Indonesia Biofuel Not Behind Environment, Food Woes

Mita Valina Liem, PlanetArk 2 May 08;

JAKARTA - Indonesia's biofuel sector is not a major force destroying tropical forests or squeezing out land used for food production, a senior industry official told Reuters on Wednesday.

The grain and oilseed-based biofuel sector has come under attack from green groups for accelerating the destruction of forests, while some analysts blame it for contributing to soaring world food prices by diverting crops that could be used for food.

"There is no proof that palm oil plantations clear the forest. The government's rule is very clear on this and firms don't dare violate it," Paulus Tjakrawan, secretary general of the Association of Indonesian Biofuel Producers, said.

Indonesia has diverse tropical forests with rare tigers and endangered orangutans, but Greenpeace estimates it had the fastest pace of deforestation in the world between 2000 and 2005, equivalent to 300 soccer pitches of forest destroyed every hour.

Tjakrawan said most of the association's members did not own palm oil plantations and new investment projects were mostly for producing crude palm oil, used in the production of a wide range of products from toothpaste to ice cream and biofuel.

He said Indonesia's booming population, currently estimated at 226 million people, was also a factor driving land clearance.

Tjakrawan, an electronic engineer by training, said the Indonesian biofuel sector was too small to cause global ripples.

"The biofuel industry at home is still at an early stage and does not affect world food prices due to its small consumption of palm oil."

But as the world's top producer, Indonesia has a clear influence on global food and energy issues through its policies on palm oil, the world's second most popular oil after soy.


TOP PALM OIL PRODUCER

The Southeast Asian country produced an estimated 17.18 million tonnes of palm oil in 2007, according the Indonesian Palm Oil Producers Association.

The combined capacity for biofuel using palm oil as a feed stock in Indonesia is 1.7 million tonnes per year and it exported an estimated of 300,000 tonnes of biofuel in 2007, according to data from its biofuel association.

Tjakrwawan blamed speculators for driving up palm oil prices and said this had hindered the development of the biofuel industry in Indonesia.

Rising palm oil prices and a lack of government incentives has prompted Indonesia's state-owned oil firm, PT Pertamina, to cut the blend in its diesel fuel gradually since 2007 from an initial 5 percent to 2.5 percent and then 1 percent.

"The biofuel industry in the country is declining due to a lack of government incentives," Tjakrawan said, adding Pertamina only bought 12,800 tonnes of biodiesel in 2007.

Five out of the nine firms in the Indonesian palm-oil based biofuel sector were using less than 10 percent of capacity or had stopped operations, he said.

"We have to think of our country, we don't want to end up importing biofuel from other countries," Tjakrawan said.

He noted research taking place in Indonesia into using high-yielding microalgae to produce biofuel, although said the infrastructure needed may be expensive.

According to data from the Bogor Agriculture Institute, biofuel derived from palm oil can produce 5,830 litres per hectare, while jatropha can yield 600 litres per hectare and microalgae 58,700-136,900 litres per hectare.

(Editing by Ed Davies)