Top view of a green mountain forest

By: Ahmad Munawir Siregar, Akhmad Hanan

The incoming Indonesian presidential administration of Prabowo Subianto and Gibran Rakabuming has embraced a vision focused on social and ecological justice, renewable energy adoption, green economy development and robust responses to climate change.

The pair want to position Indonesia as a global leader in green energy. This strategy is centered on making the country the leading global producer of biofuels by leveraging its massive palm oil industry. The drive is in line with Indonesia’s pledge to obtain 23% of its energy from renewable sources by 2025, working toward the ambitious target of achieving net-zero emissions by 2060.

The palm oil sector holds immense potential for boosting the Indonesian economy. In 2023, when output reached 50.07 million metric tons, the industry contributed 240 trillion rupiah ($14.7 billion) to national gross domestic product and provided employment to approximately 16 million people.

While Indonesia is already the world’s largest palm oil producer, Prabowo has signaled his intent to use 11 million hectares of industrial forest land for oil palm cultivation to further boost output and increase the ratio of palm oil in the blended diesel mandated for use in the country. Yet the increase would be less substantial than might first appear as a large portion of the land is already use for oil palm while the balance is used for other crops like cassava.

In any case, Prabowo’s bold ambitions for Indonesian biofuels must be tempered with caution given the severe risks the plan could pose to the environment.

Despite attempts to address environmental issues, Indonesia lost 9.95 million hectares of primary forest, equal to 11% of the national total, between 2002 and 2021, mainly due to increased production of palm oil. This deforestation has caused severe ecological impacts, including ecosystem destruction, biodiversity loss and increased carbon emissions.

The cultivation of oil palm trees has also led to soil degradation and erosion, resulting in increased occurrences of flooding and landslides. A key element of this is that in most areas, only oil palm is planted, producing an ecosystem imbalance. Moreover, the use of chemical fertilizers and pesticides has contaminated water sources, posing additional risks to human health and local ecosystems.

To address environmental degradation from palm cultivation, Indonesia needs a more comprehensive planning approach.

One possibility would be to require environmental impact assessments that include detailed examinations of the ecological changes likely to result from increased palm cultivation and offer data and insights for developing effective mitigation strategies. The promotion of low-impact palm oil production processes, such as biotechnologically enhanced palm varieties and innovative processing technologies, could also reduce the sector’s environmental footprint.

Indonesia also needs to lay the groundwork for supply chain traceability that would enable prospective customers to verify and monitor deforestation risk by looking into the plantations and mills involved in production. This could help ensure that raw materials are sourced in a legal and environmentally and socially responsible manner and enable Indonesia palm oil to be certified as sustainable.

Only a small share of palm oil can now be traced back to the mills and plantations that generated it. Smallholder plantations can face difficulties implementing traceability, highlighting the need for guidance and support from knowledge hubs.

Oil palm cultivation could potentially be expanded without additional deforestation, for example by repurposing pastureland. Integrating palm oil trees with other crops would offer the benefits of supporting biodiversity, reducing soil erosion and supporting the income of smallholder farmers. Organic farming practices, which usually involve avoiding use of chemical fertilizers and pesticides, could reduce pollution and improve soil health.
Indonesia and neighboring Malaysia have had some success at curtailing deforestation through the No Deforestation, No Peat and No Exploitation, or NDPE, program.

Under this initiative, producers pledge to avoid cutting down additional forest to plant palm, especially in high conservation value and high carbon stock areas, and also to avoid conversion of peatlands. Producers pledge to involve affected indigenous communities in decision-making, to promote gender equality and to prevent use of child labor wherever possible.

Biofuel development in Indonesia involves other challenges beyond deforestation and environmental risks.

One is that the increased dedication of land to biofuel production can leave less resources available for food production, potentially impacting prices and supplies for consumers. Managing this competition for resources requires meticulous planning and innovative solutions to balance food security with biofuel expansion.

Indonesia needs to carefully review its strategies for reducing emissions from road transportation. Its plans to tighten vehicle emission standards have to be better aligned with its biodiesel rules to maximize the benefit of both programs. At the same time, the push toward electric vehicles and cleaner electricity supplies could undercut the need for additional biofuels and supporting infrastructure.

Officials must move carefully and strategically to navigate Indonesia’s biofuel dream. The country’s ambitions to lead in biofuel production are commendable, but environmental sustainability must be prioritized. To mitigate the adverse impact of palm cultivation, thorough environmental assessments are needed as well as improved traceability and adoption of sustainable farming practices.

The opinion has been published on NikkeiAsia.
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