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Increasing biodiesel use may aggravate environmental risks

Jakarta Post - March 26, 2024

Divya Karyza, Jakarta – The emergence of a food-versus-fuel dilemma in Indonesia has added to concern that a push for palm oil-based biodiesel will drive deforestation.

Consumption of palm oil for biodiesel in Indonesia surpassed that for food for the first time last year, Indonesian Palm Oil Association (GAPKI) data show, with 46 percent of a total 23.2 million tonnes going to biodiesel and 44 percent to food production. Ten percent was used for oleochemicals.

Eliza Mardian, a researcher at the Center of Reform on Economics (CORE), said the continuing rise in domestic demand for biodiesel might see new land cleared for oil palm to increase output of the commodity.

"The increasing demand for palm oil for fuel and food may encourage deforestation, especially in eastern Indonesia, to increase production," she told The Jakarta Post on Friday.

The massive push for biodiesel usage, supported by Rp 30 trillion (US$1.9 billion) to Rp 50 trillion in annual funding from the Indonesian Oil Palm Plantation Fund Management Agency (BPDPKS), had long been predicted to have side effects, Jakarta-based think tank Energy Shift Institute said in a report published on Feb. 9.

"That's because it [is expected to] rapidly increase domestic palm oil consumption, which could result in an overlap with the use as a food source, considering that the government is subsidizing biodiesel [...], not to mention the risk of expanding plantations," Energy Shift Institute managing director Putra Adhiguna told the Post on Friday.

The Indonesian Biodiesel Producers Association (APROBI) did not immediately respond to a request for comment.

GAPKI secretary-general Eddy Martono took no issue with the government's plan to keep increasing the palm oil-derived fatty acid methyl ester (FAME) share in the mandatory biodiesel program, explaining that Indonesia's palm oil stock was still sufficient for the 40-percent biodiesel mix (B40).

Nevertheless, he stressed that Indonesia had to consider the declining palm oil production if it wanted to increase the bio share for the biodiesel program beyond 40 percent. In that case, companies would have no choice but to ramp up refinery productivity, he added.

The government introduced a moratorium on new palm oil plantations based on Presidential Instruction No. 8 of 2018 as part of its commitment to slash Indonesian greenhouse gas emissions by 32 percent by 2030.

But the moratorium ended after just three years, in Sept. 2021, without any official explanations about whether it would be renewed, extended or stopped altogether.

"Increasing productivity or utilizing degraded land will cause no harm to the environment," Eddy told the Post on Friday in response to a question about the possible environmental damage driven by the increasing use of palm oil for biodiesel.

He went on to say that ensuring palm oil producers abided by the mandatory Indonesian Sustainable Palm Oil (ISPO) certification and getting more producers to obtain Roundtable on Sustainable Palm Oil (RSPO) certificates voluntarily was key to sustainable palm oil production.

Southeast Asia's largest economy aims to get more oil palm companies RSPO- or ISPO-certified to ensure sustainability compliance, but only 33,000 hectares of oil palm plantations had ISPO certification in 2023, according to the Indonesian Sustainable Palm Oil Farmers Forum (Fortasbi), a mere 0.2 percent of Indonesia's total palm oil plantations of 16.38 million ha.

Dawdling PSR program

Indonesian Oil Palm Farmers Association (Apkasindo) chairman Gulat Manurung suggested the government improve the productivity of smallholder palm oil plantations, which make up 42 percent of the country's total palm oil plantations.

"Palm oil production in Indonesia is low because [the country] only manages to make use of 25 to 30 percent of the smallholder plantations' potential," he told the Post on Friday.

Gulat suggested the government aim to make it easier for smallholder farmers to join the People's Oil Palm Replanting (PSR) program run by the BPDPKS.

"The PSR [will help] smallholders to double or triple their plantations' productivity without expanding land, so it is sustainable," he said.Under the PSR program, the Agriculture Ministry has set a target of replanting 180,000 ha of the smallholder oil palm plantations annually since 2017. However, as of January this year, only 306,490 ha had been replanted, BPDPKS data show.

Last year, the BPDPKS disbursed Rp 1.59 trillion, 26.5 percent of a total of Rp 6 trillion allocated for the PSR program in 2023, to 21,910 smallholders, covering a total acreage of 53,012 ha.

London-based nonprofit CDP in a 2021 report anticipated that the government's push for greater use of palm-based biofuel may drive deforestation across the country.

The palm oil industry is already a major driver of deforestation in Indonesia. A 2019 study shows that oil palm plantations were the single largest driver of deforestation between 2001 and 2016, accounting for 23 percent of total deforestation nationwide.

Even though new plantations are increasingly being developed on non-forested land, 18 percent of those established between 2010 and 2015 were still in forested areas, according to a 2017 study.

And unless the palm oil that goes into biodiesel can be shown to be deforestation-free, it was misleading to claim that the biodiesel was "green fuel," the CDP report says.

Food vs. fuel

CORE's Eliza highlighted the importance of a strict monitoring mechanism from the government as well as transparent, real-time reporting from palm oil industry players regarding stocks for cooking oil and biofuel to prevent future cooking oil crises in the country.

"We need to prevent businesses whose crude oil should be processed into cooking oil diverting it [for] biofuel [production] because the price is more attractive," she said.

"A cooking oil crisis may happen again, but prevention [measures] could be carried out systemically, starting now," Ahmad Rahma Wardhana, a researcher at Gadjah Mada University's Center of Energy Studies (PSE UGM), told the Post on Thursday, adding that the government should also consider encouraging a diversification of food products from palm oil, such as red palm oil.

Source: https://www.thejakartapost.com/business/2024/03/24/increasing-biodiesel-use-may-aggravate-environmental-risks.htm