Activists denounce plan to allow palm oil firms in peatlands

Environmental activists have mounted a challenge against the government’s plan to allow palm oil companies to set up plantations in the country’s remaining peatlands. 

Greenpeace Southeast Asia says the plan runs counter to President Susilo Bambang Yudhoyono’s promise to halve emissions from the forestry sector by 2009. The President made the pledge during the climate change conference in Bali in 2007 and at the G7 summit in Hokkaido, Japan, last year.

“Opening up peatlands would cause huge carbon emissions into the atmosphere that can’t be compensated for, including by oil palm trees,” Greenpeace forest campaigner Yuyun Indradi told The Jakarta Post on Sunday.

He called on Yudhoyono to take action to halt the conversion of peatlands, or risk the failure of efforts to tackle climate change.

“The government needs to protect the remaining peatlands and forests if we are to slow down climate change and protect the livelihoods of forest-dependent communities and biodiversity,” he said.

The government has promised to cut emissions, including from the forestry sector, by 50 percent in 2009, 75 percent in 2012, and 95 percent in 2025.

The National Action Plan on mitigation and adaptation on climate change revealed the country’s agriculture sector contributed up to 96.42 million tons of carbon dioxide (CO2) emissions in 2005.

The Agriculture Ministry said it would issue a decree this year allowing businesses to open up peatlands for oil palm plantations, as part of efforts to boost the country’s crude palm oil (CPO) production.

Ecosys, a European-based institute dealing with energy, carbon and biofuel issues, estimates that peatlands planted with oil palms would emit about 0.46 kilograms of CO2 per megajoule (MJ).

Indonesia has about 20 million hectares of dense, black tropical peat swamps that are natural carbon storage sinks.

Fitrian Ardiansyah, head of WWF Indonesia’s climate change and energy program, said the government should prioritize exploiting millions of hectares of idle land if it wanted to expand the CPO business.

“We currently have more than 7 million hectares of idle land. Why does the government not utilize this before opening up forests or peatlands?” he said.

Demand for CPO has risen globally, spurred on by the development of the biofuel industry.
However, scientists warn the use of crop-based biofuels could speed up rather than slow down global warming, by fueling the destruction of rainforests.

Once heralded as the answer to oil, biofuels have become increasingly controversial because of their impact on food prices and the amount of energy it takes to produce them.

They may also be responsible for pumping far more carbon dioxide into the atmosphere than they could possibly save as a replacement for fossil fuels, according to a study released Saturday.

“If we run our cars on biofuels produced in the tropics, chances will be good that we are effectively burning rainforests in our gas tanks,” Holly Gibbs, of Stanford’s Woods Institute for the Environment, was quoted as saying by AFP.

Gibbs studied satellite photos of the tropics from 1980 to 2000, and found that half of new farmland came from intact rainforests, with another 30 percent from disturbed forests.

“When trees are cut down to make room for new farmland, they are usually burned, sending their stored carbon into the atmosphere as CO2,” Gibbs said.

For high-yield crops like sugarcane, it would take 40 to 120 years to pay back this carbon debt.

For lower yield crops like corn or soybeans, it would take 300 to 1,500 years, she told reporters at a meeting of the American Association for the Advancement of Science.

“Biofuels have caused alarm because of how quickly production has been growing: global ethanol production increased by four times and biodiesel by 10 times between 2000 and 2007,” she said.

“Moreover, agricultural subsidies in Indonesia and in the United States are providing added incentives to increase production of these crops.”

Gibbs estimated that anywhere from a third to two-thirds of recent deforestation could be as a result of the increased demand for biofuels, but added an increased demand for food and feed also played a major role. 

Much of the expansion of cropland in response to growing demand and rising prices is occurring in the tropics, where there is an abundance of arable land and an ideal growing climate for biofuel crops like sugarcane, soybeans and oil palms.

Source: Adianto P. Simamora , THE JAKARTA POST , JAKARTA | Mon, 02/16/2009 9:12 AM | Headlines 

Seeking green EU - ASEAN ties

In the run-up to the United Nations Climate Change Conference in Bali, spectacular action by environmental NGOs highlighted the controversies surrounding the current boom in the palm oil industry. Greenpeace, in collaboration with Indonesian activists from Sumatra, dammed an irrigation canal to protest against the conversion of Sumatra's last rainforests. 

A report by Wetlands International and Wageningen University placed Indonesia in third place on the global list of carbon emitters, because of the huge amounts of carbon released when the peat forests are drained. In reaction, representatives from the Indonesian and Malaysian governments and from the industry toured Europe to seek support for sustainable palm oil, claiming that, if properly managed, the product can play a positive role in the fight against global warming. 

The oil palm, elaeis guineensis, is native to central Africa, but can be grown successfully as a commercial crop in tropical lowland areas. The products from the palm, crude palm oil, palm kernel oil and palm kernel meal and their derivates are extremely versatile, and, in addition to widespread use as cooking oil, are important ingredients for the food, cosmetics and chemical industries and as animal feed. Indonesia and Malaysia together account for over 80 percent of global production and Europe is one of their biggest markets. 

The boom in the palm oil industry is breathtaking. Global output of crude palm oil increased by 65 percent between 1995 and 2002. The area devoted to oil palm plantations in Indonesia and Malaysia doubled to ten million hectares between 1995 and 2005. New plantations and expansion targets are being developed in the Philippines, in Thailand and in Papua New Guinea. The expansion of oil palm plantations is a key component of government development strategies across the region. 

The links to, and importance of Europe in this development are profound and manifold. Europe is not only an important and expanding market for palm oil products. European banks, the food and chemical industries, agribusiness, animal feed, and also direct producers and refiners of palm oil such as Unilever are intertwined with the industry at different levels. 

At the same time, the European Union and the Association of Southeast Asian Nations are cooperating in expanding free trade between the regions and in environmental protection. This includes joint initiatives against the problem of haze, for the protection of biodiversity, and, more recently, to stop global warming and to promote sustainable energy. 

The latter initiative, perhaps ironically, has intensified the controversies surrounding oil palm. Environmental NGOs based in Europe, concerned by the rapid expansion of oil palm plantations in Southeast Asia, had been targeting the industry in the 1990s, campaigning around media-responsive species such as orangutans. 

The exposure of the industry to negative publicity led to the formation of the Round Table on Sustainable Palm Oil (RSPO) in Malaysia and later in Indonesia. The stakeholder initiative which included leading corporations and the WWF set down criteria for sustainable palm oil, such as a zero-burning policy and no conversion of High Conservation Value Forests. 

The European Commission has drafted a scheme that would fulfill the sustainability criteria as well as promote reduction of Greenhouse Gases (GHGs). The EU Commission laid out three criteria: to achieve a minimum level of GHG savings; to avoid major reduction in carbon stocks through land use change; and to avoid major biodiversity loss from land use change. 

The Commission claims its scheme will ensure that biomass, failing to meet one of the criteria, will neither count towards meeting Member States' obligations nor be eligible for any incentives e.g. fuel-tax deductions or other financial support. The Member States would be responsible for ensuring the criteria are respected, and legislation would be put in place to define the requisite procedural requirements. 

However, the scheme to set mandatory biofuel targets for the transport sector, has led to a new round of campaigning. Critical reports on RSPO members have questioned the implementation of the criteria, and the industry has also come under attack for antiunion policies. 

At this stage, the proposed EU certification schemes, however, do not take into consideration the indirect, or displacement, effects of diverting plant oils to biofuel production. Certification of palm biodiesel is potentially meaningless if palm oil imported for food or other industrial purposes does not need to be certified. For example, certified EU-sourced rapeseed oil might be diverted from food purposes to make certified biodiesel, only to be replaced in the edible oils market by uncertified palm oil that has been grown unsustainably on former tropical forest. 

Although these initiatives could be considered nontrade barriers, it is clear that environmental issues are high on the agenda of foreign importers of Indonesian biodiesel. To maintain these markets, the Indonesia government and producers will need to meet environmental and social criteria. Other major markets, such as China and India, may be less discerning on environmental or social grounds. The net result is likely to be that developed-country markets will be furnished with sustainably produced biofuels and palm oil while other markets will take the less-sustainably-produced products. Hence demand from the EU and other OECD countries could simply displace unsustainable practices to other markets, including domestic markets. 

The Indonesian government has stipulated national standards (SNI- 04-7182-2006) for biodiesel parameters, e.g. carbon residue and sulfur and acid concentration, closely following the international standards. The remaining issue now is how to cost-effectively apply the scheme into domestic markets without causing too much burden to the industry. However, it is politically sensitive to treat the domestic market as an inferior market. 

The interaction between Europe and ASEAN, therefore, is much more complex and dynamic than a simple relationship of supply and demand, or government policy within the framework of international conventions. A specific, contested regime of environmental and development governance is emerging and changing, framed by coalitions from industry, civil society and government that operate transnationally. 

The writer is a researcher at the Department of Economics, Centre for Strategic and International Studies (CSIS), Jakarta and Graduate Student of the Lee Kuan Yew School of Public Policy, NUS.
Source: Imelda Maidir , Jakarta | Wed, 02/18/2009 2:07 PM | Opinion 

House hits out at biofuel subsidy

The government's proposal to subsidize biofuel mixed in Premium gasoline and diesel faces tough challenges from lawmakers. 

The lawmakers suspect that the policy would only benefit the producers. This suspicion was triggered by the presence of the Indonesian Biofuel Producers Association (APROBI) who accompanied the government in the hearing where the proposal was submitted. 

The government Monday proposed to Commission VII, overseeing the energy and mining sector at the House of Representatives, to allocate Rp 831.43 billion (US$70.61 million) to subsidize bioethanol and biodiesel mixed in with subsidized Premium gasoline and diesel. 

The figure was increased from the initial proposal of Rp 774.47 billion. 

Evita H. Legowo, director general for oil and gas at the energy and mineral resources ministry, said the higher figure was because the government estimated the consumption of subsidized Premium gasoline and diesel will exceed its initial quota. 

Earlier, the government had proposed the House to revise up the allocated quota for subsidized Premium gasoline from 19,444,354 kiloliters to 20,638,869 kiloliters and diesel from 11,605,183 kiloliters to 12,500,750 kiloliters. 

Evita said the volume of bioethanol and biodiesel mixed in with the two fuels would consequently rise. . 

"The Rp 831.43 billion is proposed to subsidize 206,389 kiloliters of bioethanol and 625,038 of biodiesel. The average subsidy will remain at the maximum Rp 1,000 per liter as we proposed earlier," Evita said. 

She added the subsidy would only be spent when the biofuel prices are higher than the fossil fuel prices and the maximum subsidy paid out will be capped at Rp 1,000 per liter. 

"We are proposing this subsidy to maintain the stability of biofuel supply to the domestic market," Evita Legowo said. 

In September, the government issued a regulation mandating the use of biofuel by manufacturers, commercial businesses, fuel retailers and power plant operators. 

State oil and gas company PT Pertamina, the sole distributor of subsidized fuels, was ordered by the government to use at least 1 percent biopremium in subsidized Premium gasoline and up to 5 percent of biosolar in subsidized diesel. 

Paulus Tjakrawan, APROBI's secretary general, said that biofuel producers had suffered losses by selling their products to Pertamina.. 

"At the moment, the biofuel market prices are higher by between Rp 800 and Rp 1,200 a liter than the Pertamina prices," Paulus said. 

However, the presence of APROBI in the hearing was questioned by most of the lawmakers. 

"We want the government to explain clearly what is behind this subsidy propossal. The discussion about subsidies cannot be done with other parties, because it will be prone to colussion," said Effendi Simbolon. 

Alvin Lie voiced a similar argument. "The government must make it clear as to where the proposed subsidy will go. Is it to the people or to the biofuel producers," Alvin said. 

Lawmakers and the government agreed to hold another meeting to discuss this matter further.

Source:Alfian , The Jakarta Post , Jakarta | Tue, 02/10/2009 2:39 PM | Business 

2009 Oil & Gas Production Target Realistic

The 2009 oil and gas production target, consisting of 960 thousand bpd of oil and 7,56 billion cubic feet per day is regarded realistic. The government is optimistic in reaching this target due to the report of oil and gas contractors that they have no substantial problem in production.

“The 2009 oil and gas production target is realistic, because actual production is doing well. Keeping this in mind, we are optimistic in reaching this target” explains the Minister of Energy and Mineral Resources, Purnomo Yusgiantoro during the press conference of Oil and Gas Working Contractors at the Department of Energy and Mineral Resources on Tuesday (3/2).

The minister remarked that this production is consistent with field conditions and the targeted national income stated in the national budget, which is neither too low nor high. “This target is aimed at reaching the target set in the national budget”. The minister also pointed out several recurring problems which may hinder production, including environmental, operational, technical, security, and governmental policy issues.

The Director General of Oil and Gas, Evita H. Legowo explains that she will facilitate to solve these issues. “We are ready to facilitate the problems faced by the contractors”. The Head of BP Migas R Prijono explains that he will coordinate and support the contractors in solving these problems in order to reach the production target.