Wednesday, March 7, 2007

Indonesia's biofuel drive not fully thought through


Indonesia's biofuel drive not fully thought through

C.G. Moghe, Jakarta

While the developed countries tend to throw money at problems,
Indonesians like to throw vast tracts of land at a problem, even when
easier solutions exist. About a decade ago, the then rulers committed
a million hectares of land to overcome the shortage of rice; which
still continues to be imported. The prospect of self-sufficiency in
(expensive) domestic rice is slim considering the reduced buying power
of the average Indonesia consumer since then.

To date, 5.25 million hectares of idle land and 5.06 million hectares
of forest land have been reportedly set aside for growing the basic
feedstock for bioethanol and biodiesel. The all-out efforts to develop
the biofuel sector are laudable, but the basic problems related to
energy usage must be identified and tackled, and efforts made to
ensure that the development of biofuels does not go the same way as
the rice self-sufficiency project.

The current official thinking on the future development of energy
sources appears muddled and skewed towards grandiose plans. The
Jakarta Post's editorial titled "Biofuel, the right way" (Thursday,
February 15, 2007), extolling the virtues of developing biofuel
capabilities, provides a good example of this kind of thinking. In
describing how "virtuous" biofuel is supposed to be, the editorial
states that "because biodiesel contains no sulfur, global demand for
this fuel has been increasing, particularly in fuel-strapped,
environmentally friendly countries in Europe and North America",
indicating therefore that biodiesel is "good" and all other fuels are

The editorial also recognizes the harsh truth that "demand for
biodiesel will continue to surge as long as international oil prices
remain at or above US$60 per barrel." So, any unexpected development
leading to reduced oil prices may scuttle all the grandiose
development plans for biofuels on economic grounds, irrespective of
how low the sulfur content of the biofuels may be. Perhaps as a
consolation or a footnote, the editorial says that "even if fossil
fuel prices fall below that line, palm oil remains a high-value
commodity for use in cooking oil, soap, margarine and a host of other

The current craze for the breakneck development of biofuels ignores
the fact that biofuels by themselves cannot fully replace fossil
fuels, such as gasoline and diesel, but always have to be used as a
blend (e.g. ethanol blended with gasoline or "gasohol", or palm oil
blended with diesel), and that to the extent edible products like palm
oil are diverted for use as fuel, their price for human consumption
may go up with corresponding adverse economic effects. What is burned
as a source of energy is not as important as how efficiently it is
burned since any waste heat added to the atmospheric gases is as bad
as the greenhouse gases themselves.

It is only after several years of effort, coupled with financial
incentives, that the developed countries have managed to achieve
blends of 20-25 percent biofuel (e.g., ethanol) with conventional
fuels (e.g., gasoline).

Inefficient use of even the greenest of the biofuels will mean
additional waste heat in the atmosphere adding to the greenhouse
effect. The editorial acknowledges that "international consumers will
not touch Indonesian biofuel, however, if it is produced through
environmentally unsustainable practices".

It will thus be important to find ways of reducing the overall impact
of high crude oil prices without producing adverse effects, such as
unaffordable cooking oil (as a result of increased usage for
biofuels), or increased emissions of hot gases. In comparison with the
current blockheaded strategy of slash-and-burn replacement of forests
with oil-palm plantations, several other potential approaches could
achieve a much better balance between ecological impact and cost.

Peak load capacities for most electric power producers are governed by
domestic lighting needs, which can be brought down to about one sixth
by use of Compact Fluorescent Lamps (CFL), with huge reductions in the
corresponding investment needs. Indonesia could follow the good
example of Australia, where regulations enforcing a total shift to CFL
over the next few years are to be brought in.

Methane in underground coal seams is mostly wasted causing perennial
haze/safety hazards/small fires. This gas can be "harvested" as an
energy source and put to efficient use. Extensive use of compressed
natural gas (CNG), a product of local origin (although some investment
will be required for the distribution of CNG), will also make a
significant impact as petroleum-based liquid fuels produce more waste
heat and effluent gases as compared to CNG when burnt, and are mostly
imported, making a shift to CNG both economic and eco-friendly.

Jatropha, a non-edible oil seed-bearing plant, which does not require
as much fertilizer and water as oil palms, can be planted on
wasteland, e.g., land left behind by abandoned coal mines, a totally
unused resource creating eco-hazards. This would conserve the better
land for more useful purposes, would avoid forest clearance for
oil-palm plantations, and would put otherwise useless land to good use
without in any way affecting the supply of edible oils.

Use of geothermal energy, of which Indonesia has huge untapped
supplies, for power generation could make a major difference as this
produces little waste heat; there are no "bad" effluents to deal with;
and no recurring fuel imports would be needed, thus causing minimum
damage both to the environment and the economy.

It is interesting to note that even in the U.S, a combination of the
following carrots and sticks have been adopted to drive future energy
usage: energy efficient buildings (since heating energy is major
component of overall energy usage); incentives to switch to ethanol
(to reduce dependence on fossil fuels and to develop renewable
resources); power generation using resources like wind/tidal power;
improving energy efficiency for cars (both through incentives for
better mileage and penalties for mileage below an ever-increasing
minimum efficiency); limits on emissions for industry, etc.

In Indonesia, previous attempts to develop huge tracts of land, such
as land intended for forestry or sugarcane plantations, or for the
development of shrimp aquaculture, turned out to be disguised attempts
at money grabbing. Any attempted "solution" to our fuel problems
involving the throwing of millions of hectares of land at the problem
could well repeat the mistake.

Investigating and developing every possible alternative, especially
where these are more economic and have less damaging impacts on the
environment, should mean less use of productive/eco-friendly land,
e.g., land that is used for growing edible products and forest land.

The writer has been working for more than 33 years in banking,
financial services and development projects. He can be reached at


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