Niche Markets for Economic Revitalisation of Satoyama Forest ...

In Japan, the priorities have been geothermal and photovoltaic
(PV). The continued emphasis on PV is reflected in the
2007 Japan Renewables Portfolio Standard (RPS) report
that recommends PV receive double credit over other
power sources. While biomass energy production may not
reflect the same level of industrial development of export
opportunity as in Japanese PV, there is still a significant
market opportunity to boost the technology especially
considering Japan’s ongoing challenges with foreign energy
dependence, high international energy prices and nuclear
power safety concerns. Utilising forest residues in wood block
construction for wood building construction represents an
emergent opportunity for commercial projects in satoyama.
While housing construction in Japan is generally expected
to decline there are indications that many Japanese people
prefer wood construction homes, which could lead to an
increasing market share for such products. As the Cabinet
Office opinion poll discussed above shows a 60 per cent
preference for wood construction among those surveyed,
there are expectations that Japan’s aging population will
increasingly appreciate wood buildings and renovations, and
some recent data for one part of the country—Ishikawa—
show an increasing number of wood construction starts.
Arguments to invest in wood block construction on the
supply side are enhanced by the recurring annual forest
build–up in Japan (approximately 64 million cubic meters)
and the cost advantage of local forest products over foreign
ones. Still, sourcing local wood products has not been the
normal procedure in Japan for many years.
One of the main challenges with bioenergy and wood block
construction is how to distribute forest residues from diffuse
sources to diffuse end production facilities, especially in
a mountainous country like Japan. Certainly there are cost
advantages with using forest residues in the locations where
they can be sourced. Indeed, this local use was part and parcel
of the economically advantageous system of harvesting
charcoal and fertilisers from the forests that supported forests
thinning practices in the first part of the twentieth century.
However, wood block construction and power generation
represent new opportunities that require a greater degree of
centralised collection and distribution. A key question is how
to minimise these costs. As discussed, forestry associations,
timber companies, processing companies and housing
construction companies are collaborating in Ishikawa
to establish distribution and processing centers in key
regions to support supply to wood block construction. The
development of a center for the distribution and processing
of wood materials is, in fact progressing in that prefecture
based on efforts by the Kaga Forest Association. Such
techniques could be replicated in other parts of the country,
or even in the biomass energy sector. Forest residue suppliers
could even explore the integration of coordinated supply to
power generation and wood block construction buyers.
Undertaking thinning and management projects in satoyama
to enhance Japanese carbon sinks and earn tradable
pollution rights is only a possible commercial opportunity
at present, although public funding for such projects may
well be available under the government current climate
change policy. Such a system would likely provide new
opportunities for helping finance satoyama management,
since, as Japan is quite heavily forested, there would be little
room for competing afforesting or reforestation projects.
Forestry sink projects in Japan would primarily be limited to
maintaining the estimated 35–70 MtCO2/y sequestration
potential through enhanced management. Moreover, the
35–70 MtCO2/y potential is not an insubstantial natural
resource. By comparison, New Zealand is estimated to have a
total potential of 10–42 MtCO2/y.
Unlike wood block construction and biomass energy,
however, the development of a domestic carbon market is
almost entirely dependent on political forces that influence
the decision to institute a cap and trade system with forestry
offset provisions in Japan. A national carbon trading scheme
remains contentious, as do other strong instruments like
the long–discussed carbon tax. Nevertheless mounting
global concern over climate change and the prospect of
greater United States involvement in international climate
cooperation, point to the likelihood of increasing pressure
to reduce emissions substantially in Japan in coming
years. Given the high efficiency of Japanese industry, and
the relatively high cost of abatement in that sector, offset
projects—including forestry based ones—will likely be
attractive to companies with emissions caps. This pressure
will also result in further promotion of renewable energy
sources like biomass.
However, Japan to date, as in many sectors, is oriented toward
overseas investment in carbon reduction projects—it is a
significant buyer of UN certified emissions reductions under
the Kyoto Protocol’s CDM and is intent on seeing a similar
international offset system carried through to any climate
treaty system after Kyoto. The government’s 2005 climate
budget allocated 9,599 million yen to Kyoto mechanisms
(essentially CDM credit purchases), up from 4,999 in 2004
or a 92 per cent increase on the year. At the same time
forestry sink budget allocations in Japan fell by 7 per cent
from 2004 to 2005. So there is a clear emphasis on overseas
carbon emissions reduction projects in the recent budget. A
key question for satoyama is how to attract some of these
investments into forestry sink project in Japan.
Whether domestic carbon trading opportunities emerge
or whether carbon sink enhancement funding remains in
government budgets, climate change policy and regulation
clearly offers opportunities to draw resources into satoyama
enhancement. It is likely most accurate to view such a
resource as augmenting or supporting other commercial
initiatives like the biomass energy and wood block
construction opportunities mentioned above. Indeed, such
projects themselves are clear candidates for national funding
in support of emissions reductions as well as potential offset
projects in a carbon trading scheme. Biomass energy displaces
fossil fuel consumption and wood block construction reduces
the amount of carbon emissions associated with other
construction materials such as concrete. 32
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