. Our Chairman, former UnitedStates Congressman Henry Waxman, is responsible for some of the mostimportant environmental legislation of the last 50 years, notably the 1990
re-authorization of the Clean Air Act and the Safe Drinking Water Act.

MIGHTYEARTH.ORG

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Old growth bottomland hardwood forest, S. Carolina. Dogwood Alliance