Michael Taylor/Thomson Reuters Foundation, Kuala Lumpur – Indonesia's ambitious biodiesel program would increase the risks of deforestation as more tropical forest could be cleared to grow palm oil, environmentalists say, urging policymakers to implement a long-term ban on new plantations.
Indonesia – which is home to the world's third-largest tropical forest, but is also its biggest producer of palm oil – has steadily increased the portion in its biodiesel mandate derived from palm oil since 2018 to boost demand.
Looking to also curb costly fuel imports and its emissions, the Southeast Asian nation raised the "bio" content in its biodiesel to 30 percent in late 2019 from 20 percent the year before, with the rest being fossil fuel.
Indonesian President Joko Widodo has targeted biodiesel made entirely out of palm oil, but without setting a firm deadline to roll it out widely, as it would require engines to be modified.
State energy company PT Pertamina last month started trials of the green diesel after conducting tests with jet fuel late last year.
Yuyun Harmono, climate justice campaign manager at the Indonesian Forum for the Environment, said that no additional land would yet be used to produce palm oil for biodiesel, but that could change, further threatening the nation's forests.
"If there is increasing demand for fuel, there will also be an increase in demand for biofuel... of course there is a [deforestation] risk," Harmono said.
Indonesia was named as one of the top three nations for rainforest loss in 2019 by Global Forest Watch, a monitoring service that uses satellite data.
Palm oil – used widely in cosmetics, food products and biofuel – has faced scrutiny from environmentalists and consumers, who have blamed its production for forest loss, fires and the exploitation of workers.
In response, industry watchdog the Roundtable on Sustainable Palm Oil tightened its rules in late 2018, imposing a ban on clearing forests or converting peatland for oil palm plantations.
Harmono said that biodiesel should not be viewed as a substitute for fossil fuel and the use of both must fall, echoing comments last month by environmental groups, who urged Jakarta to be more ambitious in its efforts to cut carbon emissions.
Harmono said that, since 2018, biodiesel is mandatory to power both privately owned and business vehicles. "It is only 30 percent ['bio'] now, but when demand increases, then demand for palm oil is also going to increase," he said.
Indonesia's biodiesel production last year used more than 7 million tonnes of palm oil – out of total national output of 41.4 million tonnes – up from about 1.4 million tonnes in 2015, according to consultancy LMC International.
Malaysia, the world's second-largest grower, used about 880,000 tonnes of palm oil for biodiesel production last year, up from 600,000 tonnes in 2015.
"Indonesia has achieved very impressive growth in biodiesel production over the past five years," said Julian McGill, head of Southeast Asia at LMC International.
"Indonesia's success at sustaining biodiesel production has been a critical factor in the low stocks and high prices which the industry is enjoying today," McGill said.
However, a slump in crude oil prices as the COVID-19 pandemic hit demand has made Indonesia's biodiesel program less economical and plans to boost the "bio" portion to 40 percent have been delayed.
Despite industry concerns over the cost of Indonesia's biodiesel policy, which is funded by a palm oil export levy, the government is likely to remain resolute in its use of biodiesel to replace diesel imports, McGill said.
Ricky Amukti, of climate change and energy policy advocacy group Traction Energy Asia, said that smaller and independent palm oil producers have yet to benefit from the biodiesel program, due to being squeezed on prices by intermediaries and larger growers.
The longer-term goal for biodiesel to be made entirely from palm oil could also increase competition for its procurement for food and cosmetics versus fuel, he said.
"The competition would potentially be detrimental for Indonesia's remaining forest, notably in Papua, as the need for palm oil would significantly increase," Amukti said.
Indonesia's energy minister has estimated that 15 million hectares of new palm plantations would be needed to meet the nation's biodiesel goals, according to media reports late last year.
Indonesia's biodiesel program is "a serious threat to the rainforests that will be cleared to make way for these new plantations," said Gemma Tillack, forest policy director at US-based environmental group Rainforest Action Network.
Indonesia's president in September 2018 imposed a temporary ban on new permits for palm plantations for three years in a bid to tackle forest fires and protect carbon-storing tropical forests, seen as crucial to the global fight against climate change.
Harmono said that this should be extended so that any rise in palm oil demand for biodiesel would have to be met by improving yields rather than from new plantations.
The government should also focus on developing and promoting electric vehicles powered by sustainable energy, he said.
To further reduce the threat of deforestation, Amukti said that biodiesel producers should buy from mills that use fruit grown by smallholders to limit the threat of land conversion and also increase the transparency of the supply chain.
Utilizing waste cooking oil – most of which is dumped in sewers – as a complementary component for biodiesel is also possible, he said.
"Deforestation-linked biodiesel is not a green fuel," Tillack said. "As the climate crisis worsens, we can't ignore the rising demand and use of deforestation-linked palm oil for biodiesel," she said.