Community-based biofuels offer ‘sensible’ alternative to palm oil for Indonesia, analysis shows

Oil palm fruits harvested in Kalimantan. Image by Cooke Vieira/CIFOR via Flickr (CC BY-NC-ND 2.0).

Indonesia’s push to meet its ambitious biofuel targets by expanding oil palm plantations could cost the country billions in environmental damage and social conflict, a new analysis by environmental NGO Madani Berkelanjutan warns.

But if Indonesia diversifies its biofuel feedstock sources at community level, it could cut the ecological and social costs to zero while still meeting its energy goals, the analysis found.

Indonesia, the world’s top palm oil producer, has aggressively pursued biofuel development in recent years, especially palm-based biodiesel, to boost energy sovereignty and reduce fossil fuel reliance.

As of January this year, Indonesia requires all diesel sold at the pump to contain 40% palm-based biodiesel, a blend known as B40. The government plans to increase this to B50 next year, making it one of the most ambitious biodiesel transition programs in the world.

The current B40 mandate alone requires a supply of 14.2 million metric tons of crude palm oil (CPO). The B50 plan would raise that to 18 million metric tons, fueling concerns over the industry’s heavy environmental footprint.

This heavy reliance on palm oil has raised major environmental, economic and social concerns.

In its analysis, Madani compared the business-as-usual (BAU) scenario, where Indonesia continues to develop palm oil to meet its biodiesel mandate, with an alternative scenario where communities are given the opportunity to develop their own biodiesel crops other than oil palm.

Business as usual

Under the BAU scenario, establishing vast swaths of new oil palm plantations is the only way to produce enough palm oil to meet the government’s biofuel targets, the analysis found. It calculated a figure of 4.72 million hectares (11.67 million acres) of additional plantations, or an area about half the size of South Korea.

This raises the prospect of increased greenhouse gas emissions and land conflicts, costing the country up to $4.72 billion in ecological and social damages, according to the analysis.

While there are economic gains to be made under this scenario, up to $31.36 billion, these would benefit mostly large corporations, which have long dominated the palm oil and biofuel industries. Village communities and small-scale farmers, those most likely to be impacted by the expansion of plantations, would gain little economic benefit under this scenario, Madani concluded.

Palm oil farmers in Central Kalimantan. Image by Rendy Tisna/Mongabay Indonesia.

Alternative scenario

Madani proposed an alternative scenario: one centered on a community-based model that would directly benefit the rural economy without incurring the massive ecological and social costs of plantation expansion, while still meeting the biofuel targets.

Under this scenario, there would be no need to expand existing oil palm plantations as long as yields could be increased to 6 metric tons per hectare from the current 3.41 metric tons per hectare via replanting and improved agricultural practices.

Madani has identified 9 million hectares (22 million acres) of aging plantations, much of them owned by smallholders, that could benefit from this upgrade.

To further bolster the supply of biofuel in the country, the alternative scenario proposes a decentralized bioenergy system, with village-owned enterprises and cooperatives producing up to 10% of the biodiesel supply.

The scenario also calls for the diversification of biofuel feedstocks, such as used cooking oil and the seeds of the rubber (Hevea brasiliensis) and nyamplung (Calophyllum inophyllum) trees.

Pursuing this scenario would directly benefit the rural economy to the tune of $2 billion over 10 years, Madani calculated.

“So we advocate that local areas produce their own biodiesel from local commodities,” Madani deputy director Giorgio Budi Indrarto said at a recent media briefing in Jakarta to present the findings. “There are many options. Jatropha [Jatropha curcas], for instance, doesn’t need vast land and can be handled by village-owned enterprises.”

This scenario also avoids the deforestation, carbon emissions and social conflict that could occur if oil palm expansion continues at industrial scale.

Dried nyamplung fruit. The waste can be used as animal feed. Image by Nuswantoro/Mongabay Indonesia.

The calculation used an ecological footprint model with 14 limiting variables, including water availability, conservation zones, peatlands and biodiversity areas.

With 17.3 million hectares (42.7 million acres) already planted, the industry is on the verge of surpassing this cap, raising the risk of irreversible ecological damage, from biodiversity loss to intensified flooding, the study warns.

Therefore, adopting the alternative scenario also means enforcing the palm oil cap and sparing the country from worsening ecological and social crises that could arise should the palm oil industry exceed the cap, said Sawit Watch campaign and research head Hadi Saputra.

“The palm oil cap and intensification should be prioritized [as] many existing plantations still have low productivity,” he said at the media briefing.

A forest and oil palm plantation in Indonesia. Image by Rhett A. Butler/Mongabay.

Win-win solution

By avoiding deforestation, carbon emissions and social conflicts, the alternative scenario incurs no external costs. As a result, it shows a higher net economic benefit, $37.1 billion, compared to the $31.36 billion under the BAU scenario.

Therefore, this approach makes not only environmental and social sense, but also economic sense in the long run, Madani’s Giorgio said.

It also realigns the biofuel strategy with Indonesia’s broader goals of a just energy transition, rural empowerment, and forest and climate protection, he added.

“We need rational thinking in this time of climate crisis,” Giorgio said. “We face multiple crises. This isn’t about being pessimistic — it’s about being sensible.”

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This article was originally published on Mongabay under the Creative Commons BY NC ND licence. Read the original article.