Promoting Transparency, Accountability, and Sustainability in Indonesia’s Domestic Palm Oil Industry

Aidenvironment and the Sustainable Biofuel Network met with Pertamina, Indonesia’s national energy company, to discuss how palm oil and other materials sourced for the country’s biodiesel blending policy can meet sustainability requirements.

The meeting, held on 4 September 2019 with Mr. Hendra Yoga and Mr. Zarkoni of Pertamina’s Renewable Energy Development Research Division, was part of Aidenvironment’s project funded by the Norwegian International Climate and Forest Initiative (NICFI) to promote transparency, accountability, and sustainability in Indonesia’s domestic palm oil sector.

The meeting explored the opportunities and challenges of implementing Indonesia’s biodiesel blending policy. Pertamina is a state-owned enterprise and holds 80% of the biodiesel quota for 2019. It is therefore a key player in the implementation of the policy. Biodiesel is still mainly sourced from palm oil and this carries both a risk and an opportunity. The risk is that in the absence of strict sustainability measures the demand for palm oil for biodiesel could drive conversion of fire-prone forest and peat areas into palm oil plantations, which would conflict with the government’s emission reduction target and low carbon development goal. However, if sustainability measures are imposed on the suppliers, this policy could be an opportunity to build momentum for responsible and sustainable management in palm oil sector.

The important message of this meeting is that Aidenvironment and the Sustainable Biofuel Network, which represent civil society, support the biodiesel blending policy insofar it contributes to the government’s low carbon development and emission reduction goals. Mr. Hendra Yoga of Pertamina explained that the main criteria in sourcing biodiesel are cost-efficient and sustainable supply. Palm oil waste products would be more environmentally friendly alternative raw materials, but the challenge is ensuring easy access and continuous availability to make them commercially viable.

Seven out of ten companies supplying biodiesel to Pertamina for the 2019 period have already adopted NDPE policies, which means that they have committed to source their palm oil only from sources that are free from deforestation, peat conversion, social conflicts, and exploitation of human resources. This provides an opportunity for civil society organizations (CSOs) to monitor on-the-ground implementation of the policy and at the same time to encourage non-NDPE companies to adopt the policy and implement it in their business practices. A good way to stimulate this, it was suggested, would be for the Ministry of Environment and Forestry to establish an award scheme for the managers of oil palm plantations and palm oil mills that have fulfilled NDPE, like the scheme developed under PROPER ( Program Penilaian Peringkat Kinerja Perusahaan dalam Pengelolaan Lingkungan Hidup (Company’s Environmental Management Performance Assessment Program)) for oil and gas companies.

An important recommendation to come out of the meeting is to initiate a multi-stakeholder discussion to push the sustainability requirement, with the government (Ministry of Energy and Mineral Resources) taking a lead in reaching out and coordinating the roles of all relevant stakeholders: Pertamina, APROBI (Asosiasi Produsen Biofuel Indonesia / Association of Indonesian Biofuel Producers), KNKT (Komite Nasional Keselamatan Transportasi / National Committee on Transportation Safety), the Ministry of Transportation, and others.

Following the meeting with Pertamina, Aidenvironment conducted a three-day training course on 4–6 September 2019 for CSO partners involved in supporting project implementation:  Lingkar Hijau, Agra (Sumatera), Padi (East Kalimantan), Sawit Watch, JPIK (Bogor), Linkar Borneo (West Kalimantan), and Elsam (Jakarta). The training provided a forum for sharing experiences and  focused on strengthening CSO capacity to conduct fact-based monitoring, campaigning, and public pressure through the media, as well as advocacy.