Bloomberg News

Sumitomo Osaka Cement Counts on Biomass for Fuel

November 07, 2012

Sumitomo Osaka Cement Co. (5232), a Japanese producer of energy fueled by organic materials, plans to cut its dependence on coal by using more biomass such as wood chips, a senior executive said.

“As an industry that consumes a lot of power, we need to take measures to promote energy conservation,” Senior Corporate Executive Officer Masafumi Nakao said in an interview at the company’s Tokyo headquarters. “Wood chips are now in the spotlight as a fuel source.”

Using more biomass is one way Japanese companies are seeking to reduce greenhouse gas emissions after the Fukushima Dai-ichi nuclear accident last year. Japan introduced a feed-in tariff program in July to provide incentives for companies that produce electricity from clean sources.

Sumitomo Osaka Cement, which currently gets about a third of its fuel from sources such as wood and industrial waste, plans to meet 40 percent of its needs from alternatives within three years and 50 percent in the longer term, Nakao said. It burns a mix of wood chips and coal to make electricity at its Tochigi and Kochi plants.

A government task force forecast in September that enough electricity could be generated to serve 4.6 million households. That depends on the country tapping its unused biomass, including food waste and timber from thinning forests. That would be equivalent to 5 percent of the nation’s greenhouse gas emissions, the task force concluded.

Sumitomo Osaka Cement shares rose 1.2 percent to 261 yen at the 11:30 a.m. trading break on the Tokyo Stock Exchange.

Biomass Use Expands

Japan’s fixed-premium rates for renewables are the highest in the world. The program premium for power derived from recycled wood is 13.65 yen per kilowatt hour for 20 years and 33.6 yen for unused wood, including from thinned forests.

“Cement and paper producers, both of which use heat and electricity for their core businesses, have technologies and the accumulated know-how to use biomass,” said Yugo Nakamura, an analyst at Bloomberg New Energy Finance in Tokyo. “The new incentive will create an opportunity for them to expect stable earnings from power sales.”

Sumitomo Osaka Cement, which added its first biomass power plant in Tochigi in 2009, is seeking to increase the proportion of wood used in biomass operations to almost 100 percent from about 80 percent now, Nakao said. It’s also considering building more such facilities in Japan.

The company sold about 45 percent of the 2.1 million megawatt-hours of power it generated and internally used the remainder at its facilities in the financial year ended March 31, according to Nakao. Fuel and electricity make up more than one third of cement’s costs.

To contact the reporter on this story: Masumi Suga in Tokyo at msuga@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net


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