Govt highlights renewable energy master plan

The Jakarta Post, Jakarta | Wed, 07/13/2011

According to Indonesia’s economic acceleration and expansion master plan for 2011-2015, the country needs Rp 134.6 trillion (US$ 15.7 billion) in investment to develop renewable energy resources for the next 15 years, the Energy and Mineral Resources Ministry says.

The funds will be allocated to five regions; Sumatra (Rp 25.06 trillion), Java (Rp 86.3 trillion), Sulawesi (Rp 15.77 trillion), Bali-Nusa Tenggara (Rp 2.64 trillion) and Papua-Maluku (Rp 4.83 trillion).

Supplying the public with renewable energy is a government priority, Renewable Energy and Conservation Director-General Kardaya Warnika said Wednesday.

"The funds will be used to build both infrastructure and generators,” he said as quoted by tribunnews.com.

Kardaya added that the government was seeking to increase renewable energy utilization by the public, by endorsing innovations such as solar powered street lights.

The ministry also encourages shopping centers and city malls to produce their own electricity by installing solar panels on their roof tops.

“We are blessed with sunshine throughout the year, so we should use it.

"Even a subtropical country like China is doing so,” Kardaya said.

He also added that the government was promoting biofuel development using coconut husks and jatropha.

Indonesian Palm Oil Giant Vows to Save Forests

Jakarta Globe, February 09, 2011

A forest cleared to make way for a palm oil plantation in West Kalimantan.
Golden Agri-Resources (GAR) and its subsidiary SMART, part of the Sinar Mas group,
said it would work with Geneva-based consultancy The Forest Trust (TFT) to ensure
its palm oil is sustainably harvested. (Reuters Photo)

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Indonesia's biggest palm oil producer pledged on Wednesday to follow new standards to protect carbon-rich forests and peatlands, in a move cautiously welcomed by environmentalists including Greenpeace.

The Forest Trust (TFT)

Golden Agri-Resources (GAR) and its subsidiary SMART, part of the Sinar Mas group, said it would work with Geneva-based consultancy The Forest Trust (TFT) to ensure its palm oil is sustainably harvested.

"We will not develop plantations on High Carbon Stock (HCS) forests, High Conservation Value forest areas and peatlands," SMART president director Daud Dharsono told reporters.

He said the partnership with The Forest Trust "aims to ensure that the group has a no deforestation footprint".

Scientists believe the destruction of carbon-storing forests is a lead cause of climate change.Indonesia is the third biggest emitter of the greenhouse gases blamed for global warming, thanks mainly to deforestation across islands such as Sumatra and Borneo, where illegal logging is rife.

Major palm oil buyers including Nestle and Unilever cancelled contracts with SMART in response to a Greenpeace campaign last year highlighting the company's allegedly unsustainable clearing of forests.

TFT executive director Scott Poynton said better management of the palm oil industry was crucial for the environment. Indonesia is the world's biggest palm oil producer.

"Without better stewardship, the phenomenal growth of the palm oil industry could spell disaster for local communities, biodiversity and climate change as palm plantations encroach further and further into forested areas," he said.

But he added: "We all know that this agreement counts for nothing if it's not now implemented".

"We have worked with other companies to clean up their supply chains successfully, and it is our intention to do so again," he said.

Greenpeace Indonesia forest campaigner Bustar Maitar said the group's campaign against GAR would be put on hold to give it a chance to prove that Wednesday's announcement was more than greenwashing.

"On paper, these commitments are really a major step forwards and if GAR implements these changes, it will save large areas of forests," he told AFP. "But we will watch closely to make sure this happens."

Agence France-Presse

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Major Global Palm Oil Supplier GAR Agrees to New Standards for Conserving Forests and Reducing Emissions in Indonesia

Wilmar Int’l set to relocate factories to RI: Govt

The Jakarta Post, Jakarta | Tue, 02/08/2011

The world’s largest palm oil producer, Wilmar International, has proposed to relocate its factories from Malaysia and China to Indonesia this year, a minister says.

“The relocation will begin this year,” Industry Minister MS Hidayat said on Monday as quoted by kompas.com.

Hidayat said Wilmar had planned to relocate its factories to Gresik, East Java, due to the existing infrastructure in the city, but the government had asked the firm to also set up factories in Riau, Indonesia’s main palm oil province.

He added that Wilmar had agreed to do so on the condition that the government could develop infrastructure such as roads to the seaport in Riau.

Indonesia Sets Up Government Unit to Boost Renewable Energy Use

Jakarta Globe, Bambang Djanuarto, August 24, 2010

Energy Minister Darwin Saleh has established a directorate general in charge of renewable energy. It is to be headed Luluk Sumiarso, the former director general for electricity, and oil and gas.

Jakarta. Indonesia’s Ministry of Energy has set up a directorate general in charge of boosting and regulating the use of renewable energy in Southeast Asia’s biggest economy.

The directorate general’s task is to “formulate policies and the technical standardization on new energy, renewable energy and energy conservation,” Energy Minister Darwin Saleh said in Jakarta on Tuesday. The office will be headed by Luluk Sumiarso, the former director general for electricity, and oil and gas, he said.

Indonesia is the world’s biggest producer of palm oil, which can be used to make biofuel. The nation, which is a net oil importer, seeks to boost the use of new energy and renewable energy to support a faster expanding economy. The government forecasts the economy to grow 6 percent this year from 4.5 percent in 2009.

Indonesia left the Organization of Petroleum Exporting Countries last year after crude oil output slumped 49 percent from a peak in 1977.

Bloomberg

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SMART ‘misreported’ some conclusions

The Jakarta Post | Sat, 08/21/2010 10:24 AM

Two international consultants hired by palm oil producer PT SMART to verify Greenpeace claims that the firm was responsible for deforestation said SMART misreported some elements in their study.

In their joint press release on Thursday, Control Union Certification and BSI Group (CUC-BSI), said due to the misreported elements, they “wish to restate the key findings of the report”.

On Aug. 10, SMART held a press conference where they announced that the Independent Verification Exercise (IVEX) Team Report had shown that “SMART operates responsibly and within the laws and regulations set out by the Indonesian government”.

SMART also called Greenpeace claims that they were responsible for deforestation and the destruction of orangutan habitats “exaggerated or wrong”.

In the release made available Thursday, however, CUC-BIS revealed several findings demonstrating that SMART was in breach of the law. The IVEX team, which comprised CUC-BIS members and experts from the Bogor Institute of Agriculture’s School of Forestry, found that there was planting on peatland more than 3 meters deep in two estates, a breach of a presidential decree on deep peatland. “This also contravened SMART’s own operating instructions,” it went on. The report said planting in deep peat was evident but not as extensively as claimed by Greenpeace.

On Aug. 10, SMART acknowledged the finding but said the planting was “unintentional”.

CUC-BIS said that of the 11 concession areas they examined, only three in West Kalimantan had obtained the necessary environmental impact assessments (Amdal) before the land clearance, while two in the province and all six in Central Kalimantan did not have the necessary Amdal when SMART cleared the land.

Another key IVEX finding said most of the concessions stood on already secondary forests, degraded and shrub lands before SMART cleared the land. However, the team found that 21 percent of the examined land, or 37,698 hectares of the company’s total 182,528 hectares was opened before an independent high conservation value assessment was conducted.

“This potentially contravenes Roundtable on Sustainable Palm Oil [RSPO] Principles and Criteria and SMART would need to propose a compensation or exclusion process when these plantations enter into the certification process,” the report said.

Greenpeace said SMART had “manipulated” the report by saying it operated responsibly and within the laws while knowing there were several legal violations. Greenpeace accused SMART, a publicly listed company, of misleading the public and its shareholders.

In response to Greenpeace’s fresh accusations, SMART said it did not have any intentions of misleading anyone as it had published the IVEX Team Report in a “transparent and open way”. “We have taken all the [necessary] steps according to the rules for companies listed on the stock exchange,” SMART president director Daud Dharsono said in a press release Thursday evening.

At a press conference earlier this month, SMART distributed the entire 84-page IVEX report to the press in addition to a press statement containing their own interpretations of the report’s findings on the top of the document in bold typeface. It also made a presentation on parts of the report along with SMART’s own conclusion on the report. — JP

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Japan to Build Biofuel Plant in East Java

Tempo Interactive, Monday, 02 August, 2010 | 14:54 WIB

TEMPO Interactive, Jakarta: Japan has pledged a US$16 million assistance in form of machinery, equipments, and working capital for Indonesia to develop biofuel production of byproducts from sugar industry in the country, the Industry Department said, which is expected to pave way for a similar investment in palm oil byproducts.

Secretary General of the Industry Department Agus Tjahyana said today (2/8) the assistance from New Energy and Industrial Technology Development Organization (NEDO) will specifically help Indonesia to convert molasses from sugar factories into biofuel which have been exported in the past for food industry.

Chief Director of the 10th National Plantation Firm overseeing state plantations in Eastern Java, Subiyono said factories in East Java produce 200 thousands tonnes of molasses a year or between 350 and 400 thousand tonnes if combined with those produced by farmers. Subiyono convinced that the biofuel will be used for domestic need as the firm is drafting future cooperation with Pertamina

NEDO chairman Seiji Murata said his organization has appointed Sapporo Engineering dan Sukisimaki Kai to produce the facility. Agus said the project will cost around US$25 million and the 10th State Plantation Firm will prepare US$9 million for the project.

KARTIKA CANDRA

Time for Indonesia to accelerate use of renewable energy

Antara News, By Eliswan Azly, Monday, July 26, 2010 21:52 WIB

Jakarta (ANTARA News) - Indonesia is at a crossroad. With the impressive rate of its economic growth which leads to a dramatic increase in energy consumption and in an effort to reduce its greenhouse gas emissions, this archipelagic country has to find renewable energy that would may help reduce reliance on carbon-fueled energy.

It is for that purpose that the Energy Care Society (MPE) on Sunday urged the government and the House of Representatives (DPR) to encourage the use of renewable energy as an alternative to fossil fuel.

"The government and the DPR need to issue a regulation to lay a firm basis to change the market domination of fossil fuel by encouraging the public to use more renewable energy," MPE Chairman Abdul Kadir said.

According to him, the regulation must contain clauses requiring companies operating under contracts of work in the oil and gas mining sector to help meet power demand using renewable energy such as solar energy under the corporate social responsibility (CSR) programs.

The companies` participation in the fulfillment of power demand using alternative energy was badly needed to solve power shortages as well as to preserve the environment, he said adding that hopefully this will help accelerate the use of renewable energy in this country.

"It is regrettable that people in oil- and mineral-rich regions have difficult access to electricity. This must draw all of our attention," he said.

He said a number of companies such as state electricity company PLN, state oil company Pertamina, Antam and Freeport had started building solar and micro hydro power plants to meet power demands, however, the power plants are still of low capacity.

"This must become a common movement including the involvement of the extractive industry to think of a solution by providing CSR programs," he said.

He said the MPE had discussed the matter with extractive industries at a seminar in Bandung, West Java, on July 22-23.

In addition, Indonesia could also develop solar power plants which would help it overcome future energy crises, Jacobus Purwono, the director general of electricity, said.

Indonesia recently announced its plan to build 250 solar power plants with a total capacity of 2.2 MW by 2014 to supply the country`s rural areas with electricity. The proposed project is expected to cost around US$84 million.

"The electricity produced by the plants will benefit 150,000 to 200,000 households in different parts of the country," he said.

Indonesia`s announcement comes on the heels of Japan`s $400 million loan to help the country deal with global warming. The proposed solar plants are part of Indonesia`s alternative energy plan, which outlines the installation of solar panels at 192,000 homes, building 570 small-scale hydro-electric plants and the construction of 270 wind plants.

According to Jacobus, the Indonesian government looked forward to the solar project as part of their alternative energy plan since it will power villages while at the same time reducing their CO2 emissions.

Businessgreen.com also reported that the Indonesian government`s statistics showed that only 65% of Indonesia`s 240 million people had access to electricity. Because the large population was distributed in over 17,000 islands, some of the villages, especially in the easternmost regions, were not connected to the National Grid. With the new solar projects, the government hoped to connect more people to electrical supply sources.

As a matter of fact, Indonesia has the world`s largest geothermal power potential, and the plan allocates extensive co-financing to expand large-scale geothermal electricity generation, Katherine Sierra, vice president for sustainable development at the Work Bank, said earlier.

Indonesia could accelerate initiatives to promote energy efficiency and use of renewable energy sources by creating risk-sharing facilities and addressing financing barriers to small- and medium-scale investments.

The low-carbon growth investments in Indonesia are an example of similar programs now approved to receive Climate Investment Funds (CTF) financing in Kazakhstan, the Philippines, Thailand and Vietnam.

Taken together, these programs will demonstrate how future energy demands can be satisfied in ways that will not generate excessive levels of greenhouse gases.

"From our vantage point as multilateral development bank partners in helping countries implement these CTF-funded plans, this bold action on the part of Indonesia and other Asian nations is a harbinger of a fundamental shift in climate action around the globe," she said.

And the same sorts of actions are moving forward in developing countries in every region of the world. While developing countries have not been the primary source of climate-altering greenhouse gas emissions from the past burning of fossil fuels, "they are taking positive actions to help achieve a global solution to the common challenge posed by climate change," she said.

This climate-smart approach offers lessons which all, including those in developed countries, can look to emulate in coming years.

The CTF is founded on partnerships between policymakers, indigenous peoples, private sector entities, civil society and others, she said.

More important to help the country arrive at the targeted use of alternative energy is the granting of such incentive to boost investment in renewable energy such as geothermal, solar and biofuel, in an effort to cut reliance on fossil fuels.

Harry Z Soeratin, a spokesman of the finance ministry said in a statement, his office had issued a decree which granted a 5 percent tax cut over six years for renewable energy producers as well as exemptions from value-added tax and import duties on equipment. Another provision allowed investors to use accelerated depreciation and amortization on assets to reduce taxable income.

The incentive is offered to investors as the government aimed to reduce dependency on non-renewable energy and to ensure availability of sustainable energy sources by attracting investment.

In response to offered incentives, Paulus Tjakrawan, secretary general of the Indonesian Bio-fuel Producers Association (Aprobi), gave his applause and said Indonesia had joined the rest of the world by applying regulations to develop renewable energy. The government was heading in the right direction.

Paulus said the incentives would cut bio-fuel production costs, making it more affordable.

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Bengkulu closed to new plantations

Antara News, Sunday, April 11, 2010 20:02 WIB

Bengkulu (ANTARA News) - The Indonesian Environmental Forum (Walhi) said Bengkulu province was now closed to new big-scale plantations because there was no longer land space available.

"Bengkulu province, with 1.9 million hectares of land, 900 thousand hectares of forest and a population number of 1.7 million, is now running short of land spaces," Walhi`s campaign affairs coordinator for Bengkulu, Firmansyah said here over the weekend.

Firmansyah said that with a population of 1.7 million, Bengkulu could not share one hectare for each of its people. This condition makes Bengkulu unable to open more land for new big plantations if it does not want to remove its own locals.

However, the local government of Kaur district is planning to provide 14,400 hectares to a new oil palm plantation company, PT Desaria Plantation Mining.

"This is threatening the existence of the locals in eight subdistricts of Kaur district," Firmansyah said.

Plantation firms to produce biodiesel for Pertamina

Nani Afrida, The Jakarta Post, Jakarta, Fri, 04/09/2010 10:53 AM

Renewable energy: State-owned oil-and-gas company PT Pertamina president director Karen Agustiawan (right) talks to state-owned electricity company PT PLN president director Dahlan Iskan (left) while State-Owned Enterprises Minister Mustafa Abubakar listens at the ministry, on Thursday. The companies signed two separate MoUs with state-owned plantation companies PTPN and PT Rajawali Nusantara Indonesia and state-owned forestry firm PT Perhutani on renewable energy. JP/P.J. Leo

Three state plantation firms – PT Perkebunan Nusantara (PTPN) III, IV and V — will begin the construction of three biodiesel plants in Dumai, Riau province, before the second half of the year starts.

The three plants are expected to absorb Rp 400 billion in total investment.

“The plants will be finished in the next 18 months. In 2012 the plants will start producing biodiesel,” PTPN IV president director Dahlan Harahap said on the sidelines of the signing of an MoU between the three firms with state oil and gas producer PT Pertamina on Thursday.

Pertamina has agreed to purchase the biodiesel from the plants and to prepare a storage facility for the biodiesel at the port in Dumai.

Dahlan said each of the plants has a capacity to process 100,000 tons of oil palm fruit bunches (TBS) annually. The capacity is expected to be doubled by 2014.

“If the demand keeps increasing, the capacity may jump to 1 million tons of TBS every year,” he said.

Dahlan said about 30 percent of the investment needed to construct the plants would come from the companies’ internal cash flow and the rest from bank loans.

Biofuel is currently being sold to retail customers. In 2008, Pertamina had 279 petrol stations selling biofuel while PLN has also used biofuel to help power nine of its power stations. These nine stations have a total capacity of 96 megawatts (MW).

Currently Indonesia has produced two types of biofuel: bioethanol — made from cassava, sugarcane and sweet sorghum, and biodiesel — made from castor, crude palm oil and jatropha.

By 2015, Indonesia plans to have 10 million hectares of palm oil plantations, up from 7.9 million today.

According to studies by state plantation companies, there are 44 million hectares of land in the country ideal for palm oil plantation. Using conservative yield estimates, this area of oil palm plantation could produce 145 billion liters per year of biodiesel, or 10 percent of current fossil diesel demand.

Besides planning to produce biodiesel, the state plantation firms also plan to produce electricity from biomass-generated power plants and sell it to state electricity company PT PLN.

To produce electricity power in the CPO factories, one factory will require between Rp 30 billion and Rp 40 billion in investment. Dahlan said PTPN IV currently operates 50 factories, with each one potentially able to generate 3 MW of power from biomass, mostly from the Empty Fruit Bunches (EFB) and any other available biomass waste.

PLN will be obtaining electric power from CPO plantations from power generated from biomass (EFBs) while Pertamina will obtain biofuel processed from the CPO itself.

“At the present, only two factories are ready to produce 6 MW in total of electricity power,” he said.

CPO is playing an increasingly important role in Indonesia today with the demand for the product increasing which not only for food consumption and other uses but also as an energy supply crop.

The Indonesian Palm Oil Producers Association (GAPKI), consists of about 370 CPO producer firms making use of about 2.4 million hectares of oil palm plantations. They, along with many smaller farmers, are aiming to produce at least 25 million tons of CPO this year, up by 25 percent from last year’s production target of 20 million tons.

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Plantation firms to produce biodiesel for Pertamina

Nani Afrida, The Jakarta Post, Jakarta | Thu, 04/08/2010 10:29 PM

Three state plantation firms – PT Perkebunan Nusantara (PTPN) III, IV and V -- will begin the construction of three biodiesel plants in Dumai, Riau province, before the second half of the year starts.

The three plants are expected to absorb Rp 400 billion in total investment.

“The plants will be finished in the next 18 months. In 2012 the plants will start producing biodiesel,” PTPN IV president director Dahlan Iskan said on the sidelines of the signing of an MoU between the three firms with state oil and gas producer PT Pertamina on Thursday.

Pertamina has agreed to purchase the biodiesel from the plants and to prepare a storage facility for the biodiesel at the port in Dumai.

Dahlan said each of the plants has a capacity to process 100,000 tons of oil palm fruit bunches (TBS) annually. The capacity is expected to be doubled by 2014.

East Java needs 48,000 tons of jatropha

Wahyoe Boediwardhana, The Jakarta Post, Pasuruan | Mon, 03/15/2010 10:25 AM

East Java looks to the prospect of becoming the first commercial biofuel producer in Indonesia with a capacity of 1 million liters annually.

Such a volume is expected from PT Alegria Indonesia, which is set to complete the construction of a plant in Pasuruan regency this year. The plant, located on 22 hectares of land at Oro-oro village, Kejayan district, commenced the construction last year under the Indonesia-Japanese joint venture with an investment value of more than US$300 million.

Chief executive officer of PT Alegria Indonesia Wahyu Suprihadi Eko Sasono said the plant would need 48,000 tons of dried jatropha seeds in a month.

The Pasuruan administration office has encouraged people to optimize the land use and cultivate jatropha in order to meet demands.

“For the initial stage, we expect 4,000 tons of dried jatropha seeds. The volume will gradually grow to 48,000 tons in order to produce 1 million liters of biofuel annually,” said Edy Suwanto, the head of Pasuruan Forestry and Plantation Office.

He said his office was conducting a campaign to raise awareness about the commercial benefit of jatropha and encourage people to use their neglected land for the plantation.

He said his office was expecting to open 1,200 hectares of the neglected land for jatropha cultivation this year.

“The plantation area will gradually expand because Pasuruan has more than 30,000 hectares of neglected land left idle, although the area suitable for jatropha plantation covers only 11,000 hectares.”

Data shows Indonesia has 77 million hectares of neglected land, 50 million of which can be developed into jatropha plantations while those in Pasuruan accounts for 2 percent of 1.7 million hectares in East Java.

PT Alegria Indonesia is currently working with the Karangploso Tobacco and Fiber Plants Research Center in Malang regency to conduct tests and cultivate seedlings. The center is equipped with a processing unit able to produce 10,000 liters of biofuel daily.

The price of dried jatropha seeds with around 30 percent water content is Rp 1,200 (12 cents) per kilogram.

Counseling programs are available for the farmers on how to grow jatropha for higher yields.

Past biofuel program have failed, resulting in losses for jatropha farmers. However, Wahyu ensured that would not be a repeat.

“We are aware that most people are not interested in growing jatropha again because many have suffered a great deal of loss because most of the biofuel programs failed. But they don’t have to worry now. We will see to it their products will not be neglected.”

Edy reasserted they would buy up all the stock and had deposited a sum of funds in the bank as a guarantee to the farmers.

“But the quality of jatropha seeds must be in line with factory standards.”

The regency administration does not seem the only one interested in developing jatropha-instilled biofuel as an alternative energy. The Defense Ministry has been sending a team to Pasuruan to observe the project.

Team member Col. Purwanto said the ministry was looking to alternative energy resources to ensure domestic energy reliance in the future.

Indonesia's Palm Oil Industry Seeks New Standards

Jakarta Globe, Arti Ekawati, February 02, 2010

Palm oil and paper companies are among those on the environmental offenders list. (Photo: Dimas Ardian, Bloomberg)

The palm oil industry, which is regularly accused of being a major contributor to climate change, wants to develop a universally accepted measurement of the environmental impact of palm oil production.

Witjaksono Darmosarkoro, director of the state-run Indonesian Oil Palm Research Center (PPKS), said it was inevitable that agricultural activities would create carbon emissions, which contribute to global warming.

However, the sector was also responsible for removing some carbon dioxide from the atmosphere by planting new trees and there was a need for a clear measurement on the net effects of the industry in terms of carbon emissions, he said.

“Activities in the palm oil sector must be measurable, reportable and verifiable,” Witjaksono said on Monday, ahead of the International Conference on Oil Palm and the Environment in Bali from Feb. 23 to Feb. 25.

Palm oil stake holders would begin discussing the issue at the conference, which will be attended by government officials, palm oil producers and scientists, Witjaksono said.

Jean-Guy Bertault, regional director for Southeast Asian island nations at Cirad, a French agricultural research center, said there were many assumptions about carbon emissions from the palm oil industry.

Each country, palm oil producer and non-government organization has their own methodology to calculate the ecological, social and economic impacts of palm oil production, Bertault explained.

“How to protect biodiversity as well as how to use it economically? No one could answer that question, since everyone is using various methodologies,” Bertault said.

Environmental campaign groups such as Greenpeace blame the palm oil industry for driving deforestation, contributing to global climate change and endangering rare species such as orangutans.

Indonesia is the world’s biggest producer of palm oil, which is used to make everything from soap to cooking oil.

Joint venture to produce biofuel in Brazil

Radio Netherlands Worldwide, 1 February 2010 - 3:33pm

Sugarcane field

(first generation biofuel)

Shell plans to enter into a joint venture with the Brazilian ethanol producer Cosan. The two companies have signed a declaration of intent for the production, distribution and sale of ethanol in Brazil.

Brazil makes widespread use of ethanol made from sugarcane as a biofuel. This will be the first time that Shell has been involved in the production of biofuel. The energy company believes that biofuels are the most realistic replacement for petrol in the transport sector in the next 20 years. Shell aims to invest 1.6 billion dollars in the joint venture in the next two years. The enterprise is intended to become market leader in Brazil, with 4500 points of sale and an annual production of 17 billion litres.

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Bumi Waras to build CPO processing plant in Bengkulu

Antara News, Sunday, December 13, 2009 17:48 WIB

Bengkulu (ANTARA News) - National Investor Bumi Waras (BM) Group will build a CPO (Crude Palm Oil) processing plant in Pino Raya sub district, South Bengkulu District, Bengkulu Province.

The company would invest tens of billions of rupiahs for the CPO processing plant, according to Risman Sipayung, head of the Bengkulu provincial plantation service, here on Sunday.

The construction work of the CPO processing plant would begin early 2010, he said.

The plant would need around 200 tons of CPO to be processed daily, he said. There are a number of oil palm plantations around Pino Raya sub district which could supply the company with oil palm.

The factory is expected to produce margarine and cooking oil, while its residue could be used to produce fodder, material to make soap and lauryl alcohol.

Indonesia`s crude palm oil (CPO) production next year is projected to increase by 1 - 1.5 million tons from this year`s production estimated to reach more than 20 million tons, analysts said.

"Indonesia`s CPO production in 2010 will increase by 1 - 1.5 million tons from this year`s estimated figure at 20 million tons. The 2010 prediction is realistic, though it could reach 2 million tons," Dorab E Mistry of Godjred International Ltd said recently.

Speaking at the "Indonesia Palm Oil Conference and Outlook 2010," Dorab said that the increase in Indonesia`s CPO production would happen because Indonesia had fast areas and was active in expanding plantations, particularly in 2007 that would boost its production next year.

Japan`s Cosmo Oil to invest US$800 mln in PNG biofuel project

Port Moresby (ANTARA News/Asia Pulse) -- Japan-based Cosmo Oil Co Ltd (TSE:5007) is set to invest US$800 million in the development of a starchy crop as raw material for biofuel production in Papua New Guinea, reports The National.

However, the project can only start in another three-and-half years as pre-feasibility studies have to be done for six months to gather necessary data on appropriate crops, raw material and appropriate soil type, after which a three and half years' long full-scale analysis on the chosen raw materials will be carried out.

Crops for analysis included corn, cassava and peanut.

Shell's renewables strategy to focus on biofuels

Shell's to focus on biofuels rather than wind, solar energy in alternative energy strategy 

Yahoo Finance

By Toby Sterling, Associated Press Writer, Tuesday March 17, 11:26 am ET 

AMSTERDAM (AP) -- Royal Dutch Shell PLC, Europe's largest oil company, said Tuesday its alternative energy strategy will focus more on biofuels than wind or solar energy, but revealed that investments in the sector are still only a tiny fraction of its overall business. 

Presenting the company's strategy, Shell said it has made $1.7 billion in investments in renewable energy and to reduce carbon dioxide output over the past five years. That compares with $1.7 trillion in company sales and $126.8 billion in net profit in 2003-2008. 

Executive board member Linda Cook said the company wouldn't give further details or disclose future spending plans in the individual categories of renewable energy. 

But she said Shell's ultimate goal is to build a "material business in alternative energy" and that the company plans to concentrate on biofuels at the expense of wind energy or solar power. 

Biofuels is the area closest to what Shell already does, she said at a strategy meeting in London broadcast on the Internet. "It's fuels, our brand is relevant, we're already present in the distribution business. So that one makes sense," she said. 

In the past year, Shell has signed deals with U.S.-based companies Virent Energy Systems Inc. and Colexis Inc. to develop plant-based alternatives to gasoline, with a focus on fuels not based on food crops. 

"On wind and solar (energy), they're interesting, but they continue to struggle in comparison with the other investment opportunities we have in our portfolio, even with substantial subsidies," Cook said. 

In the past Shell has been reluctant to disclose its spending on renewable energy, despite the urging of its own "sustainability" reporting panel. 

Cook rejected the idea that the company's spending on renewables is too small. 

"We have to start somewhere," she said. "If there aren't investment opportunities that compete with our other projects in the billions and billions then we won't spend the money on it (them)." 

She said the company's priority was to focus on investments that would "get the best return for shareholders. If those were in renewables today, we'd be putting money there, we'd be happy to. But that's just not the case. So we keep trying." 

Also Tuesday, Shell said its oil reserves were unchanged at the end of 2008 compared with a year earlier. 

That means 2008 was the first year the company hasn't pumped more oil than it has added to reserves since 2004, when an accounting scandal forced it to slash its proven reserves by more than a quarter. 

The company said net reserves were 11.9 billion barrels of oil or equivalents at year-end, enough to last about 10 years if it stopped developing new projects. 

Shell plans to increase production by 2 to 3 percent per year through 2012, after seven years of falling production. 

Chief Executive Jeroen van der Veer said Shell believes the current global economic downturn "could last more than a year" and Shell plans to reduce costs by demanding price reductions from suppliers. 

Shell has said the company does not expect to cut jobs. 

Shares fell 2.6 percent to euro17.30 in Amsterdam. 

In January, Shell reported full year 2008 earnings of $26.3 billion, down from $31.3 billion in 2007, due to falling oil prices and a corresponding drop in the value of its oil inventory. 

China, Japan eager to develop Indonesia`s bioenergy

Jakarta (ANTARA News) - China and Japan have expressed interest in developing Indonesia`s biofuel and renewable energy, an official said. 

"Japan and China are eager to develop bioenergy in Indonesia. As a matter of fact, China has many times sent its delegation to Indonesia for that purpose," Chairman of the Indonesian Cooperatives Council (Dekopin) Adi Sasono said on Thursday. 

Indeed many developed countries regard Indonesia as a potential producer of biofuel and renewable energy, not to mention its spices, he said. 

"We have the potentials to invite foreign investors, the more so because they regard Indonesia as the main source of green energy," he said. 

The Dekopin chief said Chinese and Japanese delegations will soon visit Indonesia to explore possibilities of investment in the sector. 

The two countries are determined to reduce their dependence on fossil-based energy and to meet 10 percent of their energy needs from renewable sources, he said. 

"We are rich in sources of green energy particularly from sugar cane, cassava and jatropha curcas," he said. 

Indonesia now has an estimated 20 million hectares of idle land suitable for the cultivation of such plants, he said.

S. Korean Firm Inks $500m Pulp Deal

The Jakarta Globe, Arti Ekawati, March 6, 2009 

South Korea’s Korindo Group is planning to invest $500 million in a factory on Kalimantan Island, with the capacity to process 600,000 tons of pulp annually for particle board and paper. The announcement was made by Kim Hoon, Korindo’s executive director, on Thursday. 

The factory is scheduled to get underway over the next two years, Kim said, after signing a memorandum of understanding between Indonesia and South Korea. The signing was witnessed by the Indonesian Forestry Minister MS Kaban and Chung Kwang-soo, Korea’s minister of forest service. 

“We will use acacia mangium and eucalyptus as raw materials,” Kim said. 

Acacia mangium is found in Papua New Guinea, Maluku Province and in Australia. Some varieties can grow to 20 meters in less than a decade. Eucalyptus trees are mainly native to Australia. 

Korindo is licensed to manage 170,000 hectares of plantation forest, most of it in Kalimantan. The company has already planted 78,000 hectares as raw material, Kim said. 

He acknowledged that investors faced problems, including the lack of adequate infrastructure and jurisdictional questions between the central government and regional administrations. 

“It happens that infrastructure in some districts cannot support the industry,” Kim said, adding that some potential investment areas did not have roads. 

After the MOU signing, Kaban said the ministry had also granted forestry licenses to two other South Korean companies, PT Taiyoung Engreen and PT Inni Joa. He pledged to aid investors seeking to get involved in forestry. 

“Investment in forestry plantation is large-scale,” he said. “For example investment in sengon [ paraserianthes falcataria , a fast-growing species of wood found in East Java Province] requires about Rp 12 million [$996] a hectare,” Kaban said, adding that ministry support would be required, without elaborating on how assistance would be offered. 

Aside from supporting the large-scale forestry industry, the ministry is making an inventory of forest areas belonging to local residents, he said. 

The Ministry of Forestry said Korea has about 564,000 hectares of land for plantation in Indonesia, slated for pulp production and jathropa for biofuels. 

Indonesia has about 120 million hectares of forest, with 20.5 million hectares converted for other uses, 66.3 million hectares in production forest and 33.5 million in conservation forests.

$100m mega jatropha project

Ika Krismantari, The Jakarta Post,  JAKARTA  |  Wed, 03/04/2009 4:05 PM  

Mother Earth Plantations Pte (MEP) is investing in the first mega jatropha project in Indonesia, with US$100 million over four years in West Timor. 

Singapore-based MEP president Roland A. Jansen said Tuesday the company had started this mega biofuel project -which includes the development of 1 million hectares of land and the construction of a processing plant - half a year ago and is aimed to start initial production of 30,000 tons by 2013. 

"We will increase the capacity up to 100,000 tons in the following years," Jansen said. 

He said the company, through its local subsidiary PT Buana Ibunda would start construction of the processing plant by the end of 2009. 

In relation to the development of up to 1 million hectares of land, the company decided to do this in four stages over a period of four years, with the first phase to start with the development of 100,000 hectares, followed by the development of 300,000 hectares per year over the next three years. 

Jansen said the output from the plant, which would be in the form of biodiesel, would be prioritized for the local market, with only a small portion of the output to be exported to countries such as China. 

Commenting on the renewable energy market in Indonesia, he said that jatropha had good prospects of becoming the main feedstock for the production of biofuel in Indonesia, despite the current trends with oil prices being fairly low. 

International crude oil prices are currently hovering below $40 a barrel, as against the historic high of $147 per barrel in July last year before prices fell in line with the impact of the global financial crisis. 

Investing in jatropha needs relatively less investment than other biofuels and should not heighten the global food and energy debate as it is a non-edible plant, he said. 

A number of foreign energy companies, including CNOOC of China and Britain's BP Plc, have expressed interest in investing to help develop the country's biofuel sector. 

Indonesia is regarded as having big potential in the biofuel sector due to its vast land area and rich natural resources, including palm oil as a popular feedstock for biofuel. 

BP has also set its sights on the development of jatropha in Indonesia, however their plans are yet to be developed. 

In addition to the current low price of oil, unclear regulations and previous lack of government supports in terms of incentives and guidance are among the reasons for the slow pace in the development of biofuel projects. 

In an attempt to promote the use of biofuel, the government has decided to subsidize biofuel products with a maximum cap of Rp 1,000 (83 US cents) per liter. 

Biofuel producers have repeatedly complained they have been running at a loss when selling biodiesel to Pertamina, since prices are set in accordance with fossil fuel prices, currently too low to cover the cost of biodiesel production. 

Indonesia has the capacity to produce 2.9 million kiloliters of biodiesel per year and 215,000 kiloliters of bioethanol per year, with more than 200,000 kiloliters of bioethanol and biodiesel to be blended into subsidized fuels this year alone.

RI CPO exporters seek to comply with EU certification rules

The Jakarta Post, Jakarta | Wed, 02/18/2009 2:06 PM  

Indonesia's crude palm oil (CPO) exporters are preparing themselves to have their products meet the "sustainable certification" requirement. 

This requirement is soon to be applied in international markets, and Indonesian exporters need to comply so as not to lose their competitive edge, a minister and business players said on Tuesday. 

Agriculture Minister Anton Apriyantono awarded on Tuesday the first ever Sustainable CPO Certificate to PT Musim Mas, one of the industry's major players, and said at least four other companies would follow suit in the following months. 

"Crude palm oil contributed around US$10.7 billion to the country's economy in 2008 and the industry absorbs around 3.7 million laborers," Apriyantono said, speaking on how vital the commodity's contribution to the economy is. 

"Right now, there are four other companies which are preparing themselves to meet the standard needed for the certification. They are PT Hindoli in South Sumatra, PT Lonsum and PTPN 3 in North Sumatra, and PT Sime Indo Agro in West Kalimantan," he added. 

The certification, which is issued by the Roundtable on Sustainable Palm Oil (RSPO), is vital to the Indonesia CPO industry because it will help the world's largest CPO producing nation to maintain its market share, especially in EU countries. 

The European Union EU requires that starting in 2010, all of the CPO imported into EU countries will have Sustainable CPO Certification to ensure that the production process of the commodity was carried out in an environmentally friendly way. 

This measure was adopted because EU environmentalists felt the rapid expansion of Southeast Asia's oil palm estates was in part responsible for the destruction of tropical forests and wildlife. 

One of the requirements for the certification test is that CPO producers must prove that their production process can reduce the greenhouse gas effect, or greenhouse effect, by as much as 35 percent. 

The certification also requires CPO producing companies to meet eight main principles including transparency, legal and regulatory compliance, long term financing capability, best production practices, environmental responsibility, and labor welfare assurances along with 39 other standard criteria. 

"We invested around $20 to $40 per hectare in our plantation to meet the standard. In total, the investment was around $600,000," PT Musim Mas president director Bactiar Karim said. 

The secretary general of RSPO, a non profit-oriented organization grouping growers from CPO_producing countries, Vengeta Rao, said the organization, along with the government, would help smaller growers to acquire certification. 

"The cost to acquire the certificate will be much lower for smaller growers, but we have yet to determine how much that will be," Rao said. 

The country exported around 13 million out of 17 million tons of palm oil produced in 2007. The volume of CPO exports increased the following year to 14.5 million tons out of a total production of 18.5 million tons. 

"We exported around 1.5 million tons of CPO with a value of $1 billion to the EU last year," Derom Bangun, former chairman of the Indonesia Palm Oil Producer Association (Gapki) and vice chairman of Indonesian Palm Oil Board (DMSI), said. 

"Another advantage of having a certificate is that certified companies may sell their products $40 higher per ton, compared to companies who do not have certification." 

DMSI marketing head Susanto said that the certification would not have much immediate impact on the industry, but it would definitely give an edge to Indonesian CPO producers in the long run. 

"PT Musim Mas is just the beginning. Slowly but surely, all of the palm oil estates in Indonesia will be receive the certification," he said. 

The country's CPO prices were booming in the first half of 2008. Prices hit a peak of $1,200 per ton, generating huge profits. 

The global financial crisis, however, inevitably turned the tables around. Lack of demand from the market caused an oversupply that slashed the average price of the commodity by around 60 percent by October, although the prices have started to climb and stabilize again since the start of this year. 

Industry players recently projected a conservative forecast of 20 million tons of production capacity this year, targeting 14 to 16 million tons of exports, with a favorable average price level at $400 per ton. (hdt)