Biofuel on the News

Saturday, February 17, 2007

Biofuel To power Indonesia's anti-poverty drive

by Mike Patterson Sat Feb 17, 6:00 PM ET
Yahoo News

JAKARTA (AFP) - Indonesia is embarking on an ambitious biofuel programme which has already attracted more than 17 billion dollars in foreign and domestic investment and criticism from conservationists worried about the country's forests.

While Indonesia is rich in oil and gas supplies,
demand in Southeast Asia's biggest economy is
outpacing production and it is seeking alternative energy sources to secure its future.

The government has set a target that 17 percent of the country's energy requirements
must be met from renewable sources by 2025 and last year established a National Team for Biofuel Development to develop alternative energy supplies.

For team chief executive Al Hilal Hamdi, crops such as palm oil, cassava, jatropha and
sugar cane could hold the answer not only to Indonesia's concerns about energy security, but also unemployment, poverty, the environment and local unrest.

Last month foreign and domestic firms signed agreements totalling 12.4 billion dollars to develop biofuel projects to turn crops such as palm oil and sugar cane into biodiesel and bioethanol. Chinese state-owned China National Offshore Oil Corp. inked the single biggest deal -- worth 5.5 billion dollars -- with PT SMART, a subsidiary of Indonesia's Sinar Mas Group, and Hong Kong Energy (Holdings) Ltd. The other investors also included Malaysia's Genting Bhd., Japanese firms Mitsubishi and Mitsui, Brazil's Petrobras and companies from South Korea and Singapore. "Foreign investment is 12.4 billion US and the domestic investment is about five billion US -- half of that is for the farmers through the Indonesian banks," Hamdi told AFP in an

Over the next eight years, some five million to six million hectares (12.5 million to 15 million acres) will be planted with biofuel crops, he said. But just where all this land -- an area far larger than Denmark and a bit smaller than Sri Lanka or the US state of West Virginia -- is going to come from is what worries conservation groups concerned about deforestation.

And according to a surprising study by Netherlands-based Wetlands International and Delft Hydraulics, biofuel is often more polluting than fossil fuels. Drainage of vast peatland areas for oil palm plantations leads to huge emissions of carbon dioxide as drained peat decomposes very rapidly, the study released in December found. The decomposing peatland can release 70 to 100 tonnes of carbon dioxide per hectare per year and result in emissions 10 times higher than if coal was used instead of biofuel, the study found.

Biofuels often more polluting than fossil fuels

"Production of palm oil in Southeast Asian plantations degrades huge peatland areas. The
large amounts of carbon dioxide being emitted due to this degradation makes the use of
palm oil many times more polluting than burning oil or coal," Wetlands said.

Hamdi, who attended the UN conference on climate change in November, said: "We in
Indonesia have already taken some action to improve or to recover the degradation of the
peat land."

While energy security and safeguarding the environment are concerns, he said eradicating poverty and tackling massive unemployment were the main focus of the biofuel programme. About 40 million Indonesians live below the national poverty line of 1.55 dollars a day.

"Actually our concern for the biofuel development programme, number one is to reduce
poverty, to create more jobs for the people," the former manpower minister said. "We would like to cut our unemployment rate from 10.2 percent last year to six percent in 2009-2010. About four million jobs need to be created for the people," he said, but tens of millions more are underemployed.

While it sounds ambitious, Hamdi says his goal is achievable.
"Four million jobs is equivalent to five to six million hectares of oil palm, jatropa and cassava and the income for the people is above the minimum wage," he said. At current crude palm oil prices, two hectares of oil palm would give the owner four million rupiah (about 440 dollars) a month while one hectare of sugar cane for bioethanol could yield an annual net income of 12 million to 14 million rupiah. "It's a good income for the people in the villages where the minimum (monthly) wage is only 75 dollars," he said.

The introduction of new crop varieties and better cultivation methods with the help of state enterprises would also increase the productivity of small farmers, which was often less than half that of commercial plantations.

"Malaysia has a good experience with that model. They can improve the yield," he said.
And while prices for oil and biofuel fluctuate, Hamdi said Indonesia was studying the flexible approach taken by Brazil, one of the world's leading producers of bioethanol. "We are learning from Brazil. When the international price of bioethanol is above that of gasoline, they give the commodity for export and import more gasoline. It's an excellent model that we are going to copy in Indonesia," Hamdi said.

While expressing general approval of biofuel, environmental groups fear that Indonesia's
massive expansion programme will come at the expense of its forests. But Hamdi said there was already more than enough land available due to rogue companies that had obtained plantation licences but then just logged the timber.

Abandoned, logged land ripe could benefit from biofuel crops

Satellite data for Central and Eastern Kalimantan on Borneo island revealed about 4.5 million hectares of unproductive or degraded land which had been logged and abandoned, he said. Hamdi said this land could be improved by growing biofuel crops and provide people with jobs in an area where there were few employment opportunities.

"To reduce poverty is our concern. Otherwise they participate in illegal logging because there is no alternative for the people there," he said. "We cannot open industry, electronics or textiles in that area. It's difficult with the lack of skills (and) education, so agriculture is more familiar to them because they've been doing it for more than a century," he said.

Tackling unemployment in poor and sometimes restive areas could also have a peace
dividend. "The social conflict mainly comes from the people who don't have access to (opportunities) to improve their lives and then some provocateurs come," he said. "If they have a job and they're busy with their plantation, they don't have time to bother or disturb their neighbour. It's more peaceful."

Local biofuel power schemes combined with solar or wind energy could also enable
thousands of villages and islands which are inaccessible to power transmission lines to become energy self-sufficient. About a third of Indonesians have no access to electricity.

"They have had good results in the southern Philippines empowering the community, reducing the government subsidies for the electricity and we'd like to have this programme work with us in Indonesia," said Hamdi.

While Indonesia has targets for renewable energy, Hamdi stresses that is not the main
concern, explaining that 10 percent of the country's energy needs could be met at present just by substituting biodiesel and reducing palm oil exports.

"It's not just a matter of energy, but also poverty alleviation, creating more jobs, increasing purchasing power, improving the environment by utilising unproductive land, by utilising more green energy and of course to secure renewable energy for our Indonesian future," he said.

Originally posted on Yahoo News (

Biofuel on the News

Thursday, February 01, 2007

Indonesia's Push for Biofuels

By Lucy Williamson
BBC News, Kalimantan
February 1, 2007

Life is a lot sweeter for Mangat Nuan these days.

"This used to be my land," he said, waving an arm at the rows of oil palms. "But I rented it to a plantation company a little while ago. It was a good price - all the landowners round here did the same."

Mangat's plot in central Kalimantan now forms part of a new oil palm plantation, which covers 15,000 hectares of land, some of it former forest, according to a local NGO.

The arrival of the plantation may have changed the landscape, but Mangat says it has also changed the lives of the people who live here.

"Life before was difficult," he said. "I couldn't even feed my family, not to mention send my kids to school.

"After the plantation took over, more people came and suddenly we had roads and schools. We've also opened a small shop, so it's improved our income significantly."

If the Indonesian government has its way, another 5m hectares (12m acres) of land in Kalimantan and elsewhere will be turned over to companies growing biofuel crops like oil palm, cassava or sugar cane.

Global demand for alternative fuels is growing, and Alhilal Hamdi, head of Indonesia's new Biofuels Development Board, says now is the time for his country to tap into it.

He said the plan will create between three and four million jobs, and will attract investment to the country.

That investment has already begun to increase. Since the beginning of the year, dozens of new deals to develop biofuels plantations have been agreed, including one involving the Chinese state-owned off-shore oil corporation, estimated to be worth $5.5bn.

Protecting the forests

But sitting on the little bench in front of Mangat's shop is someone who sees all this very differently.

Pak Noordin works with the local pressure group Oil Palm Watch. To date, he says that around a third of palm oil concessions have been built on previously forested land.

"The threat to the forests today comes from palm oil," he said, "because in clearing the land, they have to cut everything, they leave nothing behind and that completely destroys the biodiversity. It's different with logging concessions - they leave a bit behind."

To try and quell critics like Noordin, the Biofuels Development Board says it is pushing new plantations to use so-called unproductive land - land which has been logged and left unused. That means companies will not be able to make extra money from selling the timber they cut down. According to Teguh Patriana, head of Indonesia's Palm Oil Industry Association, the focus on the forests is misplaced anyway.

Plantation companies use only the land assigned to them by the government, he said, and any rainforest there is newly-grown - rather than original - forest.

Lack of clarity

Environmentalists like Noordin remain unconvinced. Indonesia's decentralised authority means that local district heads have been able to side-step the regulations in the past, he says.

The head of the local environment agency, Moses Nikodemus, believes official resolve has hardened, but that unproductive land is less popular with companies - not only because of the lack of timber, but also because they fear getting embroiled in complicated ownership tussles.

The task of protecting Indonesia's forests is made even harder by a lack of clarity - such as where forest land is mixed with agricultural land, or where forest has grown back after logging.

Hard data is sometimes difficult to come by - even at the provincial forestry department.

The department's head admitted that while he knew how much land has been set aside for oil palms and other crops, he did not know how much forest that land contained.

Back at his shop overlooking the young oil palms, Mangat spends his time smoking Indonesia's trademark clove cigarettes and passing round plates of lychees to anyone who will have them.

The new push for biofuels in Indonesia may have made him richer, and it may even help reduce carbon emissions by providing the world with a cleaner kind of energy.

But unless Indonesia makes an effort to enforce the rules, it could find itself polishing up one green image at the expense of another.

Originally posted on BBC News (