JAKARTA – The production of biodiesel in Indonesia is seen successful in creating economic benefits, especially in saving foreign exchange and preserving environment through the reduction of carbon emissions.
The ministry of energy and mineral resources (MEMR) reported that in 2023 alone the production and consumption of biodiesel managed to save foreign exchange at a total of Rp122 trillion due to reduction of fossil diesel fuel import, and reduce greenhouse gas (GHG) emission at 132 million tons of CO2e.
But despite the success story, the biodiesel mandatory program in Indonesia is now facing a number of challenges with regard to feedstock and field technical problems, which are mainly concerned with the government’s plan to upgrade the biodiesel mandatory program from the current B35 to B40 and to B50.
The Indonesian Oil Palm Smallholders’ Association (APKASINDO) Chairman Dr. Gulat ME Manurung said that currently the CPO supply as feedstock is still enough if the biodiesel production is set up to B40. But if it is upgraded to B50, then Indonesia’s total production of CPO will be only enough for domestic consumption for foods, oleochemical, medical, and the biodiesel. “But it won’t be enough if the consumption for the foods sector increase,” he said.
“Our CPO supply is only enough for domestic use if we stop at B50. It shouldn’t be higher than that, otherwise we’ll see a supply deficit of around 1.24 million tons of CPO,” Gulat said during a public discussion at the event of Gaikindo Commercial VEHICLE EXPO 2024, which was organized in cooperation with Majalah Sawit Indonesia with the title “The B40 Application Plan: Benefits and Challenges” in Jakarta Convention Center on Friday (8/3/2024).
Gulat mentioned about the decrease of Indonesia’s export of CPO, and the increase of exports of palm oil refining product, biodiesel, and palm kernel. “If we don’t export, then we have no foreign exchange. It’s risky. We’ve discussed the case with many experts and we made simulations on CPO need for B50 implementation. We found then that we’ll see a supply shortage,” he said.
According to Gulat, the B35 program absorbs 13.15 million kiloliters of CPO. The local and global needs of CPO will certainly increase in the future. But at the same time, Indonesian production of palm oil has seen a declining trend due to palm maturity, low productivity of smallholders’ plantations and low realization of replanting program for smallholders as a result of legalistic problems.
“So, it’s just normal for Bill Gates to try to take over Indonesia’s position as the world’s largest producer of palm oil by investing in engineering technology to produce synthetic palm oil called C-16. Despite the C16 is only synthetic vegetable oil, but it can threaten Indonesian position as the world’s largest producer of palm oil,” he said.
Such condition has been worsened by the government’s application of article 110B of the law on job creation (UUCK) which contains in government regulation (PP) no.24/2021 as issued by the ministry of environment and forestry (KLHK) through ministry regulation (Permen LHK) No.7/2021 and other LHK regulations.
The plantations subjected to the regulations are not allowed to join replanting program and are only allowed for just one cycle of cultivation. “Based on data from KLHK, such plantations can reach up to 2.8 million hectares of the 3.4 million hectares claimed by KLHK as located in forest areas but actually without forest.
“The loss of the 2.8 million hectares as oil palm plantations will cause the loss of 12.062 million tons of CPO and Rp131 trillion per year during the next 5-10 years. Not to mention its social and security impacts,” said Gulat.
“If those subjected to article 110-B executed, can the government bear the cost of reforesting the 2.8 million hectares? Currently, those already determined as forest areas are not yet fully reforested according to the judges’ verdict, although it has been tens of years,” said Gulat, who is also the chairman of Bravo-5 Volunteers of Jokowi. (*)