Indonesia — The Indonesian government should pushahead with its biofuel program as an alternative to fossil fuels, currentlystill the main source of commercial energy, as long as oil palm plantationdevelopment is done in an environmentally and socially friendly way.
The a priori opposition to palm oil-based biofueldevelopment by environmental groups such as Friends of the Earth seems to havebeen prompted primarily by persistent memories of the previously utterly lax lawenforcement in Indonesia’s forest management, which allowed rampant illegallogging and extensive use of slash-and-burn farming practices.
The government’s notorious reputationunderstandably prompted many NGOs to suspect that the massive oil-palmplantation expansion was simply a ploy to log rainforests. This would destroybiodiversity and habitat for such threatened wildlife as orangutans and SumatranTigers. It is true that burning biodiverse forests and planting monoculturecrops such as oil palm to produce environment-friendly biofuel would simplycreate new, even graver environmental problems.
The government has, however, learned some lessons from its grave mistakes in thepast, and is doing its best to manage forests sustainably. This is theperception the government should continuously promote to the public, especiallyenvironmental groups. The government, for example, has scrapped its plan tocreate the world’s largest oil palm plantation along the Indonesia-Malaysiaborder in Kalimantan, partly owing to strong protests from environmental groups.
Palm oil-based biofuel development is too important to cancel simply because ofcriticism from environmental groups. Indonesia is well situated to produce largevolumes of biofuel, as it is already the world’s second largest producer of palm oil.
Because biodiesel contains no sulfur, global demand for this fuel has beenincreasing, particularly in fuel-strapped, environmentally friendly countries inEurope and North America. Demand for biodiesel will continue to surge as long asinternational oil prices remain at or above US$60 per barrel. Even if fossilfuel prices fall below that line, palm oil remains a high-value commodity foruse in cooking oil, soap, margarine and a host of other products.
International consumers will not touch Indonesian biofuel, however, if it isproduced through environmentally unsustainable practices. The best way toaddress the concerns of the environmental groups is to ensure that the biofueldevelopment program is implemented only in barren or marginal land. Plantationopenings should not in any way damage natural forests. There are millions ofhectares of barren land in Sumatra and Kalimantan left over from recklesslogging that could be tapped for oil palm plantation expansion.
Environmental concerns are, however, only one of the issues that have to beaddressed. The government should also create a fiscal and regulatory environmentthat encourages private investment in biofuel development. As a new industry,biofuel production should be supported with tax incentives, subsidies and, atleast initially, a regulatory infrastructure to make the use of biofuelcompulsory.