Indonesia hits European Union with WTO lawsuit over palm oil

Yahoo – AFP, December 16, 2019

Indonesia has accused the European Union of discrimination against its palm
oil exports (AFP Photo/Mohd RASFAN)

Indonesia has filed a World Trade Organization lawsuit against the European Union over plans to phase out palm oil-based biofuel for cars, the trade ministry said.

The action could escalate a trade dispute between Indonesia -- the world's top palm oil producer - and the EU, which plans to end its use of biofuels by 2030, citing concerns over widespread deforestation caused by the sector.

The EU earlier imposed duties on imports of subsidised biodiesel from Indonesia saying it was needed to level the playing field for its producers.

In response to what it called "discriminative" policies against its key palm oil exports, Indonesia said it filed a complaint with the WTO last week.

"Indonesia officially sent a request for consultation on December 9, 2019 to the EU as the initial step for the lawsuit," Trade Minister Agus Suparmanto said in a statement Sunday.

Neighbouring Malaysia, the world's second-biggest palm oil producer, has also threatened WTO action against the EU.

Teresa Kok, the minister overseeing Malaysia's palm oil sector, told AFP on Monday that she will head to Europe in March, and a challenge will not be filed until after then.

She said she wanted to try to convince European officials to change course on her trip.

"I want to give my trip a chance and see whether I can avoid filing the case at the WTO," she added.

Palm oil is the world's most widely used vegetable oil and a key ingredient in a wide range of products from food to cosmetics.

But environmentalists say it drives deforestation, with huge swathes of Southeast Asian rainforest logged in recent decades to make way for palm plantations.

Iman Pambagyo, Indonesia's director general for international trade negotiations, said Jakarta had previously tried other bilateral avenues to reach an agreement, without success.

"We need to assert Indonesia's stance on EU policy," Pambagyo said, referring to the WTO complaint, and adding that he hoped for a "best solution".

EU palm oil ban sows bitter seeds for Southeast Asian farmers

Yahoo – AFP, Ridwan Nasution with M. Jegathesan in Ijok, Malaysia, 24 September 2018

Indonesian farmer Kawal Surbakti says a planned EU palm oil ban could devastate
his income

Indonesian palm oil farmer Kawal Surbakti says his livelihood is under attack, but the threat is not from insects or hungry orangutans eating his prized crop.

Half a world away, the European Parliament is moving to ban the use of palm oil in biofuels, while British grocer Iceland has announced it will stop using the commodity over concerns that it causes widespread environmental destruction.

Losing the key European market worries small farmers like Surbakti and millions of others in Indonesia and neighbouring Malaysia -- the world's top two producers -- as prices drop for an oil found in everything from biscuits and sweets to cosmetics and vehicle gas tanks.

"I've suffered serious losses," the 64-year-old Surbakti said from his two-hectare (five acre) farm on Indonesia's Sumatra island.

"Before, I could save up a little money but now I can't even do that."

Across the Malacca Strait in Malaysia, grower Mohamad Isa Mansor issued a dire prediction as he plucked reddish-orange fruits from his trees.

"If the EU succeeds in the ban, I'm dead," he said at his small plantation in the coastal town of Ijok.

"Without this crop we will be living in poverty. It is the source of income for thousands of people (here)," he added.

Chart showing top producers of palm oil, led by Indonesia

'Victims of big corporations'

Europe is one of the world's biggest palm oil consumers, along with India and China.

About half of the palm oil used last year in Europe was for biofuels that ended up in gas tanks, according to environmentalists.

Indonesia and Malaysia have threatened retaliatory sanctions on European products over the proposed palm oil ban, which calls for a complete phase-out from biofuels by 2030. The legislation is awaiting a final vote and member-state approval.

As the diplomatic row smoulders, Indonesian grower Selamet Ketaren says he and other small farmers -- the backbone of the industry -- are pawns at the mercy of land-clearing multinational firms that buy their crops.

"Smallholder farmers like us are just victims of the big corporations," said Ketaren, who has been growing palm oil since the mid-eighties.

Environmentalists accuse the multi-billion-dollar industry of destroying huge swathes of rainforest home to indigenous communities, orangutans and other threatened species.

Critics say that palm oil development also contributes to climate change through deliberate forest-clearing fires, which release carbon dioxide into the atmosphere and lung-clogging smog into the region's air.

Many under-pressure firms made "no deforestation" pledges, but activists say they are tough to monitor and frequently broken in the vast jungles of Sumatra and Borneo island.

Palm oil has become a major earner for Malaysia and Indonesia but at 
huge environmental cost

This week, Greenpeace said a group of Indonesian palm oil firms that supply major international brands including Unilever and Nestle have cleared an area of rainforest almost twice the size of Singapore in less than three years.

But Malaysian farmer Mansor rejects the depiction of growers as an environmental threat.

"(The EU) says we cut down the forest. But my land is on peat soil -- there was rubber growing here before," he said.

"How can the EU claim that I'm killing the earth?"

'Negative campaigns'

An EU ban would threaten the livelihoods of 650,000 smallholders and over 3.2 million Malaysians who rely on the industry, according to the Malaysian Palm Oil Council.

"The policies that the EU is proposing to introduce will harm Malaysia's rural communities and reduce incomes for Malaysian families," said Douglas Uggah Embas, deputy chief minister of Sarawak state on Borneo island, home to many smallholders.

Some three million people in Indonesia -- the world's biggest palm oil exporter -- are estimated to be working in the sector and many more depend on their income.

While it hopes to tap other markets, the Indonesian Palm Oil Association said that a slowdown in China and "negative campaigns" against palm oil could hurt the bottom line.

Malaysian grower Muhamad Ngisa Kusas fears that political decisions made in Europe will lead to poverty, crime and could push desperate people into the arms of religious extremists in the two Muslim-majority countries.

"If the EU bans comes into effect, the price of palm oil will surely plunge. Then we smallholders are doomed," said the 78-year-old.

"The EU had better think very carefully about this action."

VIDEO: The European Parliament is moving to ban the use of #palmoil in biofuels, and UK supermarket Iceland says it will stop using it over environmental concerns. Losing the EU market worries millions of small farmers in Indonesia and Malaysia, the world's top two producers. pic.twitter.com/o3RnLJsYUl

— AFP news agency (@AFP) September 24, 2018

'Reverse photosynthesis' could change fuel production

Researchers in Denmark have discovered that a certain enzyme causes sunlight to break down the chemical bonds in plants. The finding could improve industrial processes such as the production of biofuels.

Deutsche Welle, 17 April 2016

Photosynthesis is a process in which plants convert sunlight into chemical energy that can be later released as fuel. But now, a group of scientists from the University of Copenhagen have found that adding an enzyme called monooxygenase to the process causes sunlight to break down plant material instead of helping create it. They refer to this phenomenon as "reverse photosynthesis."

The discovery could be applied to processes that require the breakdown of chemical bonds, such as the production of bioethanol, which is made from biomass via a fermentation process.

In a press release, Professor Claus Felby from the Plant Science Centre at the University of Copenhagen, the head of the study, called the discovery a "game changer" that could transform the production of fuels and chemicals, increasing efficiency and decreasing pollution.

Great usage potential

The first step to producing bioethanol is breaking down cellulose, an organic material that forms the walls in plant cells. This is exactly what happens when monooxygenase is added to the photosynthesis process.

Ethanol is widely used as engine fuel

"Basically, we have found a new way of using solar energy - going directly from sunlight to chemistry," Felby told DW. "This opens up a lot of possibilities."

The scientists' lab tests indicated that applying this process resulted in much faster production of ethanol and at lower temperatures. The duration of some of the chemical reactions was reduced from hours to minutes when sunlight was involved.

Ethanol has a multitude of uses in the modern world, mostly as engine fuel, but also as an ingredient in medical and personal care products.

The team also found that the same process can be applied to oxidizing methane. This produces methanol, a key ingredient in the manufacture of different chemicals.

"Methanol currently requires very large and expensive steel units to produce," explained Felby. "If our method was applied to this process, you would only need small, simple production units, something similar to a greenhouse."

Need to test large-scale application

While the process has proven effective in a lab environment, the scientists need to do further research to determine how it would work in real life.

"We are now working on exploring this," David Cannella, a co-author of the study, told DW. "You need to make sure that sunlight penetrates the organic material that you are converting, and we still need to work out how to do this."

Cannella feels optimistic about the commercial applicability of the process, as does Felby.

"We have to determine the exact amount of light needed for the process and how and when to apply it," said Felby. "But that's just a question of engineering."

He added that going directly from sunlight to chemical energy results in very little energy loss: "It's a near-perfect process."

Wilmar to Cut Off Palm Suppliers Caught Burning in Indonesia

Jakarta Globe, Michelle Yun, Ranjeetha Pakiam and Eko Listiyorini,  July 1, 2013

A car drives past fire from burning trees planted for palm oil, during haze at
 Bangko Pusako district in Rokan Hilir, Riau on June 24, 2013. (Reuters:
Photo/Beawiharta)

Singapore/Jakarta/Kuala Lumpur. Wilmar International, the world’s largest palm oil trader, plans to cut ties with Indonesian suppliers that clear land with illegal fires after blazes engulfed Singapore in a record haze.

Wilmar, which bans burning on its own plantations, relies on third parties for more than 90 percent of the crude palm oil for its refineries. Sime Darby, the biggest publicly traded palm oil producer, also prohibits burning at its own plantations and relies on other sources for supplies, buying as much as half the commodity for its plants from others.

Palm oil refiners are being pushed to enforce their no burning policies to suppliers after hundreds of illegal blazes raged last month in Indonesia, the world’s top producer of the commodity. Unilever, buyer of 3 percent of the world’s palm oil, said the haze is a reminder of the need to accelerate sustainability efforts.

“We need the money to speak,” said Scott Poynton, founder of The Forest Trust, which worked with Nestle SA and Golden Agri-Resources on sustainability policies.

If companies “made a no-deforestation commitment that says to these communities, ‘you can’t burn because we won’t buy your oil,’ that’s money directly speaking to the people,” he said.

Palm oil is the world’s most-used edible oil. It’s in Unilever’s margarine, ice cream and soap. The London- and Rotterdam-based company made a commitment to buy sustainable palm oil and wants all its supplies to be from certified, traceable sources by 2020.

Burning banned

“What the industry has realized is that they can’t be simple bystanders in an ecosystem that gives them life in the first place,” Unilever Chief Executive Officer Paul Polman said June 27 in Jakarta.

While Indonesia and Malaysia ban burning to clear or manage acreage, 17 timber concession and 10 palm oil plantations had land affected by fires in Indonesia, according to June 24 data from the non-government World Resources Institute, or WRI.

Indonesia is investigating a number of companies suspected to be involved in illegal fires and will announce those names once the probe is completed, Environment Minister Balthasar Kambuaya said last week.

Wilmar deals with some of the companies identified by WRI on the assurance they don’t burn, the company said in an e-mailed response to Bloomberg News.

Buying policy

“Should they be found to be involved in burning to clear land for cultivation, we will stop doing business with them,” Wilmar said. The company’s buying policy states suppliers must comply with all local and national laws and regulations.

Indonesia’s disaster management agency said June 28 that in general people start fires on peatlands to fertilize the soil ahead of planting crops.

Kuala Lumpur-based Sime Darby said in a June 28 statement it had found fires on land at one of its units, though the blazes were in an area where local communities plant crops such as corn and sugar and not in areas planted by the company.

The company buys from palm oil growers in Indonesia that participate in plans run by the company and that adhere to a strict zero-burn policy. Part of its efforts to promote no burning is to continuously educate third-party suppliers on the benefits of complying with RSPO principles, Sime Darby said in a separate e-mail.

Fire and haze are common during Indonesia’s July-to-September dry season because local villages and farmers have long favored cheaper, slash-and-burn land clearing, according to Wilmar. Using machinery to clear costs more than $250 a hectare, while fires cost almost nothing, it said.

Sustainability efforts

Wilmar, based in Singapore, as well as Sime Darby, Golden Agri and Cargill all prohibit burning at their own plantations. That’s in line with the Roundtable on Sustainable Palm Oil criteria which include a commitment to avoid clearing land with fires. The RSPO was formed in 2004 to promote sustainability in an industry that’s been dogged by concerns about deforestation, pollution and the environment.

“It is inconceivable that any listed plantation companies is willing to risk open burning to clear their land, not after years of battling the non-government organizations on issues pertaining to deforestation, orangutans and native land rights,” Malayan Banking said in a June 24 report.

No big plantation group would be involved today with deforestation, Wilmar said. Many of the problems are caused by small farmers, which makes it difficult to control, it said.

Malaysia had 183,774 small palm growers as of May, while Indonesia has more than 2 million. The Indonesia Palm Oil Farmers Association has a “zero burning” policy for its members, and other crop farmers may be responsible for the blazes, said Secretary General Asmar Arsjad.

Investor concern

For some investors, concerns about deforestation remains. Norway’s sovereign wealth fund, the world’s largest with assets of $737 billion, sold investments in 23 palm producers including Wilmar, Golden Agri and Kuala Lumpur Kepong, in the first quarter of 2012 citing concern about deforestation, according to its annual report released in March.

Golden Agri, the second-biggest palm plantations operator, is “absolutely” against burning and “would also encourage best management practices to all stakeholders,” the company said in an e-mail.

It buys less than 10 percent of its fresh fruit bunches from outside suppliers. Cargill gets 95 percent of its third-party crude palm oil in Indonesia from RSPO members.

“Those suppliers have signed on to the RSPO criteria which includes a commitment to not to use burning for land clearing,” Cargill said by e-mail.

“It is one of the reasons why we target RSPO member for our third-party out supply.”

The number of Wilmar’s suppliers that are RSPO certified is still small, though steadily increasing, it said.

While the haze has lessened in Singapore, it will return, according to The Forest Trust’s Poynton.

“Singapore will choke again because globalization demands it,” he said from Geneva.

“These fires are happening to clear the way to grow a commodity for the global supply chain.”

Bloomberg

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Brazil biofuel: Shell axes plan for 'illegal' sugar cane

BBC News, 13 June 2012

Related Stories 

• Country profile: Brazil
• Brazil indigenous leader killed

Guarani tribes in western Brazil complain
 of persecution at the hands of sugar cane
farmers

A biofuels company set up in Brazil by oil giant Shell has signed a landmark agreement giving up plans to buy sugar cane grown on indigenous lands.

The company, Raizen, was sourcing some of the raw material for ethanol from farmers who encroached on the lands of the Guarani tribe in Mato Grosso state.

The deal comes after months of pressure by the Brazilian authorities and indigenous tribes.

The leader of the Guarani tribe, Nisio Gomes, was shot dead last year.

Gomes, 59, was killed in front of his community in the town of Amambai, near Paraguay border.

Indigenous leaders and pressure group Survival International have welcomed the agreement signed by Raizen, but warned that the tribe's future continued to be threatened by illegal logging and farming on their ancestral lands.

Valdelice Veron, an indigenous Guarani in Mato Grosso do Sul state, says their rivers have been polluted by pesticides.

"We will be able to drink water from our land again. We will be able to start afresh," she told Survival International.

Booming demand

Raizen was established in 2010 as a multi-billion joint venture of Shell and Brazilian ethanol company Cosan to produce ethanol from sugar cane.

The company says it produces 2.2 billion litres of ethanol every year, for export and to supply the Brazilian market, where most a great deal of the cars run both on petrol and biofuel.

Shell's move came under renewed pressure after the killing of Nisio Gomes.

In the deal signed with Brazilian indigenous agency Funai, Raizen says it will not source sugar cane from any land declared by the Ministry of Justice as belonging to indigenous tribes.

The agreement comes into force in November.

The Guarani are Brazil's largest indigenous minority, with around 46,000 members living in seven states.

Many others live in neighbouring Paraguay, Bolivia and Argentina.

The group suffers from a severe shortage of land in Brazil, which has worsened as a boom in agriculture has led farmers and ranchers to extend their holdings.

Indigenous activists say farmers in Mato Grosso do Sul frequently use violence and threats to force them off their ancestral territory, and that the local authorities do little to protect them.

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Researchers Turn Common Indonesian Plant Into Alternative Fuel

Jakarta Globe, Ismira Lutfia | January 07, 2011

In an effort to wean rural communities off inefficient and costly kerosene, Indonesian researchers have developed an alternative fuel from a common plant.

Researchers say the fruit of the bintaro can be used to
make an oil that may be able to replace kerosene.

The new fuel is derived from the seed of the sea mango tree (Cerbera manghas), known locally as bintaro.

Aris Purwanto, head of the research team at the Bogor Institute of Agriculture (IPB), said the idea came after rising kerosene prices in the Teluk Meranti area of the Riau Islands forced villagers to switch to burning wood for cooking.

“The bintaro tree grows all year round and a tree of at least three years of age can produce an average of 300 to 400 fruit a year,” Aris said during a presentation on Wednesday.

To extract the bintaro oil, researchers removed the seeds from the ripened fruit, then dried and crushed them. Aris said 2.9 kilograms of seed yielded one liter of oil.

In an interesting aside, he said the seed kernels contain the toxic substance cerberin, which is often used by local farmers to poison wild animal pests that damage their crops.

“Even in its raw phase, the oil can be used to fuel an electricity generator,” Aris said.

But the researchers experimented further, refining the oil by mixing it with water and storing it until an oil-water dispersion was achieved.

This refined oil, they said, can be used to fuel a fire, such as in a kerosene stove.

However, Aris said that because it had a much higher viscosity than kerosene or diesel, and hence different combustion properties, stoves and generators would have to be modified slightly to ensure the oil worked.

The viscosity difference means that the bintaro oil is too thick to vaporize into a flammable spray, as required in the combustion chamber of a kerosene stove or diesel-powered generator.

To use it to power a generator, for instance, a converter must first be used to heat the oil to 70 degrees Celsius to lower its viscosity to the level of diesel.

Even then, the generator needs to have been running for four to five minutes on diesel before the bintaro oil can be added to the external tank and the diesel supply shut off.

Aris acknowledged bintaro oil could not yet be classified as a biofuel, and was not yet a viable replacement for conventional fossil fuels.

He said that with only four months of development behind it, more research and processing was needed before bintaro oil could viably generate sufficient power to fuel heavier machinery such as motor vehicles.

In the meantime, he said, it is sufficient for basic cooking needs such as boiling water or cooking rice, allowing it to take over some of the role of kerosene.

“We aim to develop this as an alternative energy source for people in remote areas, so that they’re not overly dependent on kerosene,” he said .

He added that bintaro trees were common in many rural areas and relatively easy to grow, making it easy for villagers to collect the necessary seeds.

The tree is also frequently used in greening projects in residential areas across the country .

Marzuki Effendi, one of the Teluk Meranti villagers who attended Wednesday’s presentation, said that bintaro-fueled stoves produced an intense blue flame that brought water to the boil in just four minutes.

With kerosene, he said, boiling water took eight minutes.

Marzuki said another downside to kerosene was its high cost.

The fuel typically costs Rp 6,000 to Rp 8,000 (66 to 88 cents) per liter in the area, he said.

Kerosene distributed to the public is supposed to be subsidized by the government, although distributors almost invariably charge a commission on sales.

In addition to being expensive, it is increasingly difficult to source, a result of the government’s plan to replace it with liquefied petroleum gas.

However, the kerosene-to-gas campaign has concentrated largely on urban areas, with many rural communities yet to receive the free liquefied petroleum gas stoves and canisters that are part of the program.

Experts say biomass is feasible alternative

The Jakarta Post, Jakarta | Fri, 08/06/2010 9:14 PM

Amid an energy crisis and environmental campaigns to phase out the use of fossil fuels, experts agreed Friday that biomass was a suitable and feasible alternative energy source for Indonesia.

Satya Wacana Christian University biomolecular expert Ferry F. Kawur said Indonesia, with its unique tropical climate, was a fertile ground for productive plants that could be a source of environmentally friendly biomass, as reported by Antara.

Biomass sources includes living plants, dead woods and waste.

Ferry was speaking during a launch of a book titled Biomass for Alternative Energy, written by Gan Thay Kong.

Physics professor at Satya Wacana Liek Wilardjo said that people should reduce their energy consumption and also look into the possibilities of developing biomass.

Some environmentalists have supported biomass generated from waste but others oppose biomass generated from palm oil plantations, which they claim destroy primary forests in Indonesia.

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East Java needs 48,000 tons of jatropha

Wahyoe Boediwardhana, The Jakarta Post, Pasuruan | Mon, 03/15/2010 10:25 AM

East Java looks to the prospect of becoming the first commercial biofuel producer in Indonesia with a capacity of 1 million liters annually.

Such a volume is expected from PT Alegria Indonesia, which is set to complete the construction of a plant in Pasuruan regency this year. The plant, located on 22 hectares of land at Oro-oro village, Kejayan district, commenced the construction last year under the Indonesia-Japanese joint venture with an investment value of more than US$300 million.

Chief executive officer of PT Alegria Indonesia Wahyu Suprihadi Eko Sasono said the plant would need 48,000 tons of dried jatropha seeds in a month.

The Pasuruan administration office has encouraged people to optimize the land use and cultivate jatropha in order to meet demands.

“For the initial stage, we expect 4,000 tons of dried jatropha seeds. The volume will gradually grow to 48,000 tons in order to produce 1 million liters of biofuel annually,” said Edy Suwanto, the head of Pasuruan Forestry and Plantation Office.

He said his office was conducting a campaign to raise awareness about the commercial benefit of jatropha and encourage people to use their neglected land for the plantation.

He said his office was expecting to open 1,200 hectares of the neglected land for jatropha cultivation this year.

“The plantation area will gradually expand because Pasuruan has more than 30,000 hectares of neglected land left idle, although the area suitable for jatropha plantation covers only 11,000 hectares.”

Data shows Indonesia has 77 million hectares of neglected land, 50 million of which can be developed into jatropha plantations while those in Pasuruan accounts for 2 percent of 1.7 million hectares in East Java.

PT Alegria Indonesia is currently working with the Karangploso Tobacco and Fiber Plants Research Center in Malang regency to conduct tests and cultivate seedlings. The center is equipped with a processing unit able to produce 10,000 liters of biofuel daily.

The price of dried jatropha seeds with around 30 percent water content is Rp 1,200 (12 cents) per kilogram.

Counseling programs are available for the farmers on how to grow jatropha for higher yields.

Past biofuel program have failed, resulting in losses for jatropha farmers. However, Wahyu ensured that would not be a repeat.

“We are aware that most people are not interested in growing jatropha again because many have suffered a great deal of loss because most of the biofuel programs failed. But they don’t have to worry now. We will see to it their products will not be neglected.”

Edy reasserted they would buy up all the stock and had deposited a sum of funds in the bank as a guarantee to the farmers.

“But the quality of jatropha seeds must be in line with factory standards.”

The regency administration does not seem the only one interested in developing jatropha-instilled biofuel as an alternative energy. The Defense Ministry has been sending a team to Pasuruan to observe the project.

Team member Col. Purwanto said the ministry was looking to alternative energy resources to ensure domestic energy reliance in the future.

Heating homes with cowpats

Radio Netherlands Worldwide, by Marjolein Stoop, 7 December 2009 - 4:16pm

The manure from one cow can provide enough fuel to heat seven houses. In the run-up to the United Nations Climate Change Conference in Copenhagen, we are looking at unusual energy-saving initiatives.

Nij Bosma Zathe is an experimental Dutch farm with 200 dairy cows. The manure these cows produce is used to make biogas. The gas is turned into electricity in a generator which feeds it into the national grid. The heat this releases goes directly to houses in the new estate in Techum.

The heat arrives, through a grate in the wall, in Carla Koelstra's home five kilometres away. "Just a push of the button and the house is warm," she says. Her children are surprised it doesn't smell: "They must use a lot of perfume on it."

As a result of the economic recession, not all the houses planned for this neighbourhood have been finished. Less than a hundred are now heated by means of biogas.

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Indonesia must boost palm yields to save forests

By Aloysius Bhui and Ed Davies, Reuters, Mon Mar 16, 2009 7:14am EDT

JAKARTA (Reuters) - Indonesia needs to squeeze far higher yields from existing palm oil plantations rather than open up more land in a country with some of the world's swiftest deforestation, a Greenpeace official said on Monday.

Indonesia, the world's top palm oil producer, yields only about 2 tonnes per hectare from its plantations, or just a third of the 6 to 7 tonnes in countries such as Malaysia with better estate management practices, said Annette Cotter, campaign manager for the forests campaign in Greenpeace Southeast Asia.

A view of a destroyed rainforest in Kotawaringin Timur district in Indonesia's central Kalimantan province, October 9, 2007. REUTERS/Hardi Baktiantoro

"What's interesting about palm oil in Indonesia is that the current plantations actually yield a very, very poor return," Cotter said, speaking as part of the Reuters Food and Agriculture Summit.

Indonesia has 7.1 million hectares, or 17.5 million acres of palm oil estates, with smallholders accounting for about 35 percent, but is looking to expand further.

In a controversial move, Indonesia's agriculture ministry said last month it would allow 8 percent of its 25 million hectares of peatlands, which harbor huge carbon stocks, to be used for palm oil, ending a freeze on permits dating from December 2007.

"You don't need to expand into further forest and further peatland to get increased economic benefits from palm oil," said Cotter, calling the move to end the freeze on peatlands "a total disaster."

Up to 84 percent of Indonesia's carbon emissions come from deforestation, forest fires and peatland degradation, a report sponsored by the World Bank and Britain's Department for International Development says.

"So what you've got is a situation of relatively poor management of existing plantations and you've got companies looking for further expansion to increase production but not looking at increasing productivity in existing estates," said Cotter, who has spent 12 years at Greenpeace with time in Brazil monitoring Amazon forests.

By boosting existing estates' productivity, Indonesia would "go a very long way to increasing production and increasing therefore Indonesia's exports," she added.

GREEN PALM OIL?

Under fire from green groups and consumers, the palm oil industry set up a Round Table on Sustainable Palm Oil (RSPO) in 2004, to develop an ethical certification system, with commitment to save rainforests and wildlife.

One of Indonesia's top palm companies, PT Musim Mas, was its first to be certified by RSPO in January.

Cotter called RSPO a "toothless tiger" that has failed to seriously curb deforestation.

"They (RSPO) need to prove that they are actually committed to their principles before we can say they are actually doing a good job," she added.

The global financial crisis was delaying planned palm oil expansion and showing up its flaws, she added.

"What palm oil is being sold as is the green gold, but it's another classic boom and bust industry," said Cotter, noting that a collapse in palm oil prices late last year led to job losses and fruit rotting on trees.

BIOFUEL THREAT

The growing trend of palm oil use in biofuel also threatened conservation and food security, Cotter said.

Indonesia and Malaysia, the world's top two palm oil producers, have made the use of palm-based biodiesel mandatory from this year.

Cotter said biofuel could be looked at for development only after food security issues had been addressed, and principles of sustainable agriculture enforced.

"But that's not the case we are in at the moment."

Sharp drops in global food prices, including palm oil, have temporarily eased concerns over food security.

"If you look where the trends are going internationally with palm oil it's focusing more and more on biofuels and less and less on food," she said.

"And so you're actually going to see in the future questions around food security."

(Editing by Clarence Fernandez)

China, Japan eager to develop Indonesia`s bioenergy

Jakarta (ANTARA News) - China and Japan have expressed interest in developing Indonesia`s biofuel and renewable energy, an official said.

"Japan and China are eager to develop bioenergy in Indonesia. As a matter of fact, China has many times sent its delegation to Indonesia for that purpose," Chairman of the Indonesian Cooperatives Council (Dekopin) Adi Sasono said on Thursday.

Indeed many developed countries regard Indonesia as a potential producer of biofuel and renewable energy, not to mention its spices, he said.

"We have the potentials to invite foreign investors, the more so because they regard Indonesia as the main source of green energy," he said.

The Dekopin chief said Chinese and Japanese delegations will soon visit Indonesia to explore possibilities of investment in the sector.

The two countries are determined to reduce their dependence on fossil-based energy and to meet 10 percent of their energy needs from renewable sources, he said.

"We are rich in sources of green energy particularly from sugar cane, cassava and jatropha curcas," he said.

Indonesia now has an estimated 20 million hectares of idle land suitable for the cultivation of such plants, he said.

$100m mega jatropha project

Ika Krismantari, The Jakarta Post, JAKARTA | Wed, 03/04/2009 4:05 PM

Mother Earth Plantations Pte (MEP) is investing in the first mega jatropha project in Indonesia, with US$100 million over four years in West Timor.

Singapore-based MEP president Roland A. Jansen said Tuesday the company had started this mega biofuel project -which includes the development of 1 million hectares of land and the construction of a processing plant - half a year ago and is aimed to start initial production of 30,000 tons by 2013.

"We will increase the capacity up to 100,000 tons in the following years," Jansen said.

He said the company, through its local subsidiary PT Buana Ibunda would start construction of the processing plant by the end of 2009.

In relation to the development of up to 1 million hectares of land, the company decided to do this in four stages over a period of four years, with the first phase to start with the development of 100,000 hectares, followed by the development of 300,000 hectares per year over the next three years.

Jansen said the output from the plant, which would be in the form of biodiesel, would be prioritized for the local market, with only a small portion of the output to be exported to countries such as China.

Commenting on the renewable energy market in Indonesia, he said that jatropha had good prospects of becoming the main feedstock for the production of biofuel in Indonesia, despite the current trends with oil prices being fairly low.

International crude oil prices are currently hovering below $40 a barrel, as against the historic high of $147 per barrel in July last year before prices fell in line with the impact of the global financial crisis.

Investing in jatropha needs relatively less investment than other biofuels and should not heighten the global food and energy debate as it is a non-edible plant, he said.

A number of foreign energy companies, including CNOOC of China and Britain's BP Plc, have expressed interest in investing to help develop the country's biofuel sector.

Indonesia is regarded as having big potential in the biofuel sector due to its vast land area and rich natural resources, including palm oil as a popular feedstock for biofuel.

BP has also set its sights on the development of jatropha in Indonesia, however their plans are yet to be developed.

In addition to the current low price of oil, unclear regulations and previous lack of government supports in terms of incentives and guidance are among the reasons for the slow pace in the development of biofuel projects.

In an attempt to promote the use of biofuel, the government has decided to subsidize biofuel products with a maximum cap of Rp 1,000 (83 US cents) per liter.

Biofuel producers have repeatedly complained they have been running at a loss when selling biodiesel to Pertamina, since prices are set in accordance with fossil fuel prices, currently too low to cover the cost of biodiesel production.

Indonesia has the capacity to produce 2.9 million kiloliters of biodiesel per year and 215,000 kiloliters of bioethanol per year, with more than 200,000 kiloliters of bioethanol and biodiesel to be blended into subsidized fuels this year alone.