This expectation is certainly justified considering the potential of Indonesia's natural resources for biofuel development. In addition, the international response to biofuel demand during the last few years has also increased sharply. Based on a report released by market analyst at Emerging Market Online in October last year, world biodiesel production increased from 1,000 million liters in 2001 to 3500 million liters in 2005, meaning that production growth of more than 35 percent per year. This growth is expected to continue. Moreover, this March the European Union has set a target increase to 10 percent share of biofuels for transport sector in 2020. Trend of increasing biofuel demand is also marked by the U.S. government plans to increase bioethanol production to 5-fold in 2017.
However, amidst these bright hopes, biofuel programs also save some serious potential for disaster. There are at least three disaster or failure to watch out for, namely the destruction of forests, shortages of food and failure to create a domestic market.
Forest Damage
Two alternative sources of biodiesel the most promising for Indonesia today are palm oil and jatropha. But biodiesel from palm oil, or better known as the CPO (crude palm oil), estimated to be more attractive to investors. The reason, industry in Indonesia has had experience in this field. Palm oil is also considered to be more economical. Each hectare of oil palm plantations can produce 5 tons of vegetable oil per year, equivalent to three times the amount of oil production from the jatropha plant for the area and the same period. On the other hand, the production of biodiesel from jatropha oil takes longer to prepare the technology and the standardization of products and processing before it can enter the market.
What is worrying is that the use of palm oil for biodiesel will cause damage to forests from conversion to oil palm plantations. Some environmental activists estimate the biodiesel industry in Indonesia will repeat the mistake as was done by the pulp and paper industry so far in contributing to forest destruction. Friend of the Earth report last year said between 1985 and 2000, 4 million hectares of forest land has been converted into palm oil plantations in Sumatra and borneo, while another 16.5 million hectares will soon follow.
The results also showed that conversion of tropical forests into plantations, timber industry and infrastructure development accounted for 10-30 percent of world greenhouse gas emissions (Nature Magazine, 2001). Conversion of forests into monoculture plantations also threaten biodiversity. Thus, instead of reducing carbon emissions, biofuels program with precisely clearing exacerbate existing problems.
Competition for food and energy
BBN program is also expected to cause rising prices of certain agricultural commodities, which ultimately have an impact on rising prices of food products made from raw commodity. For example, the ethanol program in the United States believed to be the cause of skyrocketing commodity prices of corn in the country doubled in the past year. Thus is reasonable if the use of biodiesel from palm oil and bioethanol from sugar cane is feared will also directly influence the price of two basic ingredients, namely cooking oil and sugar.
The issue will be more serious if the program BBN also led to large-scale conversion of food crops into biofuel-producing plants. This is clearly threaten national food security. Moreover, until now the target to increase food production, particularly rice, is still not fully achieved. If this be true then that is estimated to be victims suffer most are the poor, especially those living in urban areas. These conditions are certainly contradictory to the government hopes for biofuel programs can reduce poverty.
The failure of the domestic market
The third threat is the failure in creating the domestic market. If the threat is realized, then the program biofuels will only make the nation of Indonesia as a servant of energy for industrialized countries. This can only happen if the high international market demand while at the same time the domestic market is considered unattractive. This concern has apparently started to become reality, for that reason a biodiesel company under the Sinar Mas group is more interested to open a biodiesel plant in Europe than in the country. Even now there are biodiesel industry in North Sumetara who was forced to stop operating because of similar reasons. It is a pity if the biofuels industry in the country will only be able to rely on exports of raw products, such as the CPO for example. That is, not much value added generated by industry.
The domestic market also will not be realized if biofuel industry in the country and the government failed to provide the necessary supporting infrastructure. Although biofuels and fossil fuels are equally liquid fuels, fuel properties of vegetable hygroscopic (absorbs moisture) requires a special distribution infrastructure, both in storage and handling, to maintain product quality during the distribution process.
Appropriate policy
The results also showed that conversion of tropical forests into plantations, timber industry and infrastructure development accounted for 10-30 percent of world greenhouse gas emissions (Nature Magazine, 2001). Conversion of forests into monoculture plantations also threaten biodiversity. Thus, instead of reducing carbon emissions, biofuels program with precisely clearing exacerbate existing problems.
Competition for food and energy
BBN program is also expected to cause rising prices of certain agricultural commodities, which ultimately have an impact on rising prices of food products made from raw commodity. For example, the ethanol program in the United States believed to be the cause of skyrocketing commodity prices of corn in the country doubled in the past year. Thus is reasonable if the use of biodiesel from palm oil and bioethanol from sugar cane is feared will also directly influence the price of two basic ingredients, namely cooking oil and sugar.
The issue will be more serious if the program BBN also led to large-scale conversion of food crops into biofuel-producing plants. This is clearly threaten national food security. Moreover, until now the target to increase food production, particularly rice, is still not fully achieved. If this be true then that is estimated to be victims suffer most are the poor, especially those living in urban areas. These conditions are certainly contradictory to the government hopes for biofuel programs can reduce poverty.
The failure of the domestic market
The third threat is the failure in creating the domestic market. If the threat is realized, then the program biofuels will only make the nation of Indonesia as a servant of energy for industrialized countries. This can only happen if the high international market demand while at the same time the domestic market is considered unattractive. This concern has apparently started to become reality, for that reason a biodiesel company under the Sinar Mas group is more interested to open a biodiesel plant in Europe than in the country. Even now there are biodiesel industry in North Sumetara who was forced to stop operating because of similar reasons. It is a pity if the biofuels industry in the country will only be able to rely on exports of raw products, such as the CPO for example. That is, not much value added generated by industry.
The domestic market also will not be realized if biofuel industry in the country and the government failed to provide the necessary supporting infrastructure. Although biofuels and fossil fuels are equally liquid fuels, fuel properties of vegetable hygroscopic (absorbs moisture) requires a special distribution infrastructure, both in storage and handling, to maintain product quality during the distribution process.
Appropriate policy
To avoid such disasters third required a clear and precise policy of the government, especially related to the use of land for biofuel industry. BBN Program should be placed within the framework of sustainable development and national independence-oriented and not based on short-term economic benefits.
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