KUALA LUMPUR • Indonesia's ambitious biodiesel programme will increase the risks of deforestation as more tropical forests could be cleared to grow palm oil, environmentalists have warned, urging policymakers to implement a long-term ban on new plantations.
Indonesia - which is home to the world's third-largest tropical forests but is also its biggest producer of palm oil - has steadily increased the portion in its biodiesel mandate derived from palm oil since 2018 to boost demand.
Looking to also curb costly fuel imports and its planet-heating emissions, the country raised the "bio" content in its biodiesel to 30 per cent in late 2019 from 20 per cent the year before, with the rest being fossil fuel.
Indonesian President Joko Widodo has targeted biodiesel made entirely from palm oil, but without setting a firm deadline to roll it out widely as it would require engines to be modified.
Last month, state energy company PT Pertamina started trials on the "green diesel" after conducting tests with jet fuel late last year.
Mr Yuyun Harmono, climate justice campaign manager at the Indonesian Forum for the Environment (Walhi), said no additional land would be used to produce palm oil for biodiesel yet - but that could change in the future, threatening forests further.
"If there is increasing demand for fuel, there will also be an increase in demand for biofuel... Of course, there is a (deforestation) risk," Mr Yuyun told the Thomson Reuters Foundation.
Indonesia was named as one of the top three countries for rainforest loss in 2019, according to Global Forest Watch, a monitoring service that uses satellite data.
Palm oil - used widely in cosmetics, food products and biofuel - has faced scrutiny from green activists and consumers, who have blamed its production for forest loss, fires and worker exploitation.
In response, the industry's watchdog, the Roundtable on Sustainable Palm Oil, tightened its rules in late 2018, imposing a ban on clearing forests or converting peatland for oil palm plantations.
Mr Yuyun said biodiesel should not be viewed as a substitute for fossil fuel oil. He noted that since 2018, biodiesel has been mandatory to power both privately owned and business vehicles.
"It is only 30 per cent (bio-portion) now but when demand increases, then demand for palm oil is also going to increase," he added.
Indonesia's biodiesel production last year used just over 7 million tonnes of palm oil - out of a total national output of 41.4 million tonnes - up from about 1.4 million tonnes in 2015, according to consultancy LMC International.
Malaysia, the world's second-biggest grower, used about 880,000 tonnes of palm oil for biodiesel production last year, up from 600,000 in 2015.
Mr Julian McGill, head of South-east Asia at LMC International, said: "Indonesia has achieved very impressive growth in biodiesel production over the past five years. Indonesia's success at sustaining biodiesel production has been a critical factor in the low stocks and high prices which the industry is enjoying today."
But a slump in crude oil prices, as the coronavirus pandemic hit demand, has made Indonesia's biodiesel programme less economical, while plans to boost the bio-portion to 40 per cent have been delayed.
Despite industry concerns over the cost of Indonesia's biodiesel policy, which is funded by a palm oil export levy, the government is likely to remain resolute in its use of biofuel to replace diesel imports, Mr McGill added.
The longer-term goal for biodiesel to be made entirely from palm oil could also increase competition for its procurement for food and cosmetics versus fuel, said Mr Ricky Amukti from advocacy group Traction Energy Asia.
Indonesia's energy minister has estimated that 15 million ha of new palm plantations would be needed to meet the nation's biodiesel goals, according to media reports late last year.