This is an extract from a recent report “South Korea to Reduce Subsidies for Biomass Energy, Explained” by Solutions for Our Climate.
On December 18, 2024, the South Korean government announced a major reform of public support for biomass energy, phasing down indirect subsidies known as Renewable Energy Certificates (RECs) for most biomass categories. While this change largely heralds a step in the right direction to mitigate the controversial forest biomass, slow phase-out timelines and loopholes continue to threaten global forests. Biomass power, predominantly generated by burning wood, is the second-largest source of renewable energy in South Korea. Most biomass usage occurs in large power plants supplying electricity to the national grid. Solid biomass accounts for 18% of South Korea’s renewable electricity, with 73% derived from wood directly harvested from forests. South Korea’s biomass power fleet emits an estimated 11 MtCO2 annually, significantly surpassing the government’s forestry sector net-zero target for 2050.
The annual burning of over seven million tonnes of wood far exceeds the capacity of South Korea’s forest resources for sustainable logging. Even so-called ‘unused forest biomass’ fuels—industry terminology for claimed forestry residues—are sourced through clear-cutting in 87% of cases, with 46% found to be roundwood. Faced with limited domestic forest resources, South Korea’s biomass power industry has structured its business model around importing large volumes of wood pellets at lower prices from forest-rich nations. In 2023, imports accounted for 82% of the country’s wood pellet demand, making South Korea the world’s third-largest importer of biomass fuels, after the United Kingdom and Japan.
The leading exporters of wood pellets to South Korea include Vietnam (48%), Russia (20%), Indonesia (13%), and Canada (8%). These producer countries face one or more cases of logging of primary and/or biodiverse forests, conversion of natural forests into monoculture plantations, and ongoing certification and supply chain scandals. Despite these challenges, South Korea has no sustainability requirements for biomass trading; any wood deemed legal in the exporting country is automatically approved for import. Recent study shows that the global biomass market has experienced its most rapid growth in South Korea and Japan, with East Asia projected to lead global demand in the coming years. This surge in biomass usage threatens to derail Asia’s broader energy transition, as major players in the biomass sector often stem from extractive industries such as coal, palm oil, and timber. Addressing the expansion of unsustainable biomass power is essential to achieving climate and biodiversity targets for 2030.
Burning wood for energy emits more carbon dioxide than fossil fuels per unit of energy produced. However, these emissions are excluded from the Energy sector greenhouse gas accounts, as they are assumed to be accounted for under the Land, Land-Use Change, and Forestry (LULUCF) sector. This carbon accounting loophole unfit for purpose has fostered the misconception that biomass energy can be carbon neutral. Academia and civil society have repeatedly emphasized that countries must treat biomass like any other fuel. Biomass is also more expensive than most other renewable energy sources, making it uncompetitive in an open market. Despite this, governments worldwide have not only uncritically classified biomass as renewable but have also allowed the industry to exploit the accounting loophole to access renewable energy subsidies. South Korea is no exception, as it subsidizes biomass at levels higher than those for genuine renewables.
South Korea began supporting biomass in 2012 with the introduction of the Renewable Portfolio Standard (RPS). This renewable energy policy employs a two-pronged approach. On the supply side, renewable energy producers, including biomass power plants, earn RECs for each megawatt-hour of electricity they produce. These credits can be sold on the market, with prices determined by supply and demand. Given the high cost of renewable energy production in South Korea, REC sales are essential for ensuring profitability. The value of each REC varies by energy source and facility type, reflecting the differences in generation costs. The baseline for REC weighting is mid-scale solar photovoltaic, with a standard weighting of 1.0. In contrast, forest biomass receives weights as high as 2.0 for dedicated biomass power plants and up to 1.5 for co-firing with coal. These weightings are on par with or higher than those for solar (0.5–1.6) and wind (1.2–2.5).
On the demand side, large fossil fuel utilities with generation capacities of 500 MW or more are required by the RPS to source a portion of their electricity from renewable energy or purchase RECs from renewable producers. In 2024, the national RPS ratio was set at 13.5%, with plans to increase it to 25% by 2030. South Korea does not provide incentive programs for renewable heat. RECs therefore act as indirect subsidies. The government establishes support levels through REC weightings, while consumers bear the associated costs through their electricity bills. The high REC weightings assigned to biomass have been the primary driver of its growth. For years, civil society organizations in South Korea and abroad have advocated for reducing these weightings, contending that biomass is a false climate solution.
Under mounting pressure to address the harmful incentives supporting biomass energy, the South Korean government announced major revisions to REC weightings for forest biomass on December 18, 2024. The reform involved three key government agencies: the Ministry of Trade, Industry and Energy (MOTIE), the Ministry of Environment (ME), and the Korea Forest Service (KFS). As the lead ministry for energy, MOTIE manages the RPS and REC policies and utility consumption of biomass; KFS promotes upstream activities, including logging, wood pellet and chip production, and pellet imports; and ME oversees the production of pellets made of waste wood, also known as bio-solid refuse fuels (bio-SRFs) and greenhouse gas reporting.
Of these agencies, MOTIE plays the most pivotal role in determining the future of biomass. Since introducing the initial REC weightings in 2012, MOTIE has often accommodated forestry sector interests represented by KFS, particularly by adopting higher weightings for domestic ‘unused forest biomass’ in 2018. While MOTIE is required to review these weightings every three years, in 2021, it chose to maintain the high weightings despite widespread criticism over the clear-cutting practices they encouraged. Even within the domestic timber industry, concerns arose about increased feedstock competition due to biomass production.
Analysis
The current biomass REC weightings have remained largely unchanged since 2018, except for a partial reduction applied to state-owned coal-and-biomass co-firing facilities in 2020. While these weightings are intricately segmented by year of operation, feedstock type, combustion method, and ownership structure, the overarching policy trends can be distilled into four key takeaways:
1. Domestic ‘unused forest biomass’ receives the highest weighting of 2.0 when burned in dedicated power plants and 1.5 when co-fired with coal, regardless of ownership or start date
2. Existing power plants that began operating by 2018 are granted relatively high weightings of 1.5 for dedicated burning and 1.0 for co-firing when using biomass fuels other than ‘unused forest biomass’
3. State-owned power plants qualify for the same high weightings for burning ‘unused forest biomass’ (1.5–2.0) or other feedstocks, such as domestic roundwood, imported pellets, or bio-SRFs, in dedicated facilities (1.5), but co-firing receives a weighing of 0.5
4. New power plants that began operating since 2018 are granted with high weightings (1.5–2.0) only when burning ‘unused forest biomass’ while dedicated burning of other biomass fuels receives lower weightings of 0.25–0.5, and new co-firing plants are no longer eligible for RECs.
The 2024 REC reform introduces significant reductions in weightings across key categories, targeting both new and existing power plants while implementing staggered timelines to ease the transition for affected industries. Starting in 2025, new biomass power plants will no longer be eligible for RECs. According to the press release, the current biomass capacity has already exceeded projections in MOTIE’s Basic Electricity Plans. While biomass contributed to the initial phase of South Korea’s energy transition, the energy ministry has clarified that further expansion is unnecessary, citing industry, financial, and environmental consequences. This decision reflects a societal consensus to limit the role of large-scale biomass and focus on genuine renewables, such as wind and solar.
However, power plants under construction or in planning with approved business licenses are exempt from this rule and subject to the phased reduction timelines detailed below. The official registrar lists five planned power plants with active permits, one under construction, and one co-firing station awaiting operation. While it is uncertain if all planned plants will proceed due to unfavorable market conditions, the two most advanced projects—a dedicated burning (200 MW) and a coal co-firing plant (2,100 MW)—are expected to increase fuel demand domestically and internationally. Captive power plants, which directly supply heat and power to industrial parks, pose an additional challenge as they are less dependent on REC support.
From 2025, REC weightings for dedicated burning in state-owned power plants will be reduced to one-third of their current levels. The weighting, currently 1.5, will decrease to 1.0 in 2025, 0.75 in 2026, and 0.5 in 2027. This marks the first time MOTIE has implemented such a reduction, affecting three state-owned power plants with a combined capacity of 204 MW. As subsidiaries of Korea Electric Power Corporation (KEPCO), these facilities fall under MOTIE’s direct control. However, it remains uncertain whether these plants will reduce input levels or switch to domestic ‘unused forest biomass’ and bio-SRFs. Despite this reduction, MOTIE has not provided a timeline for a complete phase-out of RECs for dedicated burning.
From 2026, REC weightings for privately owned power plants will also be phased down to one-third of their current levels. This is the first reduction in support for private biomass utilities and will impact 12 plants with a total capacity of 292 MW. Unlike public facilities, the phase-out for private plants is tied to the facility’s age to protect the profitability of newer plants. This results in a heavily backloaded reduction curve, with most weightings remaining above 1.0 until the plant reaches 18 years of operation. Afterward, weightings will drop to 0.5 during the final two years of the plant’s lifecycle. Since most private facilities are only five to six years old, they will continue receiving high REC weightings well into the 2040s. Similar to state-owned plants, private facilities retain the option to switch to ‘unused forest biomass’ and bio-SRFs, exploiting existing loopholes
Starting in 2025, state-owned power plants will no longer receive RECs for coal-and-biomass co-firing. This practice has been widely criticized as the least sustainable use of biomass, prolonging the lifespan of coal-fired power plants while benefiting from renewable subsidies. From 2026, REC weightings for co-firing at privately owned power plants will be phased out. Six plants with a combined capacity of 617 MW are affected. However, the phase-out schedule is conservative, with weightings decreasing incrementally over 18 years. The second half of the reduction is concentrated in the final two years of a plant’s life, mirroring the timeline for private dedicated burning facilities.
Implications: A Biomass-free Vision for Asia with Limited Immediate Impact
South Korea’s decision to scale back government subsidies for biomass energy marks a significant shift away from policies that have exacerbated the climate and biodiversity crises. Subsidizing biomass has become a textbook example of a false solution to climate change, diverting global effort from proven, renewable, and nature-positive mitigation strategies. Unfortunately, many countries still classify biomass as non-emitting, enabling the industry’s exploitation of carbon accounting loopholes. As the world’s third-largest biomass importer with substantial investments in the sector, South Korea’s 2024 announcement represents the largest policy reversal on biomass in Asia.
Access the report here
