Japan goes back to the forest: but for fuel not construction

Despite a homebuilding industry that went into a virtual standstill during the pandemic, Japan last year used its highest rate of domestically produced lumber since 1972. The reason — they burned more of it for energy as part of a broader decarbonization drive.

But even with the 48-year high in lumber self-sufficiency, some in the industry are saying more needs to be done to boost Japan’s production to achieve an even higher level.

“We need to increase the use of lumber in order to promote the cycle between planting trees and utilizing them,” said an official at the Japan Federation of Wood Industry Associations. “We are hoping for new demand in fields like mid- and high-rise buildings.”

Domestic lumber made up 41.8% of the entire amount used in Japan in 2020 — a record year-on-year increase of 4 points. Total Japanese lumber production increased 0.5% in 2020 to 31.15 million cu. meters.

But production of lumber products used in construction materials plunged 10.3% to 15.8 million cu. meters. This largely stemmed from a 9.9% decrease in new homes that went into construction that year, to 815,340.

“The rise in Japan’s self-sufficiency rate is an irregular phenomenon,” said a sales representative at a lumber wholesaler. “It doesn’t feel like demand has grown as much as that figure suggests.”

The supply of imported lumber also fell 15% to 43.3 million. Trading houses and homebuilders greatly scaled back on overseas purchases, while demand in the paper industry sank as well.

Rather than increased domestic production in lumber construction products — which has been a goal for the Japanese government — the rise in self-sufficiency was propelled mainly by growing demand for biomass fuel.

Biomass is considered a less carbon intensive energy source than fossil fuels, since it is made up of plants that absorb carbon dioxide from the atmosphere as they grow. Production of wood fuel, including for biomass power plants, increased 28.8% in 2020 to 8.93 million cu. meters amid a growing global push for decarbonization.

But the Japanese lumber market has changed drastically since the beginning of this year. A homebuilding boom in the U.S. has squeezed shipments to Japan, causing a so-called wood shock here. Japanese companies are now looking to domestic lumber to fill the gap.

A new law also entered into effect on Oct. 1, promoting the use of lumber not only in public buildings but in private-sector construction as well.

Japan currently has little excess supply of lumber. There is a shortage of loggers to cut trees and forest roads are not being built quickly enough. Processing plants will need time to expand capacity as well.

Log shipments to construction material factories in January-June came to about 62.5 million cu. meters, according to Japan’s Ministry of Agriculture, Forestry and Fisheries. Although the figure increased 1% from a year earlier, it remains 7% below where it was for the same period in 2019, before the coronavirus.

Japanese cypress is now at its highest price in over 23 years, out of reach for many buyers, as the domestic lumber supply struggles to keep up. Expanding Japan’s production capabilities will be key for the construction sector to drive an increase in the country’s self-sufficiency rate.

Source: Nikkei Asia