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Trilemmas – Carbon emissions, renewable energy and the palm oil industry

Updated On: Sep 21, 2007

The quest to reduce greenhouse gas emissions post 2012 when the current arrangement under Kyoto Protocol is set to expire is now a hot topic.

Indonesia, as world’s second largest producer of palm oil after Malaysia, and moving up to number one plans to double crude palm oil (CPO) production by 2025, a goal that requires a two-fold increase in the oil palm yield. This dramatic increase in yield is attracting global attention because it is an initiative to produce biodiesel to substitute traditional fossil fuel, reducing carbon emissions in the long run. Leading this energy sector is Europe which is at present the strongest advocate of biodiesel in the region and also the largest market for biofuels which include biodiesel and bioethanol.

The irony, however, is that cultivating large-scale plantations also lead to the destruction of natural rainforests whose lands are used for such purposes. The cultivated plants in a plantation do not store carbons as much as natural forests. In addition, there is increasing focus on global environmental initiatives to protect tropical rainforests, the present deforestation of which contributes to nearly 20 percent of manmade global carbon emissions. Cultivating palm oil would achieve just the opposite. Environmentalists are up in arms against the Indonesian government as well as large palm oil plantation companies in the country. In addition, clearing forests for plantation would also lead to a loss of habitat for the indigenous native peoples of Indonesia.

Most of the opposition is now coming from Europe. The latter is persuading its peoples and the world to only buy biofuel products which were produced without damaging the natural forests. This would translate to the boycott of products produced by Malaysia and IndonesiaMalaysia currently the top producer of palm oil has been arguing that its oil palm plantations were not destroying forests. Indonesia, however, has an uphill task in convincing the Europeans and the environmentalists with its annual haze problem resulting from the clearing of land for palm oil plantation. Using satellite remote sensing technology, it can be shown that many Indonesians plantations were built from the removal of natural forests and their products are thus unacceptable to European markets.

Indonesia is thus faced with a dilemma. Indonesia is eyeing job creation from these plantations, with some 3.5 million new jobs being created by 2010. As a developing nation with high unemployment and poverty, economic growth to provide employment is essential through the primary sector, including agriculture, forestry, fisheries and mining. Increasing economic growth means extracting more natural resources and opening up more forests, peat lands and other natural ecosystems. Peatland degradation and forest fires caused by palm oil plantation cultivation are the third largest source of greenhouse gas (GHG) emissions after the energy and industry sectors, and have made Indonesia the third largest emitter of GHGs.

Indonesia is, however, not alone in this fight. It has the political support of other large developing countries with strong international political muscles. China and India insist reducing GHG emissions should be weighted by the level of a country's economic development. In addition, developing countries argue that to keep emissions low, developed nations too have an obligation in the areas of transfer of technology, financial assistance and free and fair international trade.

Indonesia is also reluctant to give up an industry that has brought great fortunes to other countries like MalaysiaMalaysia’s Plantation Industries and Commodities Minister Datuk Peter Chin Fah Kui said: “Because of the current sharp hike in demand for palm oil, the price per ton has also shot up. Due to this, our revenue from exporting this oil has also shot up tremendously this year…For the first six months of this year, Malaysia’s revenue from export of palm oil and related products was RM17.9bil, an increase of 23.6% from the RM14.1bil earned during the first six months of last year…If this trend continues, this year will be a record year in terms of palm oil earnings”. 

In addition, if Indonesia does not go into this industry, others would. More and more Thai farmers have converted rubber and fruit plantations to grow oil palm. In 2006, Thailand had some 32,000 hectares planted with oil palm, but the area is expected to jump to 81,000 by year end. An additional 400,000 hectares of unused farmland in the south could also be used. The Philippines meanwhile has about 25,000 hectares under cultivation, but some 454,000 hectares of earmarked land for palm oil cultivation.

While the debate over palm oil cultivation goes on, Indonesia is trying to clamp down on other sources of deforestation. Indonesian and Chinese forestry officials are discussing ways to deal with illegal logging activity. "The two countries share a deep concern about illegal logging activity and they therefore discussed ways of dealing with the problem. Forestry Minister MS Ka`ban on the occasion also presented Indonesia`s policy on forests," Indonesian ambassador to China Sudrajat said.

With China’s own timber now better protected, the demand for Indonesian timber has risen. And this runs against Indonesia’s own efforts to preserve their forests. "It is one of the government efforts to preserve the country`s forests," Sudrajat said, adding that the Chinese government had great concern to participate in combating illegal logging activity. "In principle, the Chinese government and wood-producing companies, including from Indonesia, will cooperate in combating the illegal activity," he added. Sudrajat said that China had promised it would ban the import of wood resulting from illegal logging inIndonesia. (20 September 2007)

Sources:

Indonesia wants stronger post-Kyoto commitments: official (Antara, 19 September 2007)

RI, China discuss illegal logging problem (Antara, 19 September 2007)

RI palm oil industry after a climate deal (Jakarta Post, 18 September 2007)

Bali must advance negotiating agenda, UN chief says (Antara,18 September 2007)

President determined to make UN climate change confab success (Antara, 18 September 2007)

Global warming and sustainable development (Jakarta Post, 17 September 2007)

The Star (16/9) Demand for bio-diesel has soared due to high price of fossil fuel (The Star, 16 September 2007)

Southeast Asia gears up for palm oil boom (Antara, 12 September 2007)