How does Indonesia's palm oil industry fuel the climate crisis?

JAKARTA - Indonesia accounts for more than half of the global palm oil supply, the world’s most widely used vegetable oil that is found in everything from food to cosmetics to fuel.

But environmentalists fear surging demand for the versatile product may drive mass deforestation in Indonesia, home to the world’s third-largest tropical rainforest, and exacerbate the global climate crisis.

Palm oil production reached 50 million tonnes in 2023 from 45 million tonnes the year before, according to the Indonesian Palm Oil Association.

As companies and small landholders replace natural habitats with palm oil plantations, activists and researchers are warning that large amounts of planet-heating carbon is being released into the atmosphere.

How do palm oil plantations contribute to deforestation?

Palm oil plantations cover more than 42.7 million acres of Indonesia, compared with 41.5 million acres in 2019, the government’s Geospatial Information Agency said this month.

Indonesia lost 721,000 acres of primary, or old growth, forest in the last two decades – equivalent to 221 metric tonnes of carbon dioxide emissions, according to Global Forest Watch. Drivers of this deforestation include plantations and mining.

Sumatra and Borneo, home to the endangered orangutan and other endemic species, have lost 36% and 45% of their tropical forests, respectively, due to palm oil expansion, according to Nusantara Atlas, a non-profit that tracks deforestation.

The loss of carbon-storing forests is compounded by the conversion of peatland into plantations. Indonesia is home to more than a third of the world’s tropical peatlands, a type of wetland that is the world’s biggest land-based store of carbon.

Palm oil planters believe the soil in these wetlands yields more crops and drain them through man-made canals so that planting can take place. A study by the International Union for Conservation of Nature and Natural Resources in 2021 showed draining peatlands across the world releases 1.9 gigatonnes of carbon dioxide equivalent per year.

How does the biofuel business affect climate change?

Palm oil is a primary ingredient of biodiesel, a cleaner-burning, renewable fuel used in transportation. But a growing body of research shows that biofuels from vegetable oils like palm actually emit more carbon than fossil fuels, primarily due to changes in land use in order to grow the crops.

Indonesia is currently among the largest biodiesel producers in the world, with total exports amounting to more than 193,000 kilolitres.

The government targets production of 13.4 million kilolitres in 2024, 2% more than last year, when it grew 11%, according to the energy ministry.

Indonesia requires fuel producers to make a blend of diesel fuel that contains 35% palm oil and wants that share to rise to 40% in 2025.

The government began to cultivate palm oil in the 1980s in the hopes of boosting the economy and providing jobs. It now accounts for 3.5% of gross domestic product, government statistics showed.

Researchers claim palm oil has not contributed to the welfare of people living near plantations. The rate of poverty remains high in the palm oil-rich regions of Sumatra and Borneo, where people face food insecurity after farms were cleared to make way for palm trees.

Can a moratorium on new plantations help stop deforestation?

While Indonesia's deforestation rate fell between 2019 to 2022 due to stricter regulations, a moratorium on forest clearing and better mitigation of forest fires, the clearing of primary forests for mining and plantations has risen slightly.

The government issued a moratorium on new palm oil plantation in 2018 to slow deforestation. Despite the reprieve, about 119,400 hectares of forests were cleared between 2021 and 2022.

Between 2022 and 2023, some 52,000 hectares of forests were converted into plantations, Nusantara Atlas data showed.

Environmental groups have blamed a lack of reinforcement of the moratorium and called for replanting unproductive oil palm trees on existing plantations, instead of clearing forests.

(Reporting by Adi Renaldi; Editing by Ayla Jean Yackley.)