Market Bulletin: Wood Pellets & Biomass (February 2026)

Asia’s biomass market is still moving, but the “easy mode” is gone. Buyers are more sensitive to policy changes, delivered cost, and especially traceability and sustainability documentation. Indonesia remains attractive on supply potential, but scrutiny is rising and paperwork quality increasingly decides who wins tenders and long-term deals.

1) Supply snapshot: Indonesia wood pellets are scaling up (and getting watched)

Public reporting citing national forestry data indicates Indonesia’s wood pellet production reached 333,971 m³ in 2024, up from 103,356 m³ in 2020, with the industry described as having 35 licensed factories.

So what?

  • More capacity means more sourcing options and potentially better continuity.

  • Bigger scale also means bigger spotlight: sourcing claims and audit readiness matter more than ever.

2) PKS: export tax stays at USD 7/t for January 2026

The Indonesian government maintained the palm kernel shells (PKS) export tax at USD 7/tonne for January 2026, unchanged from December.

Why it matters: PKS often competes with (or complements) wood pellets in biomass fuel procurement. Stable export tax helps reduce one moving part in FOB/CFR negotiations, even if freight and quality adjustments still swing final landed cost.

3) Japan: policy signals are getting more selective for large-scale woody biomass

Reporting indicates Japan’s Ministry of Economy, Trade and Industry is planning to discontinue FIT/FIP eligibility for new ≥10MW woody biomass starting from FY2026.

Practical implications for exporters/suppliers:

  • Demand does not vanish overnight, but new-build project appetite can soften, and procurement can tilt toward existing fleets, established counterparties, and long-term contracting.

  • Buyer conversations increasingly shift from “price only” to “price + compliance + bankability.”

4) South Korea: REC reform tightens biomass incentives

Under revised policy, the country will not support new biomass power plants, and support for certain state-owned facilities is being reduced or phased down (including changes to REC values/weightings).

What to watch:

  • Short-term procurement adjustments depend on each plant’s contract position and fuel strategy.

  • Medium-term: stronger pressure on delivered cost, fuel specs, and traceability assurance.

5) Compliance & traceability: not optional “nice-to-have” anymore

Indonesia’s timber legality assurance framework (SVLK) is frequently referenced as the core legality/sustainability verification system for timber-based supply chains.

Separately, the European Union has approved a delay to its anti-deforestation regulation timeline, with compliance now required from large companies by 30 Dec 2026 and small/micro firms by 30 Jun 2027.

Translation for biomass exporters (even if you don’t sell to Europe):
Traceability expectations spread across global supply chains fast. Buyers in Asia increasingly ask for “EUDR-like” evidence because their financiers, auditors, or downstream customers do.

TIMBR focus for February 2026

  1. Supplier screening that starts with documents (legality, traceability, consistency).

  2. Spec discipline (tight tolerances, consistent lab results, clear dispute rules).

  3. Policy-aware contracting (Japan FY2026 direction; Korea REC tightening) to avoid surprises in long-term supply commitments.

 

This bulletin summarizes publicly available information as of 12 Feb 2026. Market conditions and policies can change; contract terms and on-the-ground verification remain decisive.