The Disastrous Local and Global Impacts of Tropical Biofuel ...

March 2007www.energytribune.comAMERICA: BURNING FOOD AS AUTO FUELET FocusArgentina’sLoomingEnergyCrunchPrice ControlsCrimp LatinAmerica’sBiggest GasProducer820 Gessner Rd. - Ste. 920 Houston, TX 77024Nationalizingthe Orinoco

ET FocusThe Disastrous Localand Global Impacts ofTropical Biofuel ProductionBy Lucas J. Patzek and Tad W. Patzekast November, Patricia A. Woertz, the CEOand president of Archer Daniels Midland,outlined a new growth strategy for the foodprocessinggiant. ADM, America’s biggest producerof corn ethanol, will expand its biofuel production,moving into Brazilian sugarcane for ethanol and Indonesianpalm oil for biodiesel.Woertz, a former high-ranking official atChevron, said ADM will get “long-term growthand returns by capitalizing on our globalstrengths and the changing dynamics of the globalenergy and food markets.”As ADM, one of the world’s largest food companies,seeks to increase profits, the continuingpush into the tropics by it and other biofuel producerswill only accelerate a potential ecologicalcatastrophe. Vast tracts of Malaysian and Indonesianforest have already been lost, and the increasingdemand for palm oil for biodiesel willcause further losses of tropical forests in theseand other equatorial countries.This deforestation will likely be devastating.And yet, despite the global push for biofuels, thepotential damage – increased soil erosion, huge carbondioxide emissions, biodiversity loss, and desertification– is largely being ignored.Here in the U.S. there has already been amplediscussion about biofuels in Brazil, so let us concentrateon Indonesia and the oil palm.The oil palm (Elaeis) is the most productive oilcrop in the world, with an average annual yield of3 to 4 tons of crude palm oil per hectare for majorproducer countries. While the soybean is currentlythe world’s leading source of vegetable oil, with 30percent of global vegetable oil consumption in 2004,the oil palm is a close second with 29 percent of themarket. The fruit of the oil palm consists of a kernel(seed) within a hard shell that is surrounded bya fleshy pulp, the mesocarp. Commercial palm oilis derived from this mesocarp. The palm kernel oilis different. These two oils have distinct fatty acidcompositions and hence differing uses. Palm oil is aneven 50/50 split between saturated and unsaturatedfat, while palm kernel oil’s saturated/unsaturatedratio is 82/18. After oil from the kernal is extracted,a proteinaceous residue remains, palm kernel cake,which is a valuable animal feed.Traditionally, about 80 percent of palm oil is foredible use. Common food products made from palmoil and palm kernel oil include cooking oils, shortenings,vegetable ghee, margarines and spreads, andconfectionery and non-dairy products. Palm oil hasseveral properties that contribute to a long shelf lifefor end products: it is resistant to oxidative deterioration,suffers lower polymer formation, and has vitaminE as a natural antioxidant. The oil, therefore,is particularly suitable for use in hot climates and asa frying fat in the snack and fast food industry. Asfor its non-edible use, it is a good raw material forproducing oleochemicals, fatty acids, fatty alcohols,glycerol, and other derivatives for the manufactureof cosmetics, pharmaceuticals, bactericides, and otherhousehold and industrial products.Palm Oil Fruit photo by M.J. SilviusMarch 2007 19

ET FocusBurning Peat Swamp photo by M.J. SilviusDemand in the 18th century persuaded Europeansto plant oil palm plantations. The first largeplantation was established in Indonesia around 1911,and can be traced back to four seedlings planted atBogor Botanical Garden. From these seedlings theDeli dura (thick-shelled) palms developed, with betterfruit composition and a larger proportion of mesocarpthan in African palms. Southeast Asia, and specificallyMalaysia, has dominated the industry eversince. Malaysia and Indonesia together currently accountfor 86 percent of global palm oil production and91 percent of its global exports. Malaysia produces42 percent and remains the leading exporter with 48percent of the world market. Indonesia produces 44percent of the world’s palm oil and is a close secondin exports, with 43 percent of the market.Indonesia is a far larger country than Malaysiawith a correspondingly larger work force, and the expectationis that Indonesia will eventually surpassMalaysia as an exporter. As long as there is politicaland economic stability, Indonesia will remain thelargest producer in the world.The present success of the oil palm industryin these two countries can be attributed to theirfavorable climatic conditions, well-established infrastructure,and an unsurpassed knowledge base,both in the oil’s actual production and in its upstreamand downstream industries. Oil palm plantationsare being established at a rapid rate inseveral other Southeast Asian nations, includingThailand, the Philippines, and Papua New Guinea.However, by far the largest developments arefound in Indonesia. These developments are chieflyfunded by Malaysians, although China, Europe,and the U.S. are also key players.The attention given to biodiesel by the U.S.and E.U. governments has spurred the demand forpalm oil for biodiesel. The E.U. recently orderedthat 5.75 percent of all vehicle fuels come from renewablesources. The U.S. Internal Revenue Servicehas deemed oil palm as a feedstock for biodiesel,and therefore it is eligible for the biodiesel taxcredit of a penny per percent of biodiesel blendedwith petroleum diesel. These moves by the world’sbiggest motor fuel markets have led to a surge ofinvestment in Malaysian and Indonesian palm oilplantations. Indonesia’s largest plantation company,PT Astra Agro Lestari, has seen its shares jumpby about 80 percent over the past year.THE FIRES ARE HARD TO CONTROL ANDSPREAD EASILY TO ADJACENT FORESTS.In Indonesia, the oil palm plantations are ownedand operated by many of the same companies that operatelogging, wood-processing, and pulp industries.(The Salim Group, the Raja Garuda Mas Group, andthe Sinar Mas Group are all prime examples.) A naturalresult of this conjoining has been an increasein illegal and damaging land use. A company with aplantation concession may only be interested in theland’s timber. The trees will be cut down and hauledaway, no replanting effort will ensue, and the landwill be left deforested and degraded.Companies commonly set fires to clear land forplantations. Besides being illegal in many countries,including Indonesia, the fires are hard tocontrol and spread easily to affect adjacent forestsand communities. In 1997 and 1998 fires ragedthrough 6 percent of Indonesia, burning 11.7 millionhectares of land. The majority of the fires occurredon plantation company land, and threequarterswere oil palm plantations. The governmentaccused 176 companies of starting thesefires, of which 133 were oil palm plantation companies.Just 5 companies were actually taken tocourt and only one was penalized.The widespread tropical forest and peat firesin Indonesia during 1997, combined with the firesin Central and South America and in the borealregions of Eurasia and North America, emitted7.7 billion tons of carbon dioxide. The cumulativeemissions from these forest fires rival the world’stotal anthropogenic emissions. Tropical forest andpeat burning in Indonesia has continued unabated.And these oil palm plantations can never sequesterback the carbon dioxide that is released inforest and peat burning.20 Energy Tribune

The results of all this forest clearing can beseen by looking at Indonesia’s carbon dioxideemissions. Indonesia is now the third-leading producerof carbon emissions after the U.S. and China,according to a recent study done by two Dutchentities, Wetlands International, a non-profitagency, and Delft Hydraulics, a consulting firm.The study also found that degraded peatlands inSoutheast Asia produce some two billion tons ofcarbon “which is equivalent to almost 8 percent ofthe total carbon dioxide emissions from fossil fuels.”It goes on to say that these carbon emissionsare a “major obstacle to meeting the aim of stabilizinggreenhouse gas emissions.”Beyond the problems that arise from forest clearing,the replacement of primary forest with a monocultureplantation is disastrous for biodiversity. A1969 study showed that primary forests in the tropicscontain 75 mammalian species, while disturbedforest, oil palm and rubber plantations, and scrublandcontain only 32, 13, and 11 respectively. Naturally,plant diversity is more severely affected by theplantations. Since oil palm plantations can only beestablished in equatorial countries, the most biologicallydiverse in the world, these issues hold particularweight. An examination of Indonesia will put thisinto context. Although Indonesia occupies 1.3 percentof the earth’s land surface, it is home to 11 percent ofthe earth’s plant species, 10 percent of its mammalspecies, and 16 percent of its bird species.Following deforestation and the subsequentconversion to agriculture, soil erosion on steepmountain slopes in Indonesia can be 30 timeshigher than the nominal soil erosion in U.S. agriculture,10 tons per hectare.It is the sheer scale of the deforestation in manyequatorial nations that is most worrisome. Indonesiaagain is a prime example. Forty percent of the forestsextant in 1950 were cleared in the subsequent50 years. (In 1950 there were 162 million hectares offorest, and in 2000 there were 98 million hectares.)The island of Borneo has lost 80 percent of its primaryforest in the last 20 years. Official Indonesianstatistics state that up to 2.4 million hectares of forestare leveled each year. Since in the 1980s the averagewas 1 million hectares per year, it is clear thatthe rate of forest loss is skyrocketing. Deforestationcontinues to be an immense problem – and the recentbiofuel fervor has only made it worse.One of the major benefits touted by plantationcompanies is their substantial generation of employment,especially in rural areas, which in turn drivesrural development. Since oil palm plantations arecurrently less mechanized than other types, theyrequire a larger labor pool. For example, oil palmplantations employ about 1 person per 10 hectares.In comparison, the larger soy plantations in Brazilemploy an average of 1 worker per 200 hectares.A 20,000 hectare oil palm plantation would thusemploy 2,000 people, while the same size soybeanplantation would only employ 200.It is possible, however, that such claims of increasedemployment are a disingenuous measure forcommunity improvement. Oil palm plantations, likeall other tropical plantations, exist in the world’smost biologically diverse terrestrial regions, onesthat have supported human communities for a longtime. In fact, human beings are tropical animalswho originated from these regions, so it is safe to saythat as a species we have more experience creating alivelihood from tropical forests than from any otherhabitat. The loss of these forests to giant monocultureplantations creates a previously non-existentdependency on external factors. A local communitymay no longer be self-sufficient, for instance havingplentiful quantities of local fruits, vegetables, bushmeat,and lumber, and find themselves at the mercyof market forces to provide work and wages, importedfoodstuffs, and housing materials. As circumstancehas shown, this pattern of stripping away acommunity’s once viable subsistence lifestyle andreplacing it with an alien wage-based existence isdetrimental and debilitating.Communities once considered poor by Westernstandards often become utterly impoverished bytheir forced dependence on a market economy, whichholds no real niche for them other than as cheap labor.There are factors beyond a mere sustenance autonomythat must be considered as contributing toa quality of life. One must also take into account apeople’s ancient cultural and spiritual ties, as wellas their legal rights to their land.Source data for graph: Impact of oil palm plantation estabishment on greenhouse gas balance by Germer, J. and Sauerborn, J.The Impacts of Tropical Biofuel Production - March 2007 21