Generic Hero BannerGeneric Hero Banner
Latest Market News

Korea's REC changes may pare long-term biomass imports

  • Spanish Market: Biomass
  • 10/01/25

South Korea's renewable energy credit (REC) scheme revisions for biomass-fired power generation will boost private and state-run utilities' wood pellet imports in the short term, then curb them in the long run.

The South Korean government on 18 December announced a gradual reduction in RECs for biomass-fired generation. The new rules are set to bolster pellet imports in the short term, but the gradual reduction in RECs will result in lower overall imports and new market trends in the longer run.

The changes were designed differently for state-run producers and independent power producers (IPPs), so the impact on each group is different. RECs for state-run power generators will be reduced from 1.5 in 2025 to 0.5 for dedicated biomass utilities by 2027, and 0 for co-fired biomass generation producers. RECs for IPPs will be reduced to the same respective levels but over 20 years starting from 2026, after a one-year grace period. (see tables)

State-run utilities will see the largest impact in the near term, given the much shorter timeline for their credit reduction, with a stronger incentive for generators to increase output when REC credits are higher. This is set to bolster imports over the next three years as utilities secure most of their pellet needs from abroad.

This is in contrast to IPPs, which will see a more gradual REC reduction in the 20 years from 2026, and their demand for imports is expected to be broadly unaffected in the near term. IPPs also have an incentive to burn more in the coming few years because of the higher REC rates compared to later.

Biomass-fired generation at some utilities may rise by 10-15pc on the year in 2025, according to a South Korean buyer. Higher demand for spot wood pellet cargoes has already lent support to the spot fob Vietnam price to South Korea in recent weeks.

South Korean demand for imports may decline in the longer term, if the reduced state support leads to uneconomical margins for utilities. Vietnamese suppliers have already expressed concerns about South Korean demand spiking in the near term only to decline in subsequent years.

Some utilities are set to reach the end of their economic life in the mid-2030s, including the 100pc biomass-fired Yeong-Dong units 1 and 2 which are set to shut down in 2032 and 2035 respectively. This will cut overall demand for pellets unless new power plant projects are launched.

The reduction in RECs is also set to discourage new investment. Investment firm Glenwood Private Equity, which had signed a preliminary agreement to acquire South Korean IPP SGC Green Power, cancelled the deal after the government's announcement on the reduction of RECs in December.

Utilities may also start looking for alternative, cheaper feedstocks such as wood chips going forward. Expectations of a decline in overall South Korean demand for pellets may encourage southeast Asian producers to seek to sell more to other markets such as Japan or Europe, a Vietnamese pellet producer said.

REC for state-owned utilities/MW
YearREC rate
20241.50
20251.00
20260.75
20270.50
REC for independent power producers/MW
YearREC rate
20251.50
20261.49
20271.49
20281.48
20291.47
20301.46
20311.45
20321.44
20331.43
20341.41
20351.40
20361.37
20371.35
20381.32
20391.29
20401.24
20411.18
20421.10
20430.99
20440.81
20450.50

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

16/06/25

Japan’s Erex lifts biomass-fired power output in May

Japan’s Erex lifts biomass-fired power output in May

Tokyo, 16 June (Argus) — Japanese renewable energy developer Erex's biomass-fired power generation in May rose from a year earlier, according to data published by the company on 13 June. Erex's combined electricity output from the 50MW Saiki, the 75MW Buzen, and the 49MW Nakagusuku biomass-fired power plants in May increased by 2pc on the year to 98GWh. The company does not disclose the output of the 75MW Ofunato plant. Erex's biomass-fired power generation capacity in May was 249MW, including the Ofunato plant, with the firm burning mainly imported wood pellets and palm kernel shells (PKS). The Buzen plant was halted from 1-6 June because of regular maintenance. The 20MW Tosa plant has been shut down for an indefinite period because of aging facilities, according to the company. Erex started commercial operations at the 75MW Sakaide biomass-fired power plant on 2 June. The company plans to start up the 300MW Niigata Mega Bio around 2029-30. Erex's 20MW Hau Giang biomass-fired power facility in Vietnam came on line in April, with the plant burning rice husks. The company aims to build up to 18 biomass plants in the country, following Hau Giang. Erex also plans to start constructing a 50MW biomass plant in Cambodia in this year. By Takeshi Maeda Erex's Biomass-fired Generations in May 2025 Capacity(MW) Generation(GWh) Start of Operations Saiki 50 30 Nov-16 Buzen 75 36 Jan-20 Nakagusuku 49 32 Jul-21 Ofunato 75 - Jan-20 Total 249 98 Source: Erex Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Japan's Kobelco to use torrefied biomass in steelmaking


10/06/25
10/06/25

Japan's Kobelco to use torrefied biomass in steelmaking

Tokyo, 10 June (Argus) — Japan's Kobe Steel (Kobelco) plans to use torrefied wood pellets in steelmaking and has entered into an agreement with Mitsubishi UBE Cement (MUCC) to source the biomass fuel. This move underscores the rise in usage of torrefied or carbonised biomass for the steel and metal industries as the non-power sector is increasingly looking at options to cut its carbon footprint. The demand for torrefied or carbonised biomass by steel and metal companies is expected to grow in Japan as well as globally, and could increase competition with the power sector for biomass supplies. Kobe and MUCC agreed in May to conduct a feasibility study on torrefied wood pellets and aim to set up a joint venture for this project in 2026, the companies told Argus . MUCC has developed torrefaction technology to produce torrefied wood pellets, which are also called black pellets. Torrefied wood pellets have a higher calorific value than normal biomass fuels including typical wood pellets. They have better water resistance and grindability compared with typical wood pellets. They also share key characteristics with coal and can be handled like coal. MUCC has a production capacity of 60,000 t/yr in its Ube factory. MUCC's black pellets have been co-fired with coal in its thermal power plant since 2019. Normal wood pellets imported from Canada are used as feedstock to produce the torrefied wood pellets. Kobelco plans to use MUCC's torrefied wood pellets in steelmaking at its blast furnace in the Kakogawa steelworks, but the company did not elaborate further. The black pellets could be used instead of ground coal at the plant to provide heat, but may not be utilised as a major carbon source to replace coking coal as a reducing agent. The torrefied wood pellets could also be burned for power generation at the steel mill. The joint venture between Kobelco and MUCC may build factories to produce torrefied wood pellets in southeast Asian and other countries in the future. The pellets could be sourced back to Japan, and also sold commercially to other companies. By Takeshi Maeda Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

S Korean utilities seek wood pellets for summer


06/06/25
06/06/25

S Korean utilities seek wood pellets for summer

Singapore, 6 June (Argus) — South Korean utilities are expected to seek several cargoes of imported wood pellets for delivery in July-September to cater for an anticipated uptick in power demand. As many as five utilities, including state-owned as well as independent power producers (IPPs), were looking to issue tenders this month for an estimated 368,000t of wood pellets across a wide range of quality — from industrial grade 3 (I3) to higher-than I2 quality pellets, market participants told Argus . The tenders are expected to lift demand for wood pellet cargoes, especially from Vietnam, the largest wood pellet exporter in Asia. The uptick in demand from South Korea comes after it stayed largely muted over the past two months as several utilities underwent scheduled maintenance. Wood pellet consumption was also weak as moderate temperatures curtailed power consumption. The upcoming tenders could also support South Korean imports. The increase in interest comes at a time when prices fell for six straight weeks until 28 May. The prices edged higher this week on expectations of the upcoming rise in demand. Argus assessed the fob Vietnam to South Korea market at $133.67/t fob Vietnam on 4 June, while the cfr Gwangyang price was marked at $140.45/t. The fob Vietnam to South Korea price slipped to $133.45/t on 28 May, having fallen consecutively since it was at $139/t on 16 April. The demand from utilities could also support the domestic wood pellet market as power generators source a part of their requirements locally, especially if there is price arbitrage. Domestic wood pellet production totals 800,000 t/yr. Tenders An IPP opened a tender on 4 June for 40,000t of wood pellets with I3 specifications to be delivered in July cif Gwangyang, a market participant told Argus . The tender will close on 9 June, and tender results will be announced on 11 June. Another IPP is expected to launch its tender in the third week of June for the delivery of a total of 80,000t of wood pellets in August, a participant said. Yet another IPP will likely issue a tender for about 10,000t of pellets for delivery over August-September, according to a trader. As many as two state-owned utilities are expected to issue tenders towards the end of this month to seek 70,000t and 168,000t of wood pellets, respectively. Demand this month comes as utilities concluded two wood pellet tenders last week seeking around 140,000t of cargoes for delivery in July, according to a market participant in South Korea. The tenders were mainly for imported cargoes. By Joshua Sim Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Indonesia’s GBE aims to raise PKS exports to 1mn t/yr


28/05/25
28/05/25

Indonesia’s GBE aims to raise PKS exports to 1mn t/yr

Tokyo, 28 May (Argus) — Indonesia's palm kernel shells (PKS) supplier Golden Biomass Energy (GBE) aims to increase its supply capacity for the export market to 1mn t/yr by 2027 from its current capacity of 600,000 t/yr. The company plans to achieve a supply capacity of 250,000-300,000 t/yr in central Kalimantan and 40,000-50,000 t/yr in eastern Kalimantan by 2027 to export PKS with Green Gold Label (GGL) certification, GBE chief executive Samuel Agus Setiawan told Argus on 28 May. This is in addition to its current capacity of 300,000 t/yr in central Sumatra's Riau province and 300,000 t/yr in southern Sumatra's Jambi province. GBE exported around 300,000t in 2024, mainly to Japan. GBE's PKS supply capacity may increase further in the future. Golden Agri Resources (GAR), which is the parent company of GBE and a major palm oil firm, has more than 500,000 hectares (ha) of palm plantations and 49 crude palm oil (CPO) mills. GBE could potentially collect 800,000 t/yr of PKS from GAR's CPO mills, and 800,000 t/yr from other CPO mills, Setiawan said. GBE can also avoid frequent congestion at Dumai port in Riau province by loading PKS at another port in the same province that is owned by GAR. The company is also planning to increase supply capacity for domestic PKS demand in Indonesia, which is expected to grow as the government is promoting de-fossilisation. PKS exports from Indonesia totalled approximately 4.8mn t in 2024. Some 4.4mn t was shipped to Japan, while the remainder was mainly exported to Thailand and Singapore. Some European countries, such as Poland and Portugal, have also occasionally imported PKS. But South Korea has almost stopped importing PKS since the second half of 2023. By Takeshi Maeda Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Q&A: Portuguese industrial biomass gaining momentum


22/05/25
22/05/25

Q&A: Portuguese industrial biomass gaining momentum

London, 22 May (Argus) — As Europe's focus shifts to sustainable energy, demand for Portuguese industrial wood pellets is gaining momentum, executive board member of producer Unipellets Bruno Brandao told Argus. Rising interest from hard-to-abate sectors, shifting EU policies, geopolitical tensions, and environmental, social and governance (ESG) priorities are shifting the biomass landscape. How do you see current demand for Portuguese industrial pellets? Demand is undergoing a transitional phase. After a moderate first quarter, traction is increasing in the European industrial channel, driven by three key factors — reinforcement of EU energy policy, with greater focus on local biomass sourcing; geopolitical volatility disrupting transcontinental supply chains; and the upcoming implementation of the EU deforestation regulation (EUDR), which is reshaping the attractiveness of tropical-origin biomass. The second half of the year is expected to bring stronger and more ESG-driven demand, favouring certified, traceable and low-transport footprint producers such as those based in Portugal. While logistical and exchange rate differentials still play a role, they are beginning to fade. Increasing demand for lower-carbon footprint and EU-produced biomass combined with the strengthening of the euro against the dollar should support demand. Are there other industries, such as the hard-to-abate sectors, which you see increasing their buying interest in Portuguese pellets? Yes, hard-to-abate sectors such as cement and steel are showing growing interest in biomass pellets as a low-carbon alternative. From day one, Unipellets has been actively advocating this transition, including among more sceptical stakeholders. Industrial use of biomass pellets for heating is experiencing double-digit growth, with an increasing number of cement and steel facilities integrating biomass combustion systems as part of their decarbonisation strategies. In Portugal, while pellet use remains largely domestic, we are seeing steady progress toward the adoption of large-scale thermal conversion systems in industrial sectors. Unipellets is the first entity with a dedicated in-house team studying and supporting this transition, signalling a shift in national consumption patterns toward industrial use. How do you see supply of biomass developing over the remainder of 2025? Global biomass supply, particularly wood pellets, is expected to remain robust throughout the rest of this year. The global biomass pellets market is projected to grow at a compound annual growth rate of 6.7pc. In Europe, pellet demand is increasing at an annual rate of 3.6pc through to 2030, driven by renewable energy policies and emission reduction targets. In Portugal, the effective annual production of pellets is estimated at around 906,100t, with installed capacity sufficient to meet both domestic demand and export commitments. Unimadeiras remains a key partner in the supply of raw materials, while Unipellets serves as a financial partner to domestic producers. What trends do you expect to develop later in the year? The value gap between certified European pellets and transcontinental commodities is expected to widen. Owing to the full enforcement of the EUDR from 30 December, we expect increasing penalties for high-footprint products such as palm kernel shells and tropical pellets (e.g. acai-based), even when certified, given their longer supply chains and associated carbon intensity; growing investor scrutiny through green finance frameworks and supply chain auditing; and disincentives for transatlantic biomass imports, except under exceptional market conditions. How do you see regulatory shifts and geopolitics affecting the biomass market? The unfolding global trade landscape suggests that we may be witnessing the consolidation of a more protectionist, regionally-focused order — one that could have a direct and structural impact on the biomass sector. Recent signals — such as the geopolitical discomfort related to the Greenland issue between the US and Denmark, and emerging discussions on potential tariffs or restrictions on US pellet imports to the EU — illustrate a scenario where commercial tensions could escalate beyond current expectations. In this context, the EUDR plays a dual role — not only as a sustainability milestone but also as a de facto industrial policy instrument that favours EU producers and discourages dependency on high-footprint transcontinental supply chains. The European Commission's EUDR Impact Assessment frames the regulation as both an environmental and industrial safeguard. What place in the market do you think torrefaction will have in the coming years, and do you expect an increase in torrefied production facilities in Portugal? Torrefaction is increasingly seen as a promising technology to enhance the properties of biomass pellets, making them more suitable for demanding industrial applications. Although the current market is subdued, we believe the best is yet to come. To be fully transparent, while Portugal does not yet have large-scale torrefied biomass production facilities, the country has a strong foundation in pellet manufacturing and a well-developed forestry sector, which positions it favourably to invest in this technology in the coming years. By Hannah Adler Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Generic Hero Banner

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more