UK energy company Drax’s ambitions of becoming a significant wood pellet supplier to Asia are in danger of faltering as Japanese policymakers wind back generous subsidies for the biomass sector. Japan is set to soon surpass the UK as the world’s largest wood pellet importer after a post-Fukushima push to diversify power sources that caused hundreds of plants to spring up that burn wood pellets, palm kernel shells — a palm oil byproduct — and other organic materials. But policymakers in Japan are pulling support for the controversial industry after realising the hurdles to bringing down fuel costs. Tokyo has already cut subsidies for new projects of more than 10 megawatts. “The real intention is quite simple: no new government support, phasing out. We don’t see any clear path of bringing down costs in the foreseeable future,” said one government official. “Existing projects might survive but no new projects are coming.”

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