Japan¡¯s forestry sector is at a crossroads.
Population decline and cheap imported timber are driving down prices. Forest ownership is fragmented and small-scale, further limiting profitability. The workforce is aging and shrinking. As a result, many forests ¡ª planted decades ago, when timber profits seemed surer ¡ª are now under-managed, abandoned, or not replanted after being clear-cut.
¡°Especially over the past few years, we have seen a lot of forest owners decide to give up their land,¡± says Akio Abe, associate director of the Ishinomaki District Forestry Association in Miyagi Prefecture. ¡°The underlying reason is that the value of forests has dropped so much.¡±
Roughly 40% of Japan¡¯s total forest area has been planted. These are often dense, monoculture stands of cedar or cypress that are at risk of ecological degradation without human intervention, particularly through thinning. However, low profitability leaves many foresters and forest owners with their hands tied, unable to either manage the woods for timber or restore them as self-sustaining ecosystems.
Enter a mechanism that could benefit industry and the planet.
Carbon credits, Abe hopes, can provide the financial backing needed to turn the Ishinomaki District woods into a boon, not a burden, for both local landowners and the environment. Together with corporate partners, the foresters are applying for credits certified by an international body, a rarity among forest carbon projects in Japan. With plans to nurture their forests in new ways going forward, the project members hope to lead by example in a sector where business as usual has become untenable.
Fight the decline
The city of Ishinomaki and the neighboring town of Onagawa, which make up the forestry association¡¯s jurisdiction, suffered extensive damage from the 2011 tsunami. Even now, the population of Onagawa ¡ª which counts forestry among its main industries ¡ª has not returned to pre-disaster levels.
The tsunami, in a way, led to the region¡¯s forest carbon project.
The idea was conceived in 2022 by Hitachi Systems, which had dispatched employees to work remotely in Onagawa to explore ideas for local revitalization initiatives. Hitachi also invited French startup Everimpact to join the project, for the latter¡¯s expertise in measuring carbon and accessing climate finance.
The team selected 900 hectares of forest, comprising 72% of planted conifers, as the project¡¯s first initiative.
The first step was to understand the site. Utilizing two decades of satellite data, Everimpact CTO and co-founder Alain Retiere mapped changes in the forest¡¯s green, living biomass, which can be used to assess its carbon sequestration.
The planted conifers were in decline. As they aged, their photosynthesis activity progressively slowed, while respiration and decomposition were increasing, meaning the forest was becoming a net emitter for an increasing portion of the year, Retiere explains.
This was due, he found, to how densely the conifers had been planted. The foresters lacked the financial means to thin the trees at the scale they knew the forest needed.
¡°Without thinning, light can¡¯t penetrate, making it difficult for undergrowth and broadleaf tree species to grow, which lowers biodiversity,¡± says Koumei Maruyama, CEO and co-founder of Japanese startup iForest, another organization involved in carbon credits. ¡°The trees roots are also underdeveloped, increasing landslide risk.¡±
The Ishinomaki foresters ¡°were at the point where they needed to make a decision. How could they fight against the decline? Was climate finance a solution?¡± Retiere recalls.
Accessing carbon finance for forestry hinges on additionality ¡ª being able to prove that a new initiative or changed practices benefits the climate more than business as usual.
¡°High-integrity methodologies need a robust test that changes in forest management practices are genuinely driven by carbon finance and are not already legally required, financially attractive on their own, or standard practice in the region,¡± a spokesperson for the Integrity Council for the Voluntary Carbon Market (ICVCM) wrote over email.
The foresters decided it was time to try something new.
¡°The ultimate goal of the project is to create a mixed forest of conifers and broadleaf trees,¡± Abe says. ¡°From that perspective, I believe it will also contribute significantly to biodiversity.¡±
Together with Hitachi and Everimpact, they developed a plan to thin the older conifers and plant younger trees, including broadleaf species, boosting not only biodiversity but carbon sequestration and climate resilience for the hotter years to come.
¡°Currently, the area of plantation forests is simply too large relative to the demand for timber,¡± says Akihito Kitade, a member of Hitachi Systems involved with the project.
¡°We need to restore them to a state as close to natural forests as possible,¡± he says, noting that mixed forests require less maintenance.
Broadleaf species are also more adapted to a hotter, drier climate ¡ª which, according to Everimpact¡¯s modeling, the region is likely to experience going forward. Experts already suspect that climate change is contributing to wildfires in Japan, including those in neighboring Iwate Prefecture.
Choose a program
The Ishinomaki project aims to generate carbon credits worth up to ?260 million, according to a 2023 press release by Hitachi Systems.
¡°I believe we can create a system where owning, maintaining and managing forests generates revenue comparable to what it did in the past,¡± Kitade says. ¡°It¡¯s not just about making money, but about investing that money into enhancing environmental value.¡±
But getting a forest certified for carbon credits isn¡¯t simple. A prospective project must choose between various certification programs, both domestic and international, and methodologies to find the right fit.
This requires discussions with project partners and depends on factors such as geographic characteristics, local government, forest management methods, and potential buyers for the credits, Kitade explains.
¡°Regardless of which we choose, we must ensure that the value of the forest is properly assessed,¡± he says. ¡°From our side, there isn¡¯t a clear-cut answer as to which program is best.¡±
In general, ¡°high-integrity¡± credits ¡ª which rigorously demonstrate that they represent genuine emission reductions or removals ¡ª command a higher price, notes iForest¡¯s Maruyama.
¡°Looking at projects around the world, the data shows that prices increase by about 38% to 60% when biodiversity is incorporated, as opposed to credits based solely on carbon,¡± he adds.
In the end, the Ishinomaki team chose the Verified Carbon Standard (VCS) Program¡¯s Improved Forest Management methodology. Certified by industry giant Verra, the methodology calculates a project¡¯s carbon credits by comparing emissions and carbon stock changes with a dynamic baseline drawn from country-wide data on forest resources.
¡°We decided to aim for this certification because we could use satellite technology to provide accurate data on carbon amounts, and because VCS credits are high-quality and widely traded globally,¡± Abe says.
¡°The value of (improved forest management credits) is not only in emissions mitigation, but in helping align economic incentives with the long-term health of forests,¡± the ICVCM spokesperson comments.
¡°Projects also create an important revenue stream for forest owners and managers at a time when many forests are under growing economic pressure.¡±
Active since 2025, VCS¡¯s Improved Forest Management methodology is still relatively new and is being revised to expand its global applicability. The Ishinomaki project members are currently reworking their application, using Japan¡¯s national forest inventory data, to meet the methodology¡¯s latest requirements; they are confident of their eventual success in obtaining certification.
Create an impulse
On a national scale, the Japanese government also has high expectations for forest carbon credits.
According to Forestry Agency materials, Japan¡¯s forests removed roughly 45 million tons of CO2 in 2023, a figure the government includes when calculating the nation¡¯s annual net emissions. The same document notes that, as part of the government¡¯s forestry plan, ¡°land not suitable for forestry¡± could be converted into ¡°mixed forests of conifers and broad leaf trees.¡±
The government hopes that, by 2040, forests will remove 72 million tons of CO2 annually, a roughly 60% increase that is unlikely to materialize without significant activity from foresters across the country.
To make it happen, the government is deploying its own J-Credit system, a carbon credit program initially launched in 2013 that covers various types of emission reduction activities. With 356 forestry-related projects registered as of March, the program certifies credits for activities related to forest management, afforestation and reforestation of previously abandoned clear-cut sites.
¡°In effect, J-Credits are being used as a tool for implementing the government¡¯s own policies, but recently there appears to be movement to incorporate the value of biodiversity into J-Credits as well,¡± Maruyama notes.
However, the program has a key limitation: Currently, the only forests eligible for credits are those also certified under the government¡¯s Forest Management Planning System, representing just 27% of non-national forests as of March 2024.
Meanwhile, international credit programs don¡¯t have a perfect track record either. Recent years have seen numerous investigations ¡ª including into Verra ¡ª conclude that many credits did not represent genuine carbon reductions and did not actually change the way forests are managed.
Experts have also stressed that forest carbon projects should function ¡°only as a complement rather than a substitute for rapid fossil fuel emissions reductions.¡±
With tighter rules to ensure project integrity, many still see carbon finance as an important tool for mobilizing resources to combat the climate crisis. Retiere warns that if nothing is done to improve Japan¡¯s degraded plantation forests, they ¡ª like many forests around the world ¡ª are in danger of becoming net emitters of carbon in the future.
¡°More and more, the trend in modern forestry is to build climate-resilient forests managed in a different way ¡ª selective, more cautious ¡ª to reinstall nature in forest management,¡± he notes. Through the Ishinomaki project, ¡°we hope that we will create an impulse, show a route, and give confidence.¡±
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