Jakarta, 21 April 2021: Global environmental non-profit CDP today launched its report, “How green are Biofuels? Understanding the risks and policy landscape in Indonesia”, which aims to assess the evolution of biofuels policy as it relates to the production of palm oil in Indonesia. The report was launched at the Earth Day Forum 2021 “Biodiesel 40: Risks and Challenges” webinar.
The Government of Indonesia has publicly stated its ambition for balancing environmental sustainability with social welfare and economic growth, as outlined by the BAPPENAS Green Growth Plan. The plan also includes commitments to address forest loss, seen as one of Indonesia’s environmental and social challenges, by reducing consumption of imported carbon-intensive fossil fuels.
Since 2006, the government has issued several regulations to encourage biofuel, particularly palm oil-based biofuel. However, the issue of whether biofuels are truly sustainable is inseparable from the challenges that continue to surround palm oil, which remains one of the driving causes of forest loss in Indonesia. As an agricultural commodity, palm oil plays a vital role in the development of the Indonesian economy, but if palm oil-based biodiesel is set to take over from fossil fuel energy consumption as a “green” alternative, then its sustainability is of central concern.
CDP’s report finds that biofuel regulations in Indonesia, as they currently stand, may instead lead to increased pressure on Indonesian forests. The lack of mandatory certification, provision of biofuel subsidies, and aggressive regulatory push for more oil palm production could create conditions for producers to maintain business-as-usual production systems, instead of investing in more sustainable production innovations, such as increasing land productivity.
Environmental risks posed by the regulatory framework that drive biofuel expansion run counter to the targets set by the Indonesian government that aim to reduce deforestation and emissions in accordance with the Paris Agreement. About 80% of greenhouse gas emissions in the biodiesel supply chain come from plantations, signalling that the large quantities emitted from plantations will likely outweigh any projected emissions savings.
Unless the sourcing of biodiesel is deforestation-free, its claimed “green fuel” status is misleading. For Indonesia’s biofuels to be sustainable and categorized as a renewable energy source, biofuel production will require coherent policies among government sectors and the adoption of stringent forest safeguards within the raw material supply chain. Transparency regarding the environmental aspects of biodiesel production is one among several actions required to achieve a deforestation-free biodiesel supply chain.
To this end, CDP concludes its report with policy recommendations to help improve environmental safeguards for palm oil production, enhance corporate environmental disclosure for biodiesel supply chains, and increase public-private dialogue and cooperation.
Pratima Divgi, Regional Director, CDP Hong Kong commented: “To balance Indonesia’s fiscal and environmental health, biodiesel production must be sustainable. It is imperative that robust transparency measures that trace and ensure sustainable sourcing, production and consumption of biodiesel are prioritized and implemented in line with policy ambitions.”
To learn more about CDP and its report, visit their website at https://www.cdp.net/en or download the full media pack here.
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About CDP
CDP is a global non-profit that runs the world’s environmental disclosure system for companies, cities, states and regions. Founded in 2000 and working with more than 590 investors with over $110 trillion in assets, CDP pioneered using capital markets and corporate procurement to motivate companies to disclose their environmental impacts, and to reduce greenhouse gas emissions, safeguard water resources and protect forests. Over 10,000 organizations around the world disclosed data through CDP in 2020, including more than 9,600 companies worth over 50% of global market capitalization, and over 940 cities, states and regions, representing a combined population of over 2.6 billion. Fully TCFD aligned, CDP holds the largest environmental database in the world, and CDP scores are widely used to drive investment and procurement decisions towards a zero carbon, sustainable and resilient economy. CDP is a founding member of the Science Based Targets initiative, We Mean Business Coalition, The Investor Agenda and the Net Zero Asset Managers initiative