Tag Archives: palm oil industry

From Savior to Villain: Biofuel from Palm Oil

Globally, average palm oil yields have been more or less stagnant for the last 20  years, so the required increase in palm oil production to meet the  growing demand for biofuels  has come from deforestation and peat destruction in Indonesia.  Without fundamental changes in governance, we can expect at least a third of new palm oil  area to require peat drainage, and a half to result in deforestation.

Currently, biofuel policy results in 10.7  million tonnes of palm oil demand.  If the current biofuel policy continues we expect by 2030:
• 67 million tonnes palm oil demand due to biofuel policy.
• 4.5 million hectares deforestation.
• 2.9 million hectares peat loss.
• 7 billion tonnes of CO2 emissions over 20 years, more than total annual U.S. GHG emissions.
It must always be remembered that the primary purpose of biofuel policy in the EU and many  other countries is climate change mitigation. Fuel consumers in the European Union, Norway  and elsewhere cannot be asked to continue indefinitely to pay to support vegetable oil based
alternative fuels
that exacerbate rather than mitigate climate change.

The use of palm oil-based biofuel should be  reduced and ideally phased out entirely.  In Europe, the use of biodiesel other than that produced from approved waste or  by-product feedstocks should be reduced or eliminated.
In the United States, palm oil biodiesel should continue to be restricted from generating  advanced RINs under the Renewable Fuel Standard. Indonesia should reassess the relationship between biofuel mandate, and its  international climate commitments, and refocus its biofuel programme on advanced biofuels from wastes and residues. The aviation industry should focus on the development of advanced aviation biofuels  from wastes and residues, rather than hydrotreated fats and oils.

Excerpts from Dr Chris Malins,  Driving deforestation: The impact of expanding palm oil demand through biofuel policy, January 2018

In Feb. 28, 2019, Norway’s $1 trillion sovereign wealth fund, the world’s largest, pulled out of more than 33 palm oil companies over deforestation risks.

Making a Fortune from Climate Change

Eleven years ago Dharsono Hartono, a former JPMorgan Chase & Co. banker, spotted what he thought was a new way to make a fortune: climate change.The plan was to snap up rainforest in Borneo, preserve it from logging and sell carbon credits to big polluting companies in the developed world. The earth’s temperature was rising, and this was a way to profit by confronting the problem.  Investors around the world have poured money into assets like once-frozen farmland in Canada and groundwater basins in California, betting that warming temperatures will raise their value.  Another bet has been on what some investors hope will be the most profitable outcome of a warming climate: government regulation of carbon emissions. Those who correctly anticipate future government responses to climate change are likely to reap profits.

Mr. Hartono went in big. His company’s rain forest, a humid and swampy expanse home to orangutans and clouded leopards, is twice the size of New York City and has one of the largest carbon stores of any such project in the world.  Mr. Hartono has sold just 20% of his credits to environmentally conscious corporations voluntarily buying credits, and has lost around $20 million, burning through $5 million to $10 million a year in recent years. Other investors in Indonesia and Latin America who made similar bets, including one backed by Australian bank Macquarie Group , failed to sell credits and abandoned their rain-forest projects…

Only after actor Harrison Ford visited the project to shoot a documentary on climate change, and raised the issue with Indonesia’s forestry minister, did final approval come for most of the concession in October 2013. For an initial payment of around $3 million to the Indonesian government, Mr. Hartono’s company gained the rights to the forestland for 60 years.  By then, however, some environmentalists were questioning private carbon-selling projects like Mr. Hartono’s. They argued that buying up and preserving rain forest to sell credits wouldn’t decrease net deforestation, since palm-oil barons would simply work around the few protected plots in the forest.  U.S. legislation that would have put a price on carbon failed during the Obama administration. The European Union’s carbon market doesn’t include tropical forests amid worry that low-cost credits generated there would make it affordable to pollute…

The Paris climate accords are expected to lead to an international carbon market after 2020, where countries that exceed emissions targets can purchase offset credits from countries that reduce emissions beyond their targets, potentially opening up new opportunities for Mr. Hartono.

Excerpts fom One Man’s Money Draining Bet on Climate Change, WSJ, Dec. 27, 2018

How Rivers Die

Kapuas, Indonesia’s longest river support somes 3m people…One reason that the water is so murky is deforestation. Since the 1970s logging has enriched locals while stripping away the vegetation that held the soil in place. The Centre for International Forestry Research (CIFOR) found that between 1973 and 2010 over 100,000 square kilometres of forest was lost on Kalimantan, or a third of the original coverage. A national moratorium that began in 2011 has done little to still the axes. As a result, torrential tropical rains wash lots of loose earth into the Kapuas.

Illegal gold-mining compounds the problem. Locals tear up the riverbed with diggers or blast the banks with high-pressure hoses, then sieve the mud for gold. Mercury, which the miners use to separate gold from sediment, but which is poisonous to humans and fish alike, leaks into the river.

The riverbank is punctuated with corrugated-iron towers, which emit birdsong from loudspeakers. These are designed to lure swiftlets, who make their nests with saliva. The nests of swiftlets  are considered a delicacy and aphrodisiac by many Chinese.* Deane, a shop owner, built his tower last December after seeing others do the same. He sells the nests to a wholesaler for about 15m rupiah ($1,025) a kilogram…

In Kapuas Hulu, an upstream district, half the population rely on the river for drinking water. A quarter have no toilet. Even where bathrooms do exist along the river, they are often floating cubicles with a hole in the floorboards. Cows and goats, living in wooden riverside cages, also defecate straight into the Kapuas

The Kapuas passes through seven districts. Midstream ones, such as Sintang and Sanggau, earn hefty tax revenues by encouraging palm-oil plantations. But downstream districts suffer from the resulting silt, traffic and run-off without receiving any of the benefits. The same problem occurs at a village level. Mr Hadi says that fishing by sprinkling poisonous leaves on the water (the stricken fish float to the surface) is forbidden but other village heads do not enforce the rules…

A study by CIFOR on the income of villagers living near the Kapuas river found that the best-paid palm-plantation workers earned 50% more than the most successful fishermen. (Gold miners made three times as much—and spent more on education.)…But the environmental damage is plain to see. The river here is brown, clouded by silt. A study published in 2016 found that levels of phosphates in the water, from fertilisers and villagers washing themselves with soap, are highest near urban areas and palm plantations.

Down in Pontianak, the river water is darker still, occasionally brightened by oil slicks. Water bottles and instant-noodle packets cling together to form plastic islands.

Excerpts from  Indonesia’s Longest River,  Economist, Aug. 25, 2018

*According to Wikipedia: Authentic bird’s-nest soup is made from nests of some species of swiftlet.  Instead of twigs, feathers and straw, these swiftlets make their nest only from strands of their gummy saliva, which hardens when exposed to air. Once the nests are harvested, they are cleaned and sold to restaurants. Eating swiftlet nest material is believed to help maintain skin tone, balance qi (“life energy”) and reinforce the immune system… (Dictionary of Traditional Chinese Medicine, The History of Chinese Medicine and the Nutrition Table).

Palm Oil Industry: environmental and human impacts

Indonesia’s largest palm oil company, Sinar Mas, ran into trouble recently when communities in Liberia complained about a 33,000 ha. operation being developed on their lands by its indirectly-owned subsidiary, Golden Veroleum in Butaw District, Sinoe County. Alfred Brownell, the lawyer from Green Advocates representing the Kru tribes impacted by the project who is attending the 10th Roundtable on Sustainable Palm Oil (RSPO) being held in Singapore this week noted:

Golden Veroleum is in clear violation of the RSPO’s New Planting Procedure as it has not advertised its plans to clear and plant oil palms and carry out and publicise a High Conservation Value Assessment in advance of expanding its operations. Under the RSPO procedure, the company should now cease clearance until due process is followed. The villagers are concerned that their lands are being taken without their fully informed or free consent.

This is the second palm oil development involving a prominent RSPO member to run into controversy in Liberia. Last year, a subsidiary of Malaysia’s largest palm oil consortium, Sime Darby, was criticised for expanding its operations without respecting local peoples’ rights. The company was in the early stages of developing a 220,000 ha. operation but was halted in its tracks by complaints, which, to its credit, the company has responded to by entering into dialogue with the communities.

The spotlight is now on two large palm oil operations in Cameroon. One is planned by a company called BioPalm, a subsidiary of India-based corporation Siva Group which is marking out its planned operations without consultation on the lands of the Bagyeli “Pygmies” in Océan Département in western Cameroon. The company claims to be an RSPO member but does not show up on the RSPO’s membership lists. Messe Venant, Project Coordinator of the community-based indigenous NGO Okani says:  As the affected Bagyeli communities have told us, the forest is their memory. If they lose it, they lose their past, their present and their future. They will no longer be Bagyeli. To destroy the forest is to reduce them to nothingness.

Another palm oil developer is SG Sustainable Oils Cameroon PLC (SGSOC), owned by Herakles Farms from the USA and an affiliate of Herakles Capital, which is also involved in the telecommunications, energy, infrastructure, mining and agro-industrial sectors in Africa. SGSOC is developing an oil palm plantation further north in Cameroon, but has also run into sustained opposition from local communities and concerned NGOs and has announced it will pull out of the RSPO.

Other cases are highlighted in a searching review of 15 companies’ operations carried out by the Forest Peoples Programme and SawitWatch with a consortium of other NGOs and community organisations in Liberia, Cameroon, the Democratic Republic of Congo, the Philippines, Malaysia and Indonesia.

One case examined is the operation being developed by Genting Plantations, a client of HSBC, and a subsidiary of the vast Genting group which runs a casino, hotel and property empire in Malaysia. Both companies are prominent RSPO members. Genting is now in a protracted land dispute with the Dusun and Sungai peoples in Tongod District in Sabah over the imposition of the oil palm plantation. Leonard Alaza representing the Indigenous Peoples Network of Malaysia or Jaringan Orang Asal SeMalaysia (JOAS) at the 10th Roundtable of the RSPO underway in Singapore, says:  The communities have been objecting to this plantation since 2000 and filed a court case 10 years ago asking the court to recognise their rights and freeze the company’s expansion. But instead of recognising our rights, as the RSPO standard requires, the company has been contesting even the admissibility of our case and meanwhile has taken over and planted all the disputed lands.

Excerpt from Press Release of Forest Peoples Programme, New oil palm land grabs exposed: Asian palm oil companies run into trouble in Africa, Nov. 1, 2012