JAPAN PULPWOOD MARKET OUTLOOK - Fastmarkets RISI · PAPER AND PAPERBOARD PRODUCTION OF JAPAN...
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JAPAN PULPWOOD MARKET OUTLOOK UPDATE ON PULPWOOD AND BIOMASS MARKETS IN JAPAN February 13, 2017 Furama Resort ,Da Nang, Vietnam Kiyoshi Kamikawa JAPAN PAPER ASSOCIATION ９th International Woodfiber Resources and Trade Conference
Transcript of JAPAN PULPWOOD MARKET OUTLOOK - Fastmarkets RISI · PAPER AND PAPERBOARD PRODUCTION OF JAPAN...
JAPAN PULPWOOD MARKET
OUTLOOKUPDATE ON PULPWOOD AND BIOMASS MARKETS IN JAPAN
February 13, 2017Furama Resort ,Da Nang, Vietnam
Kiyoshi KamikawaJAPAN PAPER ASSOCIATION
９th International Woodfiber Resources and Trade Conference
OUTLINE1. Paper and Paperboard2. Woodchip3. Recovered Paper4. Plantation5. Biomass Energy6. Clean Wood Act7. ＣＮＦ
8. Conclusion9. Appendix
2
1. Paper and Paperboard
3
PAPER AND PAPERBOARD PRODUCTION OF JAPAN
・Paper and paperboard production of Japan dropped by minus 14.2% from 30,625 thousand tons in 2008, to 26,268 thousand tons in 2009 due to Lehman shock.
・It was back to the level of a quarter of century (about 30 years) ago (1988).
・Since then, the level of paper and paperboard production has been floundering around 26 million tons ( 26,286 thousand tons in 2016).
・ The production of paper continues to be decreasing due to dwindling and aging population as well as IT revolution (14,716 thousand tons in 2016).
・ On the other hand, the production of paperboard has been rather stable (11,570 thousand tons in 2016 ), in proportion to GDP.
4
TRENDS IN PAPER & PAPERBOARD PRODUCTION
28,518
29,659 30,012
31,014
29,886 30,631
31,828 30,717
30,686 30,457
30,892 30,951 31,106 31,266
30,627
26,268
27,36326,579
25,957 26,24126,478
26,226
26,286
16,602 17,466
17,767 18,267
17,855
18,393 19,037
18,385 18,528
18,396
18,788 18,900 19,062 19,192
18,828
15,831
16,38715,430
15,067
15,182
15,118
14,828
14,716
11,916 12,193
12,245 12,747
12,031 12,238
12,791 12,332 12,158 12,061
12,103 12,051 12,044
12,074 11,800
10,436
10,976 11,149
10,890
11,05911,360
11,39811,570
8,000
10,000
12,000
14,000
16,000
18,000
20,000
22,000
24,000
26,000
28,000
30,000
32,000
‘94 ‘95 ‘96 ‘97 ‘98 ‘99 2000 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 10 11 12 13 14 15 16
5
(×1000 metric ton)
Source : Japan Paper association
Paper&Paperboard Production
Paper Production
Paperboard Production
PAPER AND PAPERBOARD PRODUCTION BY GRADES
2008 2009 2016
Production ’08/’07 Production ’09/’08 Production ‘15/’08
Newsprint paper 3,680 96.8 3,455 93.9 2,906 78.9
Printing and writing paper 11,501 98.6 9,120 79.3 8,309 72.2
Packaging paper 1,010 101.6 786 77.8 877 86.8
Sanitary paper 1,805 102.0 1,776 98.4 1,815 100.5
Other paper 831 86.4 695 83.6 809 97.4
Paper total 18.828 98.1 15,831 84.1 14,716 78.2
Container board 9,219 97.8 8,213 89.1 9,363 101.6
Boxboard 1,879 101.0 1,637 90.0 1,433 76.3
Other paperboard 762 89.7 586 76.9 774 101.6
Paperboard total 11,800 97.7 10,436 88.4 11,570 98.1
Total 30,627 98.0 26,268 85.8 26,286 85.8
6
(1000 metric ton : % )
Source : PRPC
DOMESTIC DEMAND OUTLOOK FOR PAPER AND PAPERBOARD
• The domestic demand for paper dropped by minus 1.9% (10 consecutive years minus) to 15.06million tons, that for paperboarddropped by plus 1.3％ to 11.66million tons and that for the total decreased by minus 0.5% to 26.72 million tons in 2016.
• The outlook of the domestic demand for paper and paperboard in 2017 by JPA is 14.75 million tons (minus 2.0%) for paper, 11.71million tons (plus 0.4%) for paperboard and 26.46 million tons (minus 1.0%) for the total.
• Minus 3.4% for coated printing paper and minus 3.2% for newsprint paper.
• Plus 0.7% for containerboard and minus 1.0% for packaging paper. ・ Plus 0.7% for sanitary paper・ Printing & writing paper is still on the decline, especially for
newsprint. ・ On the other hand, sanitary paper and paperboard such as
containerboard are rather stable just because they are necessities of life.
7
OUTLOOK OF THE DOMESTIC DEMAND FOR PAPER AND PAPERBOARD IN 2017
Newsprint
(▲３．２％）
Uncoated printing
（▲３．０％）
Coated printing
（▲３．４％）
Communication
（０．０％）
Packaging & Wrapping
(▲１．０％）
Sanitary
（０．7％）
Miscellaneous
（０．４％）
Containerboard
（０．７％）
Boxboard
▲０．６％）
-4
-3
-2
-1
0
1
2
3
％
0 100%
8
Paper & Paperboard total: ▲１．0%
percentage
Paper total: ▲２．０%
Paperboard total:０．４%
growth rate（％）
Source：Japan Paper Association
Other Paperboard(▲０．２%)
2. Woodchip
9
WOODCHIP CONSUMPTION OF JAPAN
・Woodchip consumption of Japan dropped by minus 20% from 19,086 thousand tons in 2008 to 15,294 thousand tons in 2009 due to Lehman shock.（consumption of imported woodchips dropped by minus 23.6% to 897 thousand tons）
・ Woodchip consumption of Japan recovered by 11% to 16,992 thousand tons in 2010.
・ It went down again to 15,593 thousand tons in 2012.
・ But it has increased a little and continues to be stable, to 16,096 thousand tons in 2016, even though it is still at a rather low level.
10
CONSUMPTION OF WOODCHIP
0
5000
10000
15000
20000
25000
05 06 07 08 09 10 11 12 13 14 15 16
Import HardwoodImport SoftwoodDomestic HardwoodDomestic Softwood
16280
15593
15967
11
(thousand BDT)
Source: Japan Paper Association
19187 1922919363
19086
15294
16992 1648916216 16,096
PULPWOOD MARKET SITUATION ( 2016 )
12
（unit：1000BDT、％ the ratio over the previous year）
items consumptionsupply
domestic import total
％ ％ ％ ％
pulpwood total 16,096 99.2 4,767 100.1 11,522 99.6 16,289 99.8
softwood log 123 100.6 121 97.2 121 97.2
hardwood log 19 91.3 21 97.4 21 97.4
softwood chip 4,816 99.6 3,325 101.0 1,512 94.7 4,836 98.9
hardwood chip 11,138 99.1 1,301 98.2 10,011 100.4 11,312 100.1
（reference）
consumption softwood ratio over the previous year ： 99.6％
hardwood ratio over the previous year ： 99.1％
supply softwood ratio ： 30.4％
hardwood ratio ： 69.6％
import ratio ： 70.7％ ( softwood ： 30.5％ hardwood ： 88.3％ )
Source：Japan Paper Association
TREND OF SELF-SUFFICIENCY RATE OF WOODCHIP
40
45
50
55
60
65
70
75
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16
Domestic Woodchip(softwood)
（％）
0
5
10
15
20
25
30
35
40
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16
Domestic Woodchip(hardwood)
(%)
19
Source; Ministry of Economy, Trade and Industry
Softwood Hardwood
IMPORTS OF WOODCHIP BY ORIGIN(SOFTWOOD)
・ The import from U.S. was 684 thousand tons in 2008, and sharply dropped to 369 thousand tons in 2009 , but bounced back to 663 thousand tons in 2010.It continued to decrease to 497 thousand tons in 2013 but bounced back to 660 thousand tons in 2014.And it decreased again and continues to be stable onto 656 thousand tons (105.0%) in 2016.
・ The import from Australia was 1,087 thousand tons in 2008, and dropped to 598 thousand tons in 2009, but recovered to 731 thousand tons in 2010. It dropped again to 546 thousand tons in 2011, and decreased further to 460 thousand tons in 2012,but bounced back a little to 502 thousand tons in 2014.it has decreased from the previous year to 542 thousand tons (87.4%) in 2016.
.14
TREND OF WOODCHIP IMPORTS BY ORIGIN(SOFTWOOD)
0
200
400
600
800
1000
1200
1400
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
US Canada Russia Australia NZ Fiji Chile Brazil
US
Canada
15
(thousand tons)
Source: Ministry of Finance
Australia
NZ
Fiji
US
Canada
WOODCHIP IMPORTS BY ORIGIN(SOFTWOOD)
<2009>
Ａｕｓｔｒａｌｉａ
ＵＳ
ＮＺ
Ｃａｎａｄａ
Ｆｉｊｉ
Ｏｔｈｅｒｓ
<2013>Australia
US
NZ
Canada
Fiji
Others
2016
16
42.414.6
9.5
5.1
35.8
6.3
Source: Ministry of Finance
43.4
4.3
7.9
2009
WOODCHIP IMPORTS BY ORIGIN (HARDWOOD)
• The import from Chili was 2.350 million tons in 2008 and dropped a little to 2.238 million tons in 2009 and up again to 2.377 million tons in 2010.It went up to 2.590 million tons as No.1 in 2012, and went down to 1.812 million tons as No.3 in 2015. But it has come back again to 2.049 million tons as No.2.
• The import from Vietnam was 1.071 million tons in 2008 and dropped to 0.809 million tons in 2009 and up to 1.064 million tons in 2010.It jumped up to 3.039 million tons as No.1 in 2015. But it has decreased to 2.691 million tons (90.0%) still as No.1 though.
• The import from Australia was 4.464 million tons in 2008 and dropped to 3.148 million tons in 2009 but could not recovered to 3.591 million tons in 2010. It continue to decrease to 1.821 million tons as No.3 in 2014,and bounced back to 1.927 million tons as No.2 in 2015. But it has dropped again to 1.723 million tons (89.4%) as No.3 in 2016.
17
TREND OF WOODCHIP IMPORTS BY ORIGIN(HARDWOOD)
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
US Australia Indonesia Thailand Vietnam Chile Brazil S.Africa
Brazil
18
(thousand tons
Source: Ministry of Finance
Australia
S.Africa
Chile
Vietnam
WOODCHIP IMPORTS BY ORIGIN(HARDWOOD)
<2009>
Australia
Chili
SouthAfricaVietnam
Brazil
Thai
Others
<2013>
AustraliaChili
SouthAfricaVietnamBrazil
Thai
Others
19
35.4
25.2
Source: Ministry of Finance
16.1
8.9
6.4
4.1
14.5
7.4
6.53.9
17.2
20.5
26.9
7.0
20162009
Country Softwood Chip Hardwood Chip Total
Vietnam ２，６９１ ２，６９１
Australia ５４３ １，７２３ ２，２６５
Chile ２，０４９ ２．０４９
South Africa １，４９１ １，４９１
Thailand ７０１ ７０１
USA ６５６ ６５６
Brazil ７４５ ７４５
Indonesia ２４５ ２４５
Malaysia １２９ １２９
NZ １２０ １５３ ２７３
Canada ９５ ９５
Fiji ６５ ６５
20（Unit: 1000 tons)Woodchip Imports by country (2016)
WOODCHIP IMPORT BY CHINA• Japan had been almost the single and dominant player of
global woodchip trade for a long time, importing woodchips from all over the world such as US, Australia, Chile, Vietnam, South Africa and so forth.
• But the scenery has been changing, as China is increasing the import of woodchips mainly from Asian countries such as Vietnam, Thailand , Indonesia and recently from Australia and Chile.
• Woodchip import of Japan was 13.8 million tons while that of China 0.87milion tons ( only 6.3% of Japan) in 2005.
• And that of Japan was 11.9 million tons and that of China 9.8 million tons ( 82% of Japan) in 2015.
• The import of China has continued to increase and would almost exceed that of Japan in 2016. The import of hardwood by china could definitely exceed that by Japan at least.
21
WOODCHIP IMPORTS BY JAPAN AND CHINA
0
2000
4000
6000
8000
10000
12000
14000
16000
2008 2009 2010 2011 2012 2013 2014 2015 2016Japan China
１１４７２１
１２１１６
22
１０４７６
１１７８５ １１１３４ １１０１３１１６３７
１０５６
２７５６
４６２７
６５６２
７５７２
９１４２８８４３
１１９０４
９８１３
（Unit: 1,000tons)
１１８９７
１１５７１
IMPORTS OF WOODCHIP BY JAPAN AND CHINA(2015)
0
2000000
4000000
6000000
8000000
10000000
12000000
14000000
Japan China
Vietnam Australia Chile S.Africa Thailand USA Brajil Indonesia Malaysia NZ Others
Australia
ChileS Africa
ThailandThailandUSA
Indonesia
23
(Unit:BDT)
Vietnam Vietnam
AustraliaChile
IndonesiaBrajil
WOODCHIP IMPORTS BY JAPAN AND CHINA
（２０１６)
Softwood Hardwood
Total
Japan1,592,875
10,303,983
11,896,858
China 399,176 11,171,684
11,570,859
24
(Unit:BDT)
JAPAN’S WOODCHIP MARKET OUTLOOK
• Japan’s consumption of woodchips in 2016 is expected to be almost at the same level of 20１5, probably a little less, reflecting the sluggish demand for paper and paperboard.
• The total consumption of woodchips would be more than 16million tons and the import of woodchips almost 11 million tons in 2016.
• China is catching up with Japan quite rapidly and China could almost become No.1 of the woodchip importers in the world in 2016.
25
3. Recovered Paper
26
RECOVERY RATE OF RECOVERED PAPER
・Recovery rate of recovered paper is also at the highest level of 81.3% in 2015, which is due to the effectively sorted recovered paper collection system deeply rooted in the Japanese society.
・Collection of recovered paper is 21,265 thousand tons in 2015. We have a large amount of surplus (ca.20%) of recovered paper and export a large part of it to China.
27
RECOVERY RATE & UTILIZATION RATE OF RECOVERED PAPER
51.7 51.551.3
53.0
55.2
55.7
57.7
61.5
65.466.1
68.5
71.1
72.4 74.5 75.1
79.7
78.2
77.9
79.9
(53.3)(53.4)(53.6) (54.0)
(54.9)
(56.1)
(57.0)
(58.0)(59.6)
(60.2)(60.4) (60.3) (60.6)
(61.4)(61.9)
(63.1)
(63.0)
(63.7)
63.9
(63.9)
(64.3)
48
50
52
54
56
58
60
62
64
66
68
70
72
74
76
78
80
‘94 ‘95 ‘96 ‘97 ‘98 ‘99 2000 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 '10 11 12 13 14 15
28
(%)
Source：PRPC
Recovery rate
Utilization rate
（62.5)
80.881.3
CONSUMPTION OF RECOVERED PAPER
・ Japanese paper industry has achieved the highest level of recovered paper utilization rate in the world.
• Utilization rate in 2015 is 64.3% (paper40.2%,paperboard 93.2%).
• Consumption of recovered paper is 16,983 thousand tons in 2015 (minus 0.6%).
• Japan Paper Association (JPA) has set up the utilization rate target of 65％ by the year 2020 in Environmental Action Plan in 2015.
29
51.552.252.5
53.053.353.453.654.054.9
56.157.0
58.0
59.660.260.460.360.6
61.461.9
63.162.5
63.063.763.963.9
50.0
52.0
54.0
56.0
58.0
60.0
62.0
64.0
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 20
%
資料：経済産業省
注：古紙利用率＝古紙消費量+古紙パルプ消費量/繊維原材料消費量
1990年1995年までに55%
65.0
UTILIZATION RATE TARGET OF RECOVERED PAPER
1991年資源有効利用促進法制定
1995年2000年までに56%
2000年2005年までに60%
2005年2010年までに62%
2010年2015年までに64%
30
2015年2020年までに65%
4. Plantation
31
JPA’S INITIATIVES FOR SFM
JPA’s Environmental Action Plan(established in 2012)
・We have committed to promote SFM thorough forest certification
・We have target to expand forest plantation area owned or managed by JPA members at home and abroad to 800 thousand ha by FY2030 to ensure a stable wood supply, as well as to increase forest carbon sinks that help prevent global warming.
32
To read full text of the Action Plan, please visit http://www.jpa.gr.jp/en/
PROMOTION OF PLANTATIONS OVERSEAS• JPA has set up the target of expanding the area of
plantations owned or managed by Japanese paper companies to 0.8million ha in Japan and overseas by FY2030 under Environmental Action Plan .
• We have already established 0.456million ha of plantations overseas (34projects) In 11countries In 2015.
• The total area of Plantation including domestic ones (0.146 million ha) was 0.602 million ha.
• The area of plantation overseas has decreased four consecutive years (from 2012 to 2015) due to the decreasing demand for woodchip and climate changes caused by global warming (fewer rain in Australia).
• Main planting species are Eucalyptus spp. and Acacia spp. with the rotation of 7~10 years.
33
TRANSITION OF PLANTATION AREAS BY JAPANESE PAPER COMPANIES
144 138 137 134 131 128 125 121 138 151 150 150 150 149 148 147 148 147 147 147 146
178 192 212 233 255 278 301342
353355
387
455 458497 504
543 543 529479 479 456
0
100
200
300
400
500
600
700
800
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
Domestic Overseas
34
(1,000ha)
Target of plantation areas in 2030 owned or managed by Japanese paper companies is 800 thousand ha.
Source: JPA
OVERSEAS FOREST PLANTATIONS BY JAPANESE PAPER INDUSTRY
35
Cambodia400ha
Source: Japan Paper Association
Total: 479,000ha (as of the end of 2014)
5. Biomass Energy
36
FEED-IN-TARIFF ACT FOR RENEWABLE POWER GENERATION• Feed-in-tariff (FIT) act for renewable power generation (RPG) has
passed the Congress August 23, 2011.• Electric Power Companies (EPCs) have to buy all electric power
generated by solar, wind, geothermal, small and medium size hydraulic or biomass on and after July 2012.
• The purchasing prices of FIT should be decided every year (sometimes every several years) under the deliberation of the third-party committee composed of 5 members.
• The purchasing period of time is 20 years for every RPG.• EPCs can shift the burden of buying expensive prices of FIT to
consumers as surcharge.• The government has already started reconsidering FIT policy with
regard to purchasing prices. The government policy is always the biggest risk for FIT.
• For example, the newly introduced purchasing price of 40 yen/kWh(up from 32 Yen/kWh) for unutilized wood biomass power generation smaller than 2,000kWh has been set up April 2015. Incentive for small scaled heat and electricity combined.
• And the purchasing price of 21Yen/kWh for sawmill residue and imported wood biomass such as woodchip, wood pellet and PKS larger than 20,000kW will been set up coming April 2017. Disincentive for large scale imported.
37
PURCHASING PRICES OF FIT (WOOD BIOMASS)Category 2016 2017 2018 2019 Duration
Gasification 39Yen/kWh 39Yen/kWh 20Years
Unutilized>2,000kWh
40Yen/kWh 40Yen/kWh 20Years
Unutilized2,000kWh＜
32Yen/kWh 32Yen/kWh 20Years
Imported>20,000kWh
24Yen/kWh 24Yen/kWh 20Years
Imported20,000kWh＜
24Yen/kWh 21Yen/kWh 20Years
Black Liquor 17Yen/kWh 17Yen/kWh 20Years
ConstructionWaste
13Yen/kWh 13Yen/kWh 20Years
38
APPROVED CAPACITY UNDER FIT(ＪＵＬＹ2012~AUGUST 201６)
Renewable Power Generation Approved Capacity
Solar ( residential) ５．００ million kW
Solar (non-residential) ７５．２７million kW
Wind ３．０３million kW
Small Hydraulic ０．７９ million kW
Biomass ４．０３ million kW
Geothermal ０．０８million kW
39
Source: Ministry of Economy, Trade and Industry
APPROVED CAPACITY OF WOOD BIOMASS POWER GENERATION UNDER FIT (AS OF AUGUST 2016)
• Approved projectsUnutilized wood biomass 23（＞2,000kW）
Unutilized wood biomass 49（＜2.000kW）
Sawmill residue, Imported 117Recycled waste 4
Total 193・ Approved capacity 3.72 million kW・ Supposed wood biomass consumption
65.5 million ㎥
(Source: Biomass Industrial Society Network)
40
AUTHORIZATION OF WOOD BIOMASS POWER GENERATIONUNDER FIT (AS OF AUGUST 2016)
NewlyauthorizedProjects
Newlyauthorized Capacity（kW）
ExistingProjects
ExistingCapacity(kW)
TotalProjects
Total Capacity(kW)
Unutilized>2,000kW
２３２８，４
３５ ４３､０
３８２
７３１，４
７３
Unutilized2,000kW<
４９３９９，３
７３ ３６､０
１５ ５２４０５，３
８８
SawmillResidueImportedPKS
１１７
３，２６０，８０１
１０
７３､８００
１２７
３，３３４，６０１
ConstructionWaste ４
３４，９６０
２９
３３１､９１６ ３３
３６６，８７６
Total １９３
３，７２３，５６９
４６
４１４､７６９
２３９
４，１３８，３３８
ELECTRIC POWER GENERATION UNDER FIT BY JAPANESE PAPER COMPANIES
PaperCompany
Mill Operation ElectricPower(KW)
Volume of Woodchip(ton/year)
Source
Oji Group Ebetsu July 2015 25,000 210,000 Thinned
MitsubishiPaper
Hachinohe 2017 86,000 N.A. BlackLiquor
Oji Group Fuji No.1 Mar 2015 40,000 90,000 Thinned
Hyogo Pulp Tanigawa Oct 2004Dec2017
18,00022,100
160,000210,000
ConstructionWasteThinned PKS
●
NipponPaper
Yatsushiro Mar 2015 5,000 71,000 Thinned
Oji Group Nichinan Mar 2015 25,000 120,000 ThinnedSawmill
ChuetsuPulp
Sendai Nov 2015 25,000 120,000 ThinnedSawmil
42Source: Japan Paper Association
Unutilized Construction Waste Importes Sawmill Residue Bark
Construction Waste5 thousand tons
Imported PKS96 thousand tons
Bark, Branch12 thousand tons
Unutilized138 thousand tons
Sawmill ResidueImported PKS56 thousand tons
Sawmill ResidueImported woodchip44 thousand tons
Consumption of Wood Biomass for Energy under FIT(２０１５)
GUIDELINE FOR THE VERIFICATION OF WOOD BIOMASS UTILIZED UNDER FIT
• The guideline has been set in effect since June 2012 by Forestry Agency to verify the qualified wood biomass under FIT.
• Any kind of wood biomass utilized under FIT should not disturb the existing supply chains of raw materials in wood industries.
• Unutilized thinned wood should be traceable to felling sites by segregated CoC.
• Imported wood biomass should be verified as not illegal by Forestry Agency’s legality guideline.
• Recycled wood should be considered as qualified without any verification.
44
LEGALITY AND SUSTAINABILITY OFWOOD BIOMASS ENERGY
• The act for the promotion of utilization and distribution of legally harvested wood (Clean Wood Act) has just been enacted May 20th 2016. （It shall come into force just one year later on May 20th 2017.)
• Every operator of wood and wood products should confirm the legality of all wood and wood products, including wood biomass, that they use or sell by due diligence (DD) like EU, Australia and US.
• It is not legally compulsory.• But, you should comply with Clean Wood Act through
the implementation of DD in order to verify the legality and sustainability of wood biomass when you export it to Japan.
45
TRANSITION OF PKS IMPORTS IN JAPAN
0
100000
200000
300000
400000
500000
600000
700000
800000
2011 2012 2013 2014 2015 2016
Indonesia Malaysia Others
26,211
131,224
244,178
46
27,593
(unit:ton)
456,084
791,496
TRANSITION OF WOOD PELLET IMPORTS IN JAPAN
0
50000
100000
150000
200000
250000
300000
350000
20132014
20152016
CANADA CHINA VIETNAM OTHERS
(unit:ton)
83,769 96,745
232,425
346,855
WOODCHIP IMPORTS FOR ENERGY GENERATION (2016)
Custom StatisticsFor All Uses
Japan Paper Association Statistics for Pulp and Paper
Difference
Softwood 1,592,875 1,511,605 81,270
Hardwood 10,303,983 10,010,836 293,147
Total 11,896,858 11,522,441 374,417
(Unit:ton)
7. Clean Wood Act
49
COMBATING ILLEGAL LOGGING
• Japan Paper Association (JPA) pledges tocombat illegal logging, one of the major causes of deforestation worldwide.
• JPA set up the code of actions against illegal logging in 2006. (100% not illegal confirmed) in accordance with Green Purchasing Law which applies only to public procurement.
• Japanese paper companies set up their own codes of procurement and collect traceability reports from all suppliers.
• In addition, JAP audits Japanese paper companies’ actions of confirming legality.
50
LEGALITY VERIFICATION SYSTEM OF JPA62
Loggers
Import
Dom
estic
Supplier
Associations(Code of Action)
Loggers
Paper Companies
Chipping Mills
Users
Japan Paper Association(Code of Action)
Wholesalers
Audit
Authorization
Certificate
Traceability Report
THE ACT FOR THE PROMOTION OF UTILIZATION AND DISTRIBUTION OF LEGALLY
HARVESTED WOOD (CLEAN WOOD ACT)• The act for the promotion of utilization and distribution of
legally harvested wood (Clean Wood Act) has just been enacted May 20th 2016. （It shall come into force just one year later on May 20th 2017.)
• Every operator of wood and wood products should confirm the legality of all wood and wood products, including wood biomass, that they use or sell by due diligence (DD) like EU, Australia and US.
• But it is not legally compulsory.• Besides, operators who have done DD can (but not must)
register themselves to the third party registration organizations authorized by the national government.
• Until then, only wood and wood products by public procurement should be confirmed their legality by Green Purchasing Law.
52
THE ACT FOR THE PROMOTION OF UTILIZATION AND DISTRIBUTION OF LEGALLY HARVESTED WOOD
(CLEAN WOOD ACT)
１．Deffinitionwood: products such as furniture and paper which are made mainly from
wood and wood products, specified by ministerial ordinance( recycled materials are excluded)
legally harvested wood： wood harvested in accordance with the laws concerned of the states of origin.
operator： those who produce, process, import , export or sell wood or wood products (excluding retailers), specified by ministerial ordinance
２．Responsibility of the national governmentThe government should settle on the basic policy, in addition , finance
the necessary measures, provide information and take measures so as to broaden the understanding among people.
３．Responsibility of operatorsOperators should use legally harvested wood only.
４．Standard criteria to confirm the legality of woodThe ministers concerned should establish the standard criteria to confirm the legality of
wood.①Documents or certificates to certify the legality of logging in Japan or abroad②Additional documents, if you cannot obtain ①③Invoices or statements of delivery to convey the information concerned with legality④Documents specified by ministerial ordinance concerning ①and②
５．Guidance or advice by the ministers concernedThe ministers concerned could give guidance or advice necessary to operators in
order to implement this act.６．Registration of operators
The operators, who conduct DD regarding the legality of wood properly, could register themselves to the registration organization authorized by the government. If the operator would violate the conditions of registration, it will terminate and the name of the operator will be made public.
７.Request of reports and inspection on siteThe ministers concerned could, if necessary, request the operators to make reports
and inspect them on site in order to implement the act.
The Japan Paper Association’sDue Diligence Tool Against Illegal LoggingDue Diligence (DD) Manual for Member Companies
• This DD manual (tentative) is based on the DD manual of European Timber Trade Federation (ETTF) which is in accordance with EUTR.
• Therefore, this DD manual is valid not for only Clean Wood Act of Japan but also for other anti-illegal logging laws such as EUTR of EU and Illegal Logging Prohibition Law of Australia.
• Basic components are ① gathering information, ② risk assessment and ③ risk mitigation. As for gathering information and risk assessment, we make the most of our existing anti-illegal measures such as traceability reports and the third party audit.
• We are also thinking of registering our member companies for them to the registration organization under Clean Wood Act.
• Those who want to export wood chips or wood biomass to Japan must provide the legitimate information required under Clean Wood Law such as wood species, quantity, felling sites, logging laws and other ecological and social issues beforehand on and after May 20th,2017.
7. CNF
56
DIVERSIFICATION AND BIOREFINERY• Japanese Paper Industry faces the serious challenges
caused by the shrinking domestic demand for paper and paperboard.
• Production decreased, prices declined and suffering from over-capacity problem.
・ One solution is to increase the exports of paper and paperboard, taking advantage of Yen devaluation, and to expand operations overseas by M&A .
・ The other is to diversify their operations into more promising areas such as biomass energy business (under FIT) and biorefinery.
・ Above all, “cellulose nanofiber”(CNF) is a promising area and JPA member companies have already launched R&D s and started commercial operations of CNF.
57
CELLULOSE NANOFIBER (CNF)
• Cellulose Nanofiber (CNF:a.k.a. Nanocellulose) is nano sized (nm=10⁻⁹m) cellulose fiber and applicable for various industrial uses.
• Ministry of Economy,Trade and Industry (METI) has set up the new strategy to create a CNF based new industry of 1 billion yen by 2030.
• “Nanocellulose Forum” was founded in June, 2014 by the joint cooperation of Industries, academics and governments.
• Many Japanese paper companies have also participated in this consortium.
58
59
Ｃｅｌｌｕｌｏｓｅ Ｎａｎｏｆｉｂｅｒ
ＣｅｌｌｕｌｏｓｅＮａｎｏｆｉｂｅｒ（４～１０ＮＭ）
Ｃｅｌｌｕｌｏｓｅ Ｎａｎｏｆｉｂｅｒ
In 2014, Nanocellulose forum is established in National Institute of Advanced Industrial Science andTechnology (AIST) in Japan. The forum facilitates practical uses of nanocellulose by Japanesecompanies. The general meeting of the nanocellulose forum is consisted of Ministry of Economy,Trade and Industry (METI), The University of Tokyo, Kyoto University, Japan Tappi, a few keycompanies, and AIST. The forum open the door for join to Japanese companies and researchers inJapan. The forum provides research trends, collaboration opportunities, programs to develophuman resources, and information about standardization and safety/risk issues.
Nanocellulose forum: Platform to facilitate practical use of nanocellulose in Japan
108 companies42 researchers
＋10 public authorities
CNF PRODUCING MILLSCompany Mill Production/year
(ton)Operation
Nippon Paper Ishinomaki 500 April 2017
Dai-ichi KogyouSeiyaku
Ougata N.A. N.A.
Seikou PMC Ryuugasaki 24 in operation
Nippon Paper Goutsu 30 September2017
Nippon Paper Iwakuni 30 in operation
Oji Paper Tomioka 40 March 2017
Daio Paper Mishima 100 in operation
Chuetsu Pulp Sendai 100 April 2017
61
8. Conclusion
62
CONCLUSION (1)
• The demand for paper and paperboard has been decreasing continuously after Lehman shock (10 consecutive years), just like other developed countries such as US and EU countries, due to IT revolution and aging population.
• As a result, the demand for woodchip for paper production has been also decreasing gradually, while the demand for woodchip for energy has increased rapidly due to FIT.
• Japan Paper Association has set up the new recovered paper utilization target of 65% by 2020 last year (up only 1% from the previous target of 64%). The substitution of recovered paper utilization for woodchip has come to a standstill finally.
• The area of plantation overseas has decreased 4 consecutive years due to the declined demand for woodchip.
• The imports of woodchip by China could almost surpassed those by Japan in 2016 ．The competition between Japan and China for the imports of woodchip will be getting more and more heated.
63
CONCLUSION(2)
• Clean Wood Act (CWA) has passed the congress and will come into effect this May. Wood products, including imported wood chip and wood biomass, should be verified their legality by due diligence （DD). Japan Paper Association has already set up theirown DD system to meet the requirements of CWA as well as those of EUTR, Lacey Act and Anti-illegal logging Act of Australia.
• More than 120 of wood biomass power projects have been authorized and recent big projects are supposed to use imported wood biomass. The demand for imported wood biomass has grew to a large scale.
• Japanese paper companies has struggled to diversify, facing the decreased demand for paper, into new businesses such as overseas operations, energy and new products, especially CNF.
64
Thank you very muchfor your kind attention.
65
8.Appendix
66
AREA OF FOREST STANDS IN JAPAN
0
5
10
15
20
25
30
1966 1976 1986 1995 2002 2007 2012
Man-made Forests Natural Forests Others
67
7.93
15.51
1.7325.17
9.38
14.44
1.4525.26
10.22
13.67
25.26
10.40
1.37
13.38
1.3725.15
10.36
13.35
1.4125.12
10.35
13.38
1.3725.10
10.29
13.43
1.3625.08
Unit: million ha
(Source: Forestry Agency)
FOREST AREAS BY OWNERSHIP(THE TOTAL FOREST AREA IS 25.08 MILLION HA)
Forest Areas
Private Prefectual&Munincipal National
1,449
292
767
68
(Unit:10 thousand ha)
(Source: Forestry Agency)
AREA OF MAN-MADE FORESTS
0 10000 20000 30000 40000 50000 60000 70000 80000 90000
VietnamIndonesia
SwedenThailand
GermanyFinlandSudan
BrazilPoland
CanadaIndia
JapanRussia
USAChina
Area of Man-made Forests
Area of Man-made Forests
69
(Source: FAO)
STOCK OF FOREST STANDS IN JAPAN
0
1
2
3
4
5
6
1966 1976 1986 1985 2002 2007 2012Man-made Forests Natural Forests
70
0.56
1.33
1.89
0.80
1.39
2.19
1.36
1.50
2.86
1.89
1.59
3.48
2.34
1.70
4.04
2.65
1.78
4.43
3.04
1.86
4.90Unit: billion ㎥
(Source: Forestry Agency)
AREAS OF MAN-MADE FORESTS BY AGE CLASS
0
200
400
600
800
1000
1200
1400
1600
1800
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
Area by Age Class (5years)
Area by Age Class (5years)
71
(Thousand ha)
(Source: Forestry Agency)
WOOD INDUSTRIES IN JAPAN
・Sawn TimberProduction: 9.6 million ㎥ （Sawmill Residue: 6.9 million ㎥）
Sawmills: 5,468・Laminated woodProduction: 1.56 million ㎥ Mills: 165・PlywoodProduction: 2.81 million ㎥ Mills: 186Lumber Consumption 4.61 million ㎥
（Domestic 3.35 million㎥）
・WoodchipProduction: 5.85 million tons Mills: 1,477Log: 2.54million tons, Sawmill Residue: 1.98 million tons Forest Residue: 0.11 million tons, Construction Waste 1.22 million tons
72
(Source: Forestry Agency 2014)
PROMOTION OF THINNING
• The Japanese government will have to take measuressuch as subsidy to promote thinning of about 0.5 million ha of man-made forests annually in order to achieve the forest sink target of 2% out of the total sequestration of 26% (against the level of 2013) , pledged by the government of Japan in Paris Agreement.
• But most of thinned wood ,estimated around 20millon m3, have been left over unutilized on the ground, because transportation cost is so high.
• JPA has set up the goal of expanding the utilization of thinned wood in paper production in Environmental Action Plan .
73
PRODUCTION OF PAPER AND PAPERBOARDIN JAPAN
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
PaperPaperboard
（1,000ｔ）
PAPER AND PAPERBOARD PRODUCTION BY COMPANY (2015)
Rank Company Paper Paperboard Total Proportion(%)
１ Nippon Paper 3,938,206 1,660,055 5,598,261 21.1
２ Ouji Materia 208,008 2,824,461 3,032,469 11.5
３ Ouji Paper 2,826,386 77,639 2,904,025 11.0
４ Daio Paper 1,900,216 816,844 2,717,060 10.3
５ Rengo 1,814,086 1,814,086 6.9
６ Hokuetsu-KishuPaper
1,419,053 304,965 1,724,018 6.5
７ Chuetsu Pulp 725,846 30,521 756,367 2.9
８ Tokushu-TokaiPaper
163,820 550,704 714,524 2.7
９ ＭａｒｕｓｕｍiPaper
680,036 680,036 2.6
１０ Mitsubishi Paper 616,036 52,135 668,171 2.5
Total 15,117,678 11,360,142 26,447,820 100.0
75
76Location of paper mills in Japan
THE NUMBER OF WOODCHIP CARRIERSCONTRACTED BY JAPANESE PAPER COMPANIES
49
43 42 40 38
45
53
69 7067 68 69
81 82
88 87 85 8682 81 82 84 86 86
91 92
8582
7975
71 70 70
0
10
20
30
40
50
60
70
80
90
100
1983 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09 11 13 15
77
Source: Japan Paper Association
EXPORT OF RECOVERED PAPER• Export of recovered paper (most of it bound for
China) has increased in recent years and jumped up and recorded a historical high of 4.92million tons (23％ of all the recovered paper collected in Japan) in 2012 because of the increasing demand from Chinese paper industry.
• It has declined to 4. 26million tons and the share of China has also shrunk a little from 79.2% in 2012 to 70.2% in 2015.
• It will contribute to the stabilization of supply and demand of recovered paper in the domestic market, but too much of it will cause the rise of price and the shortage, which will drain the profit of Japanese paper companies. The volatile fluctuation of export prices is another problem.
78
IMPORT & EXPORT OF RECOVERED PAPER
404 479 431 362
294 288 278
214 144 118
81 77 72 67 61 44
44 42 28 30 34 35
73 42 21 312
561
300 372
1,466
1,897 1,971
2,835
3,710 3,887
3,844
3,491
4,914
4,374 4,432
4,9294,890
4,619
4,261
0
400
800
1,200
1,600
2,000
2,400
2,800
3,200
3,600
4,000
4,400
4,800
‘94 ‘95 ‘96 ‘97 ‘98 ‘99 2000 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 '10 11 12 13 14 15
79
(×1000 metric ton)
Source：PRPC
Export
Import
46
0
1000
2000
3000
4000
5000
6000
'96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 12 13 14 15
China Thailand Taiwan S.Korea Others
Thousand ｔｏｎｓ
Trend of Recovered Paper Export
CATEGORIES OF WOODCHIP (1)
81
Natural Forest
(low grade)
3.2%
Man-made
Forest (low
grade)
30.3%
Sawmill Residue
58.0%
Construction
Waste
8.8%
Domestic Sodtwood <２０１４>
CATEGORIES OF WOODCHIP (2)
82
Natural Forest
(low grade)
2.3%
Man-made
Forest
(low grade)
44.2%Sawmill Residue
67.0%
Imported Softwood <２０１４>
CATEGORIES OF WOODCHIP
83
Natural Forest
(low grade)
98.2%
Sawmill Residue
1.8%
Ｄｏｍｅｓｔｉｃ Ｈａｒｄｗｏｏｄ<２０１４>
CATEGORIES OF WOODCHIP
84
Natural Forest
(low grade)
1.7%
Man-made
Forest (low
grade)
98.1%
Sawmill Residue
0.2%
Imported Hardwood<２０１４>
CONSUMPTION OF PULP• The consumption of recovered paper had been gradually
increasing around the level of 19million tons in recent years and dropped sharply to 16.8 million tons in 2009 due to Lehman shock, and recovered a little to 17.3 million tons in 2010, but stayed almost unchanged to 17.1 million tons in 2015.
• Consequently, the consumption rate of pulp in paper production had been gradually decreasing around the level of 12 million tons and conspicuously down to 9.9 million tons in 2009, and recovered a little to 10.6 million tons in 2012 , but went down again to 9.5 million tons in 2015.
• On the other hand, export of pulp has jumped up from 0.15 million tons in 2008 to more than 0.4 million tons in 2010 after Lehman shock and has stayed at rather higher level partly because of over capacity of pulp production and depreciated weak yen.
85
CONSUMPTION OF RECOVERED PAPER & WOOD PULP
15,136
15,688 15,920
16,498 16,210
16,906
17,918 17,779 18,164 18,242
18,536 18,596 18,778
19,314 19,013
16,792
17,292
16,977
16,768
17,07017,224
17,121
13,306 13,736
13,842 14,134
13,364 13,294 13,541
12,929
12,368 12,152
12,222 12,286 12,266 12,176
11,778
9,856
10,408
10,811
10,585
9,593
9,692
9,466
8,000
10,000
12,000
14,000
16,000
18,000
20,000
‘94 ‘95 ‘96 ‘97 ‘98 ‘99 2000 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 '10 11 12 13 14 15
86
(×1000 metric ton)
Source：PRPC
Recovered paper consumption
Wood pulp consumption
IMPORT OF MARKET PULP• Major paper producing companies in Japan adopt
integrate production lines which produce paper from woodchips and utilize black liquor.
• Therefore, the share of imported market pulp, （mainly from Canada, UＳ，Brazil and NZ）, Is only 6.2% in the raw materials.
• The use of imported market pulp has decreased gradually to 1.61 million tons in 2015 from 1.91 million tons in 2011.
87
IMPORT OF MARKET PULP (2015)
USA CANADA BRAZIL CHILE INDONESIA NZRUSSIA SWEDEN FINLAND S.AFRICA OTHERS
88
USA498,024
CANADA449,107
BRAZIL219,815
CHILE141,380
INDONESIA134,712
NZ106,423
RUSSIA75,233 Unit: ton
TOTAL1,715,082
IMPORT OF MARKET PULP BY GRADE89
0
500000
1000000
1500000
2000000
2500000
5 6 7 8 9 10 11 12 13 14 15
BKP UKP DP Others
Unit: ton
EXPORT OF MARKET PULP BY GRADE
0
50000
100000
150000
200000
250000
300000
350000
400000
450000
500000
05 06 07 08 09 10 11 12 13 14 15
BKP UKP DP Others
90
Unit:ton
THE CATEGORY OF AREAS BEFORE PLANTEDBY JAPANESE PAPER COMPANIES
Felling sites of
plantations
56%
Pasture
21%
Shrub
12%
Degrated areas
11%
91
MATERIAL USE VS. THERMAL USE
• Electric power companies have already started to use a large amount of wood fiber biomass for co-firing with coals under RPS act (now replaced by FIT act).
• In addition, newcomers of biomass power generation by wood fiber will come into being ,encouraged by FIT act. Demand for woodchips has increased and the price of pulpwood has also gone up by the artificially fixed price of FIT.
• The government estimates that 6million m3 out of 20 million m3 of thinned wood left over at the felling sites will be possibly utilized for thermal use.
• The problem is that collecting costs and transportation costs are quite high and many FIT wood biomass power stations have started to utilize sawmill residue, which is not allowed to utilized in accordance with Guideline for the verification of wood biomass utilized under FIT established by Forestry Agency.
・ Material use should be always given priority to thermal use, so that cascade use system of wood fiber biomass would be maintained as a whole.
92
ENERGY MIX BY 2030• The government of Japan has finalized the proposal draft of CO²
reduction in Paris Agreement after Kyoto Protocol at COP21.• CO² emission level is 1.42 billion t- CO² （▲26% compared with 2013:
▲25.4% compared with 2005) by 2030.• The government of Japan has also announced the energy mix by
2030 which is intended to achieve the above proposal of CO²reduction.
• Nuclear energy 22%~20% and renewable energy 22%~24%• Renewable energy is broken down into;
water 8.8%～9.2% solar 7%, Wind 1.7%, geothermal 1.0%~1.1%and biomass 3.7%~4.6%
・ Estimated wood biomass energy newly introduced are as below:unutilized thinned wood 0.21 million kWconstruction waste 0.04 million kWImported wood, PKS etc 2.64~3.90 million kW
93
0
20
40
60
80
100
120
Total Electric PowerGeneration
Oil Coal LNG Nuclear Renewable
Coal 26%
94
0
5
10
15
20
25
Water Solar WindBiomass Geotharmal
Solar 7%
RenewableEnergy Mix by 2030
(1,065 billion kWh)
Renewable22%~24%
Nuclear22%~20%LNG 27%
Oil 3%
Geotharmal 1.0%~1.1%Biomass 3.7%~4.6%Wind 1.7%
Water 8.8%~9.2%
SUPPOSED WOOD BIOMASS CONSUMPTION BY ENERGY MIX ２０３０
• Unutilized thinned wood 0.２４ million ｋＷ
Supposed consumption（Green ton） 0.２４ million ｋＷ×１２＝２.８８ million tonsSupposed consumption（ＢＤＴ ） ２.８８ million tons×０．６＝１.７３ million tonsSupposed consumption（ｍ３） １.７３ million tons÷０．３２＝５.４１ million m3
・ Construction waste 0.３７ million ｋＷ
Supposed consumption（Green ton） 0.３７ million ｋＷ×１２＝４.４４ million tonsSupposed consumption （ＢＤＴ） ４.４４ million tons×０．８＝２.２２ million tonsSupposed consumption（ｍ３） ２.２２ million tons÷０．４５５＝４.８８ million ｍ３
・ Sawmill residue, Imported, PKS ２.７４ million ｋＷ～４ million ｋＷ
Supposed consumption（Green ton） ２.７４ million ｋＷ～４ million ｋＷ×１２
＝３２.８８ million tons～４８ million tonsSupposed consumption（ＢＤＴ） ３２.８８ million ｋＷ～４.8 million ｋＷ×０．６
＝１９.７３ million tons～２８.８ million tonsSupposed consumption（ｍ３） １９.７３ million tons～２８.８ million tons÷０．４５５
＝４３.３６ million ｍ３～６３.３ million ｍ３
Total supposed consumption（ｍ３） ５３.６５ million ｍ３～７３.５９ million ｍ３
WOODCHIPS UTILIZED FOR ENERGY IN 2015 (TENTATIVE)
Category Quantity
Unutilized (thinned, forest residue)
１，２３１，３５８
Sawmill residue １，５２４，３７７
Construction waste ４，３１４，５２８
Imported ０
from imported roundwood
０
Others １１６，７９２
Total ７，１８７，０５５
（UNIT：BDT）
Source：Forestry Agency
Re: Woodchips utilized for paper production16,216 thousand BDT
PRODUCTION AND UTILIZATION OF WOOD FIBER BIOMASS97
left over woodabout 2,000
sawmill residue1,070
Construction waste1,180
not utilized
the amount of wooden biomass utilization
Source ： Forestry Agency
230 780 60
630 180 370
(unit ： 10 thousand tons)
energy use
material use
not utilized
98
The Map of Wood Biomass Power stations under FIT in Japan
Power Station(Prefecture)
Wood Biomass Supplier Chipping Mill Annual Supply
Co-firingRate
Shin-nihon Steel Co. Kamaishi(Iwate)
Kamaishi Forest Owners Association
Sanriku Biomass 5,000t 2%
Sumitomo Kyodo EPC (Ehime)
Sumitomo Forestry Co. Sumi-Kyou CS 12,500t 2.5%
Chubu Electric EPC Misumi(Shimane)
Shimane Prefecture Loggers Association
Shimane Prefecture Loggers Association
30,000t 2%
Chubu EPC Shin-Onoda(Yamaguchi)
Yamaguchi Prefecture Forest Owners Association
Private Wood Chipping Mill
25,000t 1%
KyushuEPC Reihoku(Kumamoto)
Kumamoto Prefecture Forest Owners Association
Private Wood Chipping Mill
15,000t 1%
Dengen-Kaihatu EPCMatsuura(Nagasaki)
Miyazaki Prefecture Forest Owners Association
Miyazaki Wood Pellets Co.(Wood Pellets)
30,000t 1%
Chubu EPC Hekinan(Aichi)
Fiberco(Canada) (Sawmill Residue) 300,000t 3%
99
IMPORT OF PKS BY JAPAN• PKS has high energy content of 3.8~4 thousand calories,
compared with 2~2.5 thousand calories of woodchip and preferred as fuel for FIT wood biomass projects.
• The import of PKS has increased dramatically these days, from 27 thousand tons in 2011 to 456 thousand tons in 2015 because of FIT projects.
• The demand for PKS is estimated to increase rapidly since quite a few FIT wood biomass projects intend to utilize PKS as fuel.
• But it is not sure to be materialized due to ① supply constraints in producing countries such as Indonesia and Malaysia, ② rising price of PKS ( from 9.0 yen in 2011 to 14.2 yen in 2015) and ③export tax levied on by Indonesia ( 10 dollar / ton) from July of 2015.
100
IMPORTED PRICES OF PKS
Year Imported price（\/ｋｇ） Imported Quantity（ton）
２０１１ ７．９ ２７，５３９
２０１２ ９．８ ２６，２１１
２０１３ １０．７ １３１，２２４
２０１４ １１．８ ２４４，１７８
２０１５ １２．８ ４５６，０８４
Source：Ministry of Finance
WOOD PELLETS FOR ENERGY
• Wood pellets have come into use for boilers and stoves in public facilities and homes these days.
• The number of wood pellet producing plants has been increasing to １42 and the output also growing to 126 thousand tons in ２０１4,but has decreased to 120 thousand tons in 2015 because of warm winter.
• The amount of production is very small compared with European and North American countries and mainly for non-industrial use, but there are several projects under consideration to utilize domestic wood pellets for FIT.
102
TRANSITION OF WOOD PELLETS PRODUCTION IN JAPAN
3 3 510
16
29
38
47
63
75
85
108 109115
142 142
3,800 6,018
21,538 24,901 29,920
37,670
50,693
58,243
78,258
98,184
110,…
126,…
120,000
0
20000
40000
60000
80000
100000
120000
140000
0
20
40
60
80
100
120
140
160
2000 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 '09 10 11 12 13
the number of mills
the amount of production
103
(the number of mills) (tons)
Source : Forestry Agency
OVERSEAS EXPANSION OF JAPANESE PAPER COMPANIES
• Demand for paper and paperboard has been sluggish and declining due to IT revolution and reduction of overhead costs.
• We cannot expect Japan’s paper and paperboard market will expand in the future, because the population is aging and also decreasing gradually.
• Japanese paper companies are accelerating overseas operations such as corrugated container , sanitary and paper diaper, especially in emerging Asian markets.
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• In July 2005, at a G8 Summit held in Gleneagles, the U.K., developed countries around the world formed an agreement to create measures that address the problem of illegal logging.
• Following this agreement, the Government of Japan amended criteria concerning wood-based products under the Green Procurement Law.
• The amendment went into effect after April 2006, making the Law require timber suppliers of government institutions to supply timber that has been verified its legality.
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• The EU also created “Regulation (EU) No 995/2010 of the European Parliament and of the Council of 20 October 2010 laying down the obligations of operators who place timber and timber products on the market” in 2010.
• Following the establishment of this Regulation, it is prohibited to sell illegally-harvested wood or forest products made from such wood within the EU from March 2013.
• In addition, Australia has passed “Illegal Logging Prohibition Bill”, very similar to EU Timber Regulation, at the national Parliament in 2012 and has come into effect from 2014.
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• Furthermore, the United States has amended the Lacey Act in 2008, as part of its anti-illegal logging measures. Following the amendment, exporters of wood products, including paper, now have to make a declaration with regard to a country of origin where wood is harvested and tree species, as well as product name, price and quantity (However, the obligation of the declaration is not applicable to paper pulp at the point of writing this document).
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• The Forestry Agency issued the Guidelines , under the green procurement law, concerning verification methods of anti-illegal logging measures, which specifies the following three verification methods: (1) “Verification method via forest certification system”(2) “Verification method by company under the authorization of associations for forest owners, forestry or wood industries” (3) “Verification method by original measure of each company”
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・ Japan Paper Association developed “The Code of Action for” the Japan Paper Association Regarding the illegal Logging Problem” in March 2006.
• The Code of Action is designed clarify the Association’s commitment to have the entire industry commit to the elimination of illegal logging.
• The Association also amended “The Voluntary Action Plan Regarding the Environment” in March 2007, incorporating the anti-illegal logging measures as part of the Voluntary Action Plan.
• In 2014, the Voluntary Action Plan was terminated and “ The Action Plan Regarding the Environment” has been newly set up, also incorporating the anti-illegal logging measures as part of it
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• The paper industry has adopted method (3) above (“Verification method by original measure of each company”), and since April 2006, member companies of the Japan Paper Association have been implementing their own measures for tackling illegal logging issues.
• For the implementation of verification method, some companies are using method (1) or (2) above at the same time ((1) “Verification method via a forest certification system”; (2) “Verification method by company under the authorization of associations for forest owners, forestry or wood industry”).
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• Furthermore, since 2007, the paper industry has been stepping up its effort to address the illegal logging problem by implementing the “The Monitoring Operation for Anti-Illegal Logging Measures”.
• This operation includes monitoring by the Japan Paper Association, for which guidance, advice and auditing are provided by a third-party committee consisting of academic experts, consumer groups, those involved with auditing corporations, and other similar groups.
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Auditing Committee Members
Shin NAGATA Professor, Graduate School of Tokyo University
Akihiro OHNUMA All Japan Stationery AssociationKazuya KOUJITANI Green Purchasing NetworkSatoshi TACHIBANA Associate Professor, Graduate
School of Tsukuba UniversityKyoko NOMURA Price Waterhouse Coopers
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FOREST CERTIFICATION IN JAPAN （２０１６）
CertificationScheme
FM Certification(ha)
CoC Certification
SGEC(member of PEFC)
1,518,195 364
FSC 393,243 1,103
PEFC --- 189
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FOREST CERTIFICATION (2015)
• Japanese paper companies have 0.6million ha of their own forests certified by forest certification schemes such as FSC, PEFC and SGEC (Japanese forest certification scheme: mutually recognized with PEFC in 2016) .
• Besides, 21.3% of woodchips consumed by Japanese paper companies is certified by CoC.
• Japanese paper companies choose each forest certification scheme according to its acceptance in each region.
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FOREST CERTIFICATION AREA OWNED BY JPA MEMBERS
115Source：Japan Paper Association
1 2
459
549
616
650645668 670 673
643
623603
0
100
200
300
400
500
600
700
800
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
面積
(千ha)
SGEC AFS CERTFORCHILE CERTFORCHILE&FSC CERFLOR&FSC SGEC&FSC FSC
32
115 119153
（unit:1,000tons)
THE AMOUNT OF FOREST-CERTIFIED WOODCHIPS CONSUMED BY JAPANESE PAPER COMPANIES
（２０１５）
Softwood hardwood total
Ｄｏｍｅｓｔｉｃ １８５ ３ １８８
Ｉｍｐｏｒｔ ４２３ 2,８６１ 3,2８４
Ｔｏｔａｌ（ｆｏｒｅｓｔ ｃｅｒｔｉｆｉｃ
ａｔｉｏｎ ｒａｔｅ）
６０８
(１２．１%)2,８６３
(2５．３%)3,47１
(2１．３%)
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Source：Japan Paper Association
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The Act for the promotion of Utilization and Distribution of legally harvested wood (Clean Wood Act)
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The Japan Paper Association’sDue Diligence Tool Against Illegal LoggingDue Diligence (DD) Manual for Member Companies
05/2016
USER NOTE:Please read and understand the clarifications and
caveats below before using this document.This document is provided as a template example of a due diligence manual. Therefore this document cannot be used as an “off the shelf tool”. It must be adapted to set out your actual procedures as the situation in each company, and the detailed system needs, are different.The document only serves as a generic example of what a procedure may look like. The specific system details
are provided merely as examples.Text that needs obvious specific input for each company
is shown as an underline.
1.Introduction• This manual represents the timber and timber products procurement manual
for member companies of the Japan Paper Association (JPA) aimed at meeting the company policy on legal sourcing.
• The objective of this manual is to ensure that sourcing and procurement of wood materials are carried out while performing a due diligence process to minimize any risks that is sourcing or placing on the market any products with illegal origin.
• Main business of is . • With regards to this manual and the implementation of its different sections
the term Due Diligence is interpreted as a series of steps taken in the process of to minimize the risk of sourcing and procuring timber or timber products that originate from illegal sources.
• The contents of the manual are aimed at meeting the requirements for U.S. Lacey Act, the EU Timber Regulation (Regulation of the European Parliament and of the Council laying down the obligations of operators who place timber and timber products on the market), Australian Illegal Logging Prohibition Act and Japan’s Law Concerning the Promotion of Distribution and Use of Legally-Harvested Wood, etc.
• Each processes of DD in this document is applied to all suppliers of .• 1.1 The Fundamental Process of Timber Procurement Due Diligence• In this manual, DD means taking the following three procedures in order to
minimize the risk of illegality in timber and timber products:• (1) Access to necessary information• (2) Risk assessment• (3) Risk mitigation• The procedure (3) above is not necessary if the risk is concluded to be
negligible at (2).
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Document title NotesJPA’s Code of Conduct
Regarding Measures Against Illegal Logging
JPA’s Code of Conduct
Regarding Biodiversity Conservation
An Overview of Measures Against Illegal Logging Taken by the Paper Industry
JPA’s Monitoring Operation for Measures Against Logging Measures
JPA’s Environmental Action Plan
Measures Against Illegal Logging Taken by the Japanese Paper Industry (annual report)
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•Under this manual, the following documents make up the complete procurement program and due diligence system.Table 1: overview of due diligence system documents.
2.Document
3. Legal Sourcing Commitment• Our commitment has been clearly stated in the procurement policy
of .4.Quality System and Management4.1 Department in Charge• The responsible department and supervisor, as well as the implementing
department and personnel for the DD system following this manual. • 4.1.1 Supervisor and Personnel in Charge• The supervisor who should be responsible for compliance with requirements
in this manual is below.• [Name]• [Position]• [Address]• [Telephone number]• [E-mail address]• Responsible personnel who is in charge of the implementation of this manual
is below. • [Name]• [Position]• [Address]• [Telephone number]• [E-mail address]•
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• Training and Competence Assurance• Training should be carried out as below: ● Training is provided to (ex: all members who are concerned with procurement)● Training is carried out (ex: every 6 months)● Training is provided to ensure that _________’s procurement policy requirements are met, as well as ensuring every process of DD under this manual is adequately taken.● The date of training, list of participants and brief overview of the topics covered will be documented for all training.● New staff will be trained by staff who have already been trained.● Record and documentation of training and competence development activities shall be stored on file for a minimum of 5 years.
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• 4.3 Due Diligence Revision Process
● The overall responsible position for due diligence shall ensure that the due diligence system is maintained, reviewed and revised on an annual basis, unless a 3rd party has been contracted to do so as necessary.
● Supply chain and risk assessment results shall be revised and DDS shall be amended if necessary, whenever changes are made to supply chains, and sources or when new products, species and countries of origin are included in the scope of the company’s purchasing program.
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Record name
Contract
Purchase waybill
Purchase invoice
Invoice
Traceability report
Certificates under forest certification schemes
Certificates under the Japanese verification system
Legality document
Internal Audit report
Third-party audit report
Local investigation report
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Procedures for Maintaining Records ● Maintaining records covering all steps and elements.● Records can be kept digitally or on paper.● Records must be kept for at least 5 years.● The list below provides examplary summary of the records which are relevant for the due diligence system.
• 4.5 Communication Rule
• will not use claims that indicate that Japan Paper Association certified or verified its DDS on invoices, packages and products themselves (but not limited to these) when it carries out DD following this manual. For example such claims may include ”Risk Assessed”, ”Risk-Assessed Timber”, ”Low Risk Timber” and ”Indepdendently-Audited Timber”. In explaining the company’s effort in materials such as leaflets, the term ”Independent Certification” shall not be used. The term ”negligeable risk” may be used in explaining the risk assessment procedure of products but not as a product claim. However, the company may explain its effort as follows: ”In order to assess the risk of the product, carried out due diligence internally based on JPA’s Due Diligence Manual”.
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5.Material Control
● will maintain physical separation of all timber material which has been purchased from material with unknown or illegal origin throughout reception, processing, packing and shipping, if such material should ever enter into its supply chain.
● The relevant personnel shall ensure the above and arrange for the purchased material to be kept in the relevant designated area or visibly recognizable using floor plans of the storage area, if such material should ever enter into its supply chain.
● Material and products purchased as certified or verified (including certified Controlled Wood) under existing certification and verification systems shall be handled and controlled according to the relevant standards requirements.
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ProductsPlace of Harvest
Wood Species Scientific Name
Woodchips (imported)
Woodchips (domestic)
Pulp (imported)Pulp (domestic)Wood Fuel (imported) (as much information as reasonably possible)
Wood Fuel (domestic) (as much information as reasonably possible)
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6.ScopeDefine here scope of the Due Diligence system. Use the list of species attached for domestic timber species (Attachment 4, in Japanese).
[1] Currently it is extremely difficult to collect all relevant information. Efforts shall be made so that this category will be subject to full DD processes as soon as possible.[2] Currently it is extremely difficult to collect all relevant information. Efforts shall be made so that this category will be subject to full DD processes as soon as possible.
7.Access to Supply Chain Information
• Collect or assure access to relevant information regarding the products shown below where reasonably practicable, prior to purchasing. asks its suppliers to sign an agreement to provide access to the applicable and relevant information:
• The type of product • The common and scientific name of tree species used for all products
placed on the market.• c. Country of harvest, and where applicable : sub-national region
where the timber was harvested; and concession of harvest (in the country of harvest where risks of illegality are high)
• d. The country in which the timber product was manufactured• e. The name, address, trading name and any business and
company registration number (if any) of the supplier of the product
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Company registration number of the supplier
Country Name Address Type of product
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f. The quantity of the timber product to be purchased and subject to this manual;g. Documents or other information indicating compliance of those timber and timber products with the relevant legislation and regulations including (if any):- FLEGT licensed timber and CITES timber- Any certification to FSC or PEFC endorsed forest management standards[1]
- Any document indicating compliance with a 3rd party legality verification system.- Any other documentation that is indicated as acceptable in the EU Timber Regulation and Australian Illegal Logging Prohibition Act.[2]
h. Supply Chain Diagram
[1] Ensure to check product certification, as well as suppliers’ CoC certification. [2] Refer to JPA’s “2014 Report on the Development of National Risk Assessment Methodology in Overseas Plantation”, pp. 82-88, as well as EUAttachment 2）. Also see JPA’s 2015 report (3.1.4 for the EU and 3.3.2 for Australia).
• Collecting supply chain information• All information shall be collected to a level that enables
assessment of risks using traceability report (A7.ttachment 2).
7.2 Access to Supply Chain information• Missing information about the supply chain indicates a risk and
requires mitigation measures to be implemented.
7.2.1 Update and revision of data• Data on suppliers and supply chain shall be updated as below:• ● Annually • ● Whenever changes are made to the supply chains.
7.2.2 Evaluate gaps in information• Supplier information shall be reviewed prior to application in the
risk assessment process. Any information missing should be evaluated and considered to be a gap in the information available.
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8. Risk Assessment• The risk assessment process examines below items in assessing whether or not the risk of
illegal timber being sourced can be concluded as negligible.● Product● Species ● Area of harvest● Complexity of supply chain• The risk assessment shall be implemented using “The Investigation Manual for Monitoring
Operation for Measures Against Illegal Logging” (Attachment 3).• We consider timber or timber products as having a negligible risk if all of the following
applies: • ※For detailed risk assessment, refer to ETTF system for Due Diligence (Attachment 8-1),
especially Annex 5 B “Risk Specification Table” (Attachment 8-2).• a)the country of harvest is not under sanctions on timber imports or exports by the UN
Security Council or the Council of the European Union;• b)there are no verified cases of illegal practices for one or more companies involved in
the supply chain;• c)there is no reported prevalence of illegalities regarding the country of harvest or the
tree species;• d)the supply chain involves a limited number of companies which are all identified;• e)all documents that are necessary to indicate compliance of the timber or timber
products with the applicable legislation are made available by the supplier(s);• f)level of corruption of the country of harvest is low.• In case of verified-legal or certified timber → Evaluate the condition of system and risks
at FM level by following 8.1. • In case of others → Follow 8.2
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Use of Certified and Verified Material• If products are certified under FSC or a mutual
certification system of PEFC, risks can be concluded to be negligible, if the product has been certified following the relevant rules and if no significant problem regarding illegality at FM level has been reported. This applies to Controlled Wood as well. Follow 8.2 and do the risk assessment in case of other certification system.
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1．Is the product in question covered by a valid FLEGT license? (※) Note
The category of risks can conclude the risk assessment
2．Is there any sanction imposed by the United Nations Security Council or the Council of European Union on timber importsor exports?
3．Is the species constituting the product covered by CITES?
4. Does the material have the correct CITES license and documents?
Certification status 5. Is the supplier and product covered by an active credible 3rd party certification scheme which meets all applicablerequirements of the EUTR?
6. Is the product received accompanied with the required claim information that can confirm the certification status of thematerial/product?
7. Is the CoC system unbroken and can the active certification status of the supplier be confirmed?
The risks of wood species 8. Is the species of the material/product confirmed to be free of risks of illegal logging?
Risks originating from the source or origin
9. Can the harvest practices in the country of harvest and/or sub-national region where the timber was harvested, beconfirmed to be free of significant risk of illegal activities including violation of a third party’s rights?
Reference website for check：Global Forest Registry (linked to FSC’s National Risk Assessment (http://www.globalforestregistry.org/), CPI by Transparency International (http://www.transparency.org/cpi2015), various reports etc. by research institutions, NGOs, etc.
Supply Chain Risks 10. Can you access information about the supply chain to a level that allows you to confirm the origin of the material andestablish the level of control?
11. Can it be confirmed that there is no risk or possibility that material is mixed or substituted with non-negligible risk materialduring transformation and transport?
12. Is classification of species, quantities, and qualities carried out in a way according to prevailing regulations?
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Using the Risk Assessment ChecklistFollow the checklist below and do the risk assessment when you cannot specify risks as negligible at 8.1. Checklist of European Timber Trade Federation (ETTF)
(※)Forest Law, Enforcement, Governance and Trade program
[1] A list of all UN sanctions can be found here: http://www.un.org/sc/committees/list_compend.shtml The European External Action Services website contains relevant information about EU sanctions: http://eeas.europa.eu/cfsp/sanctions/index_en.htm[2] The Royal Institute for International Affairs (UK), the World Bank, Interpol etc. have published reports on illegal logging.
8.3 Flow of risk assessment
• The flowchart below shows how to carry out risk assessment. In general, the following categories are considered to have lower risks: (1) FSC or PEFC certified products; and (2) countries with a low level of corruption (high CPI scores). With regard to (2), timber and timber products from developed countries with high CPI scores will be considered to have lower risks of illegality. Nevertheless, for both cases, it is strongly recommended that whether there is any report on significant illegal logging problems at the level of harvest areas.
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9. Risk Mitigation• The process of mitigating risks builds on the result of the risk
assessment. Any risks that have been identified as not being negligible during the risk assessment shall be mitigated according to the following procedures.
• The course of action taken to mitigate risks depends on the type and severity of the risk identified during the risk assessment process as well as available options for replacement of the product, and third party verification.
1.requesting additional information or/and documents2.self-conducted audit in the supply chain3.requiring third party verification, and4.replacing non-negligible risk suppliers and/or products.
• For details refer to JPA’s 2014 report on the development of the national risk assessment method for overseas plantations (especially Table: Risk mitigation actions and their relative strengths). Also refer to Attachment 8-1. ETTF recommends creating a risk mitigation action plan.
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