<Press Release>
Nippon Paper abandons plan for Akita Mill coal-biomass plant: Cancelled coal projects now number 13 units (7GW)
in Japan since 2012
February 28, 2019
Mie Asaoka, President
Kiko Network
Nippon Paper Industries, Co. announced on February 28, 2019, that it has cancelled construction plans for a new coal- and biomass-fired power plant it was planning at its Akita Mill (in Akita Prefecture, northwestern Honshu). This announcement means that 13 of the 50 units (7 GW of 23 GW) at coal-fired power plants that were planned since 2012 have been either cancelled or had a change in the planned fuel (of the 50 units, 12 are already operating and 25 are at the planning or construction stage as of today’s date). Kiko Network welcomes the news that yet another coal plant project has been cancelled.
This 112 MW project was just below the 112.5 MW threshold that would have made it subject to the Environmental Impact Assessment Act, so no assessment was conducted for the national government. However, it was still subject to the Environmental Impact Assessment Ordinance of Akita Prefecture. Under that ordinance, the Screening 2 document on the environmental assessment was released in December 2014 and the Final EIS in January 2016, and all related procedures had been completed. However, work did not begin over the subsequent three years. According to the announcement, the reason for stopping further consideration is that Nippon Paper "concluded that the project cannot yield initially expected investment returns." Just the day before the official announcement, one media report stated that "One after the other, new entrants are finding that biomass power generation is no longer profitable due to skyrocketing costs of procuring wood pellet fuel from overseas, as well as rising construction costs." Since 2013 Nippon Paper has completed coal power plants that are now operating in two locations (Shizuoka Prefecture and Miyagi Prefecture), and this is the first time for the company to announce a cancellation.
The conditions surrounding coal and biomass power have changed significantly in the past year as the coal exit has built momentum. Construction costs and fuel costs increases have been cited as major factors, but Kiko Network sees the cancellations as a sign many developers are recognizing that coal is no longer a viable option in the context of efforts to create a decarbonized society.
On February 21, Kiko Network released its "Report on Small-scale Coal Power Projects in Japan," in which we pointed out that the Akita project had been at a standstill, and called upon Nippon Paper and the Akita Mill to cancel the project. In terms of other small-scale projects, similar to the Akita Mill, the process has stopped at the MC Kawajiri Energy Service Corporation (Mie Prefecture), and we call upon the company to make the earliest possible decision to cancel it.
References
Nippon Paper Industries News Release: "Nippon Paper Industries Akita Mill electricity generation plan consideration stopped" (Japanese)
Kyodo News coverage: "Nippon Paper Industries pulls out of Akita biomass: Fuel costs continued to skyrocket after entering business" (Japanese)
Kiko Network: Report on Small-scale Coal Power Projects in Japan (Japanese)
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