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  • What’s holding back biodiesel industry growth in Indonesia?

What’s holding back biodiesel industry growth in Indonesia?

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A woman shows freshly collected oil palm fruit in Indonesia. Photo by Icaro Cooke Vieira/CIFOR

Despite Indonesia’s reputation as the largest producer of palm oil in the world, its bioenergy production remains relatively low. Recently, a study has found that a range of policy and technical obstacles are preventing the sector’s growth.

A team from the Center for International Forestry Research (CIFOR) and Bogor Agricultural University (IPB) interviewed key informants from central and regional Indonesian governments and the business sector during research on the opportunities and challenges presented by policies relating to the development of palm oil–based biodiesel, leading to the release of a working paper.

“We found a number of policies and technical challenges that still hinder the development of biodiesel production in Indonesia,” says CIFOR Scientist Ahmad Dermawan.

Among the constraints identified in the study is the fact that biodiesel production cannot grow consistently due to policies that do not support one another.

“Existing policy frameworks give a mandate to biodiesel blending targets. However, in practice, this has not been optimal because, first, they are still focused on the transport sector, and second, they still emphasize public service obligations [PSOs],” says Dermawan.

He also said that within the country’s new and renewable energy development sector, there is a belief that biodiesel development still lies with the central government, causing a lack of understanding about the role of subnational government. Though small, the role that regional governments play in developing policies supporting biodiesel use in the region is rarely in focus.

“In the National Energy Policy, the central government is required to put together a National Energy Plan [RUEN], and the provincial government is required to have a Regional Energy Plan [RUED]. Currently, many provinces have yet to develop their RUED.”

Read more: The long and winding road to sustainable palm oil

A couple collects oil palm fruit in Indonesia. Photo by Icaro Cooke Vieira/CIFOR

PALM OIL’S POTENTIAL

Indonesia is the world’s largest producer and consumer of palm oil, producing more than 38 million tons of crude palm oil (CPO) in 2017. With around 75% of its total production exported, the commodity contributed USD 23 billion in export revenue in 2017.

Despite global contention around palm oil (earlier this year, the European Parliament voted to end the use of palm oil in biofuel by 2030) it is by far the most efficient vegetable oil when compared to other oil-producing commodity crops, meaning it requires relatively less land to produce the same amount of product.

Oil palm also remains one of the most important agricultural commodities in Indonesia for the production of bioenergy, with at least two potential forms of energy produced from the crop: biodiesel and biopower. The former is produced through refining palm oil, while the latter is produced by further processing bunches of fresh oil palm fruit to generate electricity.

Bioenergy for electricity is also being developed from wood biomass, but oil palm still prevails. “The source of biodiesel production varies quite a lot,” says Dermawan. “At one point, Jatropha and Nyamplung were developed as raw materials for biodiesel,” he added, referring to a flowering plant and an evergreen tree, respectively. “However, Indonesia’s large production of palm oil makes it the most commercially ready for development.”

Read more: Governments’ oil palm strategies too focused on expanding plantations, scientist says

OPPORTUNITIES AND COSTS

The paper also studied the financial cost of producing biodiesel and compared it with that of diesel fuel, which still receives government subsidies.

“Production cost for biodiesel is higher because there are additional production steps to be done before buyers – in this case, Pertamina and other PSO companies – will accept the biodiesel,” Dermawan explains.

In mid-2015, the government formed a unit under the Ministry of Finance to manage funds collected from levies paid by the exporters of CPO and its derivatives. This unit, the Oil Palm Plantation Fund Management Body (BPDPKS), uses the funds to develop human resources as well as promote, research and develop palm oil as a commodity.

“The BPDPKS provides incentives by covering the gap between the price of subsidized diesel fuel and the production cost of biodiesel,” says Dermawan.

Aside from sheer cost, biodiesel production is complicated on other fronts too. From the management side, production is often contingent on fluctuating supply and quality control.

“Some biodiesel companies get their raw materials from palm oil mills that receive oil palm kernels from farmers,” says Dermawan. “The mills do not always receive their fresh fruit bunches consistently in regards to quality and quantity. Low fruit quality will impact the quality of the palm oil and, in the end, impact the quality of the resulting biodiesel.”

Getting deeper into the technicalities of production, Spent Bleaching Earth (SBE), a residue from biodiesel production, is regulated as a hazardous and toxic material, known in Indonesia as B3. As such, it should be handled with extra care, which results in additional costs for biodiesel producers.

However, studies have shown that SBE contains oil that can be further processed into something useful, and more research is needed to explore its potential. Despite challenges, Dermawan says opportunities remain to optimize biodiesel production.

By Nabiha Shahab, originally published at CIFOR’s Forests News.

For more information on this topic, please contact Ahmad Dermawan at [email protected]


This research forms part of the CGIAR Research Program on Forests, Trees and Agroforestry, which is supported by CGIAR Fund Donors.

This research was supported by the “Forest in Global Bioeconomy: Developing Multi-Scale Policy Scenarios” program funded by the German Ministry of Economic and Development Cooperation (BMZ).

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  • Deep down in supply chains, zero deforestation commitments look different to what appears on paper

Deep down in supply chains, zero deforestation commitments look different to what appears on paper

Oil palm plantations are a driver of deforestation in Indonesia. Photo by Iddy Farmer/CIFOR
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A paddy field and oil palm plantation area is seen from above in East Kalimantan, Indonesia. Photo by N. Sujana/CIFOR

Oil palm, cattle, timber and soy have all received global attention in recent years for their outsized ‘forest footprints’ – the risks that their demand and cultivation pose for tropical forests around the world.

Thanks to pressure and advocacy from civil society, governments, shareholders and consumers in the Global North, many companies using and selling these commodities have begun to clean up their acts.

They have sought to become – or at least appear – more accountable for the environmental impacts of their supply chain activities. As a result, recent years have seen many make zero deforestation commitments (ZDCs) for the provenance of the commodities on which they rely.

From an environmental perspective, the move is welcome and timely. Tropical deforestation accounted for around 12% of global greenhouse gas emissions between 2000 and 2012. If these ‘big four’ commodities go deforestation-free, it could make a big difference for biodiversity and climate change mitigation worldwide.

However, following through without producing unintended negative side effects is going to be difficult. And this – or failing to follow through at all – could see ZDCs become dubbed with a tokenistic reputation as being just another public-relations and marketing strategy.

A new CGIAR Research Program on Forests, Trees and Agroforestry (FTA)-supported occasional paper by Center for International Forestry Research (CIFOR) scientist George Schoneveld and Particip GmbH consultant Peter Jopke seeks to assess the ZDCs of 50 ‘powerbrokers’ – companies that have the potential to shape rules in major commodities’ global value chains. The work attempts to unravel what these bold-sounding commitments might actually mean for forests, producers and communities on the ground.

Read more: Strengthening social inclusion within oil palm contract farming in the Brazilian Amazon

CLEAR AS MUD

Unfortunately, the researchers found serious gaps in ZDC implementation practices, which undermine the commitments’ potentials. “On paper the commitments are great, and they use the right terms and are fairly comprehensive in their scope, but by and large companies have yet to fully think through how they’re going to deliver on them,” says Schoneveld.

Company commitments to full transparency in sourcing locations and suppliers, and to independent verification, were found to be particularly weak. This doesn’t necessarily suggest that companies are trying to hide bad practices, say the co-authors, but more that it can be very difficult for them to follow their own supply chains back to their roots. Sourcing practices of the many upstream actors often involved can change without the lead firms being aware.

The study also found that almost 75% of companies did not demand company-wide ZDCs of their suppliers. This suggests that most companies actually tolerate deforestation in their supply chains, as long as their own supply comes from non-deforested areas. So suppliers to these companies might still be instigating deforestation and selling commodities from deforested areas to other, non-ZD–committed customers.

The finding makes sense, given that going zero-deforestation was “purely a business decision,” not a moral or philanthropic one, for most of the companies surveyed, says Schoneveld. As long as their brand is not contaminated, companies have little incentive to pressure their suppliers to stop deforestation entirely.

Oil palm plantations are a driver of deforestation in Indonesia. Photo by Iddy Farmer/CIFOR

PASSING THE BUCK?

Another issue of concern is the fact that in most cases, the powerbrokers did not explicitly account for the externalities resulting from their ZDCs, says Schoneveld. For example, insisting on buying commodities cultivated on non-deforested land increases demand for that land, which can displace former land uses such as food production. As a result, deforestation could occur indirectly as other users of that land are pushed to resume their practices elsewhere.

Committing to ZDCs may also prompt companies in the supply chain to sell off forest land banks that they hold, since they will no longer be able to use them to cultivate commodities. This land could then be deforested by a new owner or by communities vacating their farmland to enable corporate expansion.

Perhaps most concerning of all is that if companies implement more stringent production standards, only some producers will have the capacity to conform, so many smallholders are likely to be excluded, says Schoneveld.

“If you have to monitor everybody and trace all oil palm that comes in, and you have ten thousand suppliers, it becomes extremely costly,” he explains. “So a lot of companies are starting to say, ‘Okay, we have to cut our supply base and focus on those suppliers that we trust and know well.’ ” Oil palm refiners in Indonesia, for example, have begun to concentrate their ‘sustainable’ supply base around larger plantations.

And this is where the tensions become quite stark. One interviewed company, for example, complained that they were forced to remove a “huge chunk” of smallholders from their supply chain to please NGOs campaigning for ZD, because they expected to be criticized for failing to protect forests more than acknowledged for their efforts of including smallholders.

Read more: Corporate commitments to zero deforestation: An evaluation of externality problems and implementation gaps

A TALL ORDER

Certainly, given the influence powerbrokers have on both suppliers and governments, there are opportunities to innovate and exert pressure within value chains themselves. “It’s an important place to start,” Schoneveld acknowledges.

But it seems something of a tall order to expect companies to enact such holistic solutions all on their own. “If you want to have ZDCs that also contribute to agricultural development and food security, and support smallholder integration, I don’t think you can rely solely on companies to deliver on those,” he says. “And that’s where governments need to step in.”

Jurisdictional approaches that integrate landscape planning, deforestation monitoring and improved regulatory enforcement across a defined jurisdiction may provide part of the solution. Most companies are interested in working in places that can guarantee that production is sustainable, because it reduces their own monitoring and traceability costs. And smallholders within those areas can comply with ZD requirements, without needing to sign up to complex and expensive monitoring and evaluation systems. Some jurisdictions, such as Indonesia’s South Sumatra and Central Kalimantan provinces and Malaysia’s Sabah state, are beginning to apply these kinds of approaches, “saying, ‘hey, there could be economic benefits to being sustainable,’ ” explains Schoneveld.

Government involvement is also important because companies making zealous commitments to managing land differently in developing countries can be perceived as challenging their sovereignty. “There needs to be a better conversation between companies, governments, and civil society,” says Schoneveld, “about what role each could play in meeting environmental, economic and developmental objectives, and how to have more complementary initiatives.”

By Monica Evans, originally published at CIFOR’s Forests News

For more information on this topic, please contact George Schoneveld at [email protected].


This research forms part of the CGIAR Research Program on Forests, Trees and Agroforestry, which is supported by CGIAR Fund Donors.

This research was supported by UKAID and International Forestry Knowledge II (KNOWFOR II).

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  • Corporate commitments to zero deforestation: An evaluation of externality problems and implementation gaps

Corporate commitments to zero deforestation: An evaluation of externality problems and implementation gaps

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This research critically examines implementation gaps and externality problems associated with the recent proliferation of zero deforestation commitments (ZDC) by large commodity producers. By developing and employing a hierarchical framework, we evaluate the policies and strategies of 50 leading ZDC adopters in high forest-risk commodity sectors (soy, oil palm, cattle and wood). The analysis shows that while most ZDC adopters formulated strong ZDCs, there is significant room for further refining implementation mechanisms. Specifically, it finds that weak commitment to full transparency, notably disclosure of sourcing locations and suppliers, and to independent verification, undermines ZDCs’ transformative potential and ability to hold companies accountable for failure to comply with their ZDCs. Our analysis also reveals that most sampled companies do not explicitly account for the socially detrimental externalities that their ZDCs threaten to produce. Where this is acknowledged, it is acknowledged implicitly through standing commitments to full voluntary certification, especially in the wood and oil palm sector. As a result, issues related to free, prior and informed consent (FPIC) and protection of high conservation value (HVC) ecosystems are comparatively well addressed by adopters, but challenges faced by smallholders, food security risks, and indirect land use change issues are only minimally accounted for. Our results suggest that for ZDCs to contribute meaningfully to inclusive and sustainable development potential, complementarities between private and public regulatory initiatives need to be better leveraged.

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  • Good governance and sustainability incentives can provide alternatives to land conversion fires

Good governance and sustainability incentives can provide alternatives to land conversion fires

During land burning, haze blankets the landscape in Riau Province, Indonesia. Photo by Aulia Erlangga/CIFOR
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During land burning, haze blankets the landscape in Riau Province, Indonesia. Photo by Aulia Erlangga/CIFOR

In Indonesia, palm oil is a hot industry in more ways than one. In 2015 alone, it contributed USD 20.75 billion to the country’s export revenue. Oil palm plantations cover more than 14 million hectares of the country and, together with Malaysia’s, dominate the global market.

However, fire is still widely used in the development and planting of oil palm, including in carbon-rich peatlands. Resulting smoke and toxic haze have impacted the economy, the health and the environment of Indonesia and other Southeast Asian countries. In 2015, Indonesia’s peatland fires contributed to an economic loss of at least USD 16.1 billion and more than 100,000 premature deaths around the region.

In light of this, a new study led by Center for International Forestry Research (CIFOR) scientist Herry Purnomo, which also forms part of the CGIAR Research Program on Forests, Trees and Agroforestry (FTA), looks at the extent to which good governance principles are applied to Indonesia’s palm oil value chain and analyzes options to help reduce the use of forest and land fires in the industry.

“Palm oil is one of Indonesia’s main commodity exports, surpassing oil and gas,” says Purnomo. “But if we do not manage its sustainability, this sector can fail.

The research focuses on Indonesia’s Riau Province, which experienced massive forest conversion to have the largest area of oil palm plantations in the country. Now, it has the highest domestic frequency of fires too.

“We know that 20% of fire incidences happen in oil palm plantation areas, so we tried to find out what caused the fires and how to reduce them.”

Read more: Towards responsible and inclusive financing of the palm oil sector

WHO’S GOT THE POWER?

In theory, the central government has power to influence the oil palm supply chain through law and policies; district-level governments have the most jurisdiction for law enforcement and information-spreading; and village governments are closest to plantation developers, thus having the responsibility of dealing directly with them.

However, good governance for the industry is not as simple as a top-down approach. From consumers to mills, refineries and developers, players in palm oil influence governance processes in different, sometimes unexpected ways.

“With the governance analysis, we looked at how existing powers contest,” says Purnomo. “Along the value chain, power is not at the landscape level but at the consumer level, or at the mills and refineries. The central government can only function through the district government, but mills can influence local government using incentives and coercion.

“Sometimes the Ministry of Environment and Forestry and the Ministry of Agriculture get the blame for forest and land fire incidences. While potentially, the problem starts from the Investment Coordinating Board (BKPM) welcoming investment for refineries without considering whether there is enough capacity to supply them from legal sources.”

Furthermore, the study found that illegal oil palm developers can hold a lot of influence at local levels and force village governments to support them, often through deceptive use of a Certificate of Land (SKT).

This imbalance between governance and supply chain capacity can drive actors at the landscape level to meet the mill demands in ways detrimental to landscapes.

“Now there are mills everywhere, even in national park areas. People respond by developing plantations everywhere. The fastest and cheapest way is by burning.”

Scientists observe a drone flying over burning peat outside Palangkaraya, Indonesia. Photo by Aulia Erlangga/CIFOR

ALT OPTIONS

When demand is high and burning has long been practiced, what reason do farmers and developers have to change their habits to more arduous land-clearing methods?

“We calculated whether existing incentives in the market are enough to change the situation on the ground,” says Purnomo. “The analysis looks at benefits distrubuted from oil palm plantation development using fire, who benefits, and what alternatives can be adopted to compensate.”

The first step is for the market to support certified producers, incentivizing them not to burn as well as to employ value-added farmers. This, however, raises production costs, as well as the cost of fresh fruit bunches (FFB) of oil palm fruits. As this price margin grows, the next step is to make sure that the financial benefits go back into the hands of the farmers, to incentivize their good practices as well.

“Intermediaries have taken the benefit from this margin until now. Farmers should unite to gain more bargaining power, so once they receive a delivery order, they can cut the middleman and go straight to the mill. This will increase their value added. It is important that palm oil businesses are not only certified but also fair.”

Another key step to fire reduction is agrarian reform. While many farmers possess an SKT, the land is still legally part of a state-owned forest area. The unclarity of land status dissuades farmers from investing resrources in land.

“Why should they spend money, when the government can take their land away at any time? The farmers should be guaranteed land legality at least for 25 years, so they can invest safely.”

Read more: The long and winding road to sustainable palm oil

CHANGING HEADLINES

Recently on the international stage, the European Union in January approved draft measures to ban the use of palm oil in motor fuels by 2020. While this sent Southeast Asian governments reeling, Indonesia’s included, Purnomo believes that this boycott will change little. Instead, he says the EU market should give incentives for sustainable production, and Indonesia should create an environment in which that can be done.

“Incentives can change the situation. The government of Indonesia should be more transparent with environmental problems faced by the palm oil industry, show real progress in improving the industry’s sustainability, draw a clear roadmap to meet international standards in three to five years and invite the EU to participate in palm oil in more constructive ways.”

Cleaning up supply chains will come at a cost, but market incentives combined with strengthened national policies and international regulators (namely the Indonesian Sustianable Palm Oil system and Roundtable on Sustainable Palm Oil) can together compensate to make this effort viable – and cool things down.

By Nabiha Shahab, originally published at CIFOR’s Forests News.

For more information on this topic, please contact Herry Purnomo at [email protected].


This research forms part of the CGIAR Research Program on Forests, Trees and Agroforestry, which is supported by CGIAR Fund Donors.

This research was supported by the Department for International Development United Kingdom (DFID UK) and the United States Agency for International Development (USAID).

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  • Playing for keeps: How a simple board game could lead to more sustainable oil palm

Playing for keeps: How a simple board game could lead to more sustainable oil palm

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Once reserved for military war games, the Companion Modeling approach has been developed and expanded over the past two decades to include the complex issues of renewable resources and environmental management. The Center for International Forestry Research (CIFOR) is part of a consortium of international institutions led by the Swiss-based University, ETH Zurich, that is using ComMod to help chart a path toward more sustainable palm oil as part of a six-year project called OPAL, Oil Palm Adaptive Landscapes, being carried out in Cameroon, Colombia and Indonesia – some of the world’s biggest palm oil producers.

Originally published by CIFOR.

This work forms part of the CGIAR Research Program on Forests, Trees and Agroforestry (FTA), which is supported by CGIAR Fund Donors.

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  • Are ‘no deforestation’ commitments working?

Are ‘no deforestation’ commitments working?

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A truck collects bunches of oil palm fruits in West Kalimantan, in the Indonesian part of Borneo. Photo by I. Cooke Vieira/CIFOR

In 2014, many of the world’s major companies buying, trading or producing palm oil and pulp and paper made a joint commitment to stop clearing natural forests by 2020. As the deadline draws near, how are these ‘no deforestation’ commitments progressing, and what effect are they having on forests?

Using LANDSAT satellite data to observe annual changes in forest area and annual expansion of industrial plantations, scientists at the Center for International Forestry Research (CIFOR), including from the CGIAR Research Program on Forests, Trees and Agroforestry (FTA), are assessing the impact of corporate commitments to stop deforestation on the island of Borneo.

Borneo, a landmass shared by Indonesia, Malaysia and Brunei Darussalam, is home to some of the most diverse ecosystems on Earth. But forest fires and land conversion for logging, plantations and infrastructure development have reduced the island’s old-growth forest area by 30 percent since 1973.

Expansion of plantations for palm oil and pulp and paper has been associated with significant forest loss in Borneo, especially in Indonesia and Malaysia as the world’s leading producers of palm oil.

The ongoing research is looking at how pledges to stop this trend are having an effect, both inside and outside of plantation concession areas.

David Gaveau, co-creator of the newly updated Atlas of Deforestation and Industrial Plantations in Borneo, has been working on developing tools for buyers, traders, producers, governments and consumers to track industrial agriculture supply chains in Borneo, and monitor their impact on forests. He sat down with Forests News this week to discuss ongoing research, and what he and his partners have found so far.

What does it mean for a company to make a ‘No deforestation’ commitment?

When we talk about deforestation-free palm oil or paper, we are talking about products that have not been extracted from plantations established in place of forests. That is, where no forests have been cleared and converted to plantations. What this means in practice is that the products should come from plantations established on lands that have been cleared for other reasons, for example by wildfire, such as degraded shrublands.

A large number of palm oil and paper buyers and traders have already pledged to source only deforestation-free palm oil or paper, and in turn, the largest palm oil and pulp and paper producers have promised to stop clearing forests to expand plantations. Some made this pledge in 2013, with immediate effect. So in our research, we have sought to analyze whether those pledges, made with immediate effect, reduced overall rates of forest loss in Borneo.

Read more: New map helps track palm-oil supply chains in Borneo

Why are companies making ‘No deforestation’ commitments? Does it have any effect on profits?

Companies are making these commitments under pressure from consumer groups, environmental NGOs, and now even financial markets. For far too long, extractive industries made profit without respecting the environment. Times are changing.

An oil palm worker cleans up the trees before fruit collection. Photo by I. Cooke Vieira/CIFOR

How is a commitment monitored, and by whom?

Ideally, commitments should be monitored by tracking the palm oil back to the plantation where it was produced, and by verifying whether this plantation has been established at the expense of a forest, or whether it has replaced degraded, non-forested lands.

Have these pledges had an observable impact on deforestation rates in your research area in recent years?

Borneo is a major center for palm oil production. The area of industrial oil palm plantations in 2016 reached 8.3 million hectares — about half of the estimated global planted area of 18 million hectares. Old-growth forest area losses averaged 350,000 hectares annually from 2001 to 2016. By old-growth, we mean ancient forests that have never been impacted by humans, or forests impacted by timber extraction, but which have not been totally been cleared, and where the structure of a forest remains.

We showed in a paper published last year that the expansion of industrial oil palm plantations was responsible for 50 percent of all of Borneo’s old-growth forest area lost between 2005 to 2015. This number rises to 56 percent if we include pulpwood plantations. So, if producing companies stop clearing forests to expand plantations, deforestation should drop dramatically.

Our preliminary results from ongoing research suggest that recent corporate commitments to stop clearing forests in concessions of oil palm and pulpwood are associated with less conversion of forests to industrial plantations in Borneo, at least for oil palm and pulpwood.

We find that this company-driven deforestation peaked in concessions in 2009 and again in 2012, and has since been decreasing since 2012. In 2016, it had decelerated to 14-year low. This decreasing trend appears in Indonesian and Malaysian Borneo, and suggests that ‘No Deforestation’ commitments have slowed forest conversion within concessions in both countries. But that is not the whole story.

Despite this positive finding, the area of forest cleared since 2013 has in fact increased in Borneo. In Kalimantan — Indonesian Borneo — in particular, forests in 2016 were cleared at the fastest rate since 1997, with nearly 400,000 hectares lost that year. Much of this deforestation was caused by uncontrolled El Niño fires during late 2015, but appeared in 2016 satellite data because of cloud cover.

We find that much of this deforestation occurred outside concessions, and on peatlands, highlighting the urgent need to prevent peatland fires in the future, and to find solutions to deforestation outside concessions, where companies do not have jurisdiction. We also see a troubling trend in concessions where a lot of forest remains. In those forest-rich concessions, company-driven deforestation has not slowed, suggesting that ‘business as usual’ has continued in undeveloped concessions.

Read more: Financing farmers: Can funds for oil palm help save our forests?

How do you measure or observe the impact of commitments on forests?

We have mapped then analyzed the area of forest converted each year to industrial oil palm and pulpwood plantations from 2001 to 2016, looking mainly at land under company management – that is, concessions. We use LANDSAT satellite imagery to monitor the annual expansion of plantations.

We combine this information with annual maps of forest loss also derived using LANDSAT satellites by Matthew Hansen’s research group at the University of Maryland. The Hansen dataset, as we call it, produces very accurate tree loss maps over the humid tropics, and combined with a good forest mask, reveals where old-growth forests have been cleared.  However, this dataset does not tell us why forest has been cleared, or who cleared it.

By combining our annual maps of plantations with this forest loss dataset, we can extract the area of forest converted each year to industrial plantations by producing companies. This is what we call company-driven deforestation.

What about the effect outside of concession areas, or in nearby forests?

Deforestation caused by fire is even more dramatic in Borneo outside concessions, where it recently jumped by 400 percent to a 16-year high in 2016.

What plans do you have for researching this further, and drawing recommendations for action?

We now aim to understand other drivers of deforestation in the Borneo landscape. For example, we are quantifying the impacts of forest fires, and smallholder and mining activity. We aim to equip governments, NGOS and companies with the capacity to see the full impact of the human enterprise on Borneo forests, and to act accordingly to bring the rate of forest loss down to zero.

By Catriona Croft-Cusworth, originally published at CIFOR’s Forests News

For more information on this topic, please contact David Gaveau at [email protected].


This research forms part of the CGIAR Research Program on Forests, Trees and Agroforestry, which is supported by CGIAR Fund Donors.

This research was supported by UK aid from the UK government and the United States Agency for International Development (USAID).

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  • Are ‘no deforestation’ commitments working?

Are ‘no deforestation’ commitments working?

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FTA COMMUNICATIONS TEAM

A truck collects bunches of oil palm fruits in West Kalimantan, in the Indonesian part of Borneo. Photo by I. Cooke Vieira/CIFOR

In 2014, many of the world’s major companies buying, trading or producing palm oil and pulp and paper made a joint commitment to stop clearing natural forests by 2020. As the deadline draws near, how are these ‘no deforestation’ commitments progressing, and what effect are they having on forests?

Using LANDSAT satellite data to observe annual changes in forest area and annual expansion of industrial plantations, scientists at the Center for International Forestry Research (CIFOR), including from the CGIAR Research Program on Forests, Trees and Agroforestry (FTA), are assessing the impact of corporate commitments to stop deforestation on the island of Borneo.

Borneo, a landmass shared by Indonesia, Malaysia and Brunei Darussalam, is home to some of the most diverse ecosystems on Earth. But forest fires and land conversion for logging, plantations and infrastructure development have reduced the island’s old-growth forest area by 30 percent since 1973.

Expansion of plantations for palm oil and pulp and paper has been associated with significant forest loss in Borneo, especially in Indonesia and Malaysia as the world’s leading producers of palm oil.

The ongoing research is looking at how pledges to stop this trend are having an effect, both inside and outside of plantation concession areas.

David Gaveau, co-creator of the newly updated Atlas of Deforestation and Industrial Plantations in Borneo, has been working on developing tools for buyers, traders, producers, governments and consumers to track industrial agriculture supply chains in Borneo, and monitor their impact on forests. He sat down with Forests News this week to discuss ongoing research, and what he and his partners have found so far.

What does it mean for a company to make a ‘No deforestation’ commitment?

When we talk about deforestation-free palm oil or paper, we are talking about products that have not been extracted from plantations established in place of forests. That is, where no forests have been cleared and converted to plantations. What this means in practice is that the products should come from plantations established on lands that have been cleared for other reasons, for example by wildfire, such as degraded shrublands.

A large number of palm oil and paper buyers and traders have already pledged to source only deforestation-free palm oil or paper, and in turn, the largest palm oil and pulp and paper producers have promised to stop clearing forests to expand plantations. Some made this pledge in 2013, with immediate effect. So in our research, we have sought to analyze whether those pledges, made with immediate effect, reduced overall rates of forest loss in Borneo.

Read more: New map helps track palm-oil supply chains in Borneo

Why are companies making ‘No deforestation’ commitments? Does it have any effect on profits?

Companies are making these commitments under pressure from consumer groups, environmental NGOs, and now even financial markets. For far too long, extractive industries made profit without respecting the environment. Times are changing.

An oil palm worker cleans up the trees before fruit collection. Photo by I. Cooke Vieira/CIFOR

How is a commitment monitored, and by whom?

Ideally, commitments should be monitored by tracking the palm oil back to the plantation where it was produced, and by verifying whether this plantation has been established at the expense of a forest, or whether it has replaced degraded, non-forested lands.

Have these pledges had an observable impact on deforestation rates in your research area in recent years?

Borneo is a major center for palm oil production. The area of industrial oil palm plantations in 2016 reached 8.3 million hectares — about half of the estimated global planted area of 18 million hectares. Old-growth forest area losses averaged 350,000 hectares annually from 2001 to 2016. By old-growth, we mean ancient forests that have never been impacted by humans, or forests impacted by timber extraction, but which have not been totally been cleared, and where the structure of a forest remains.

We showed in a paper published last year that the expansion of industrial oil palm plantations was responsible for 50 percent of all of Borneo’s old-growth forest area lost between 2005 to 2015. This number rises to 56 percent if we include pulpwood plantations. So, if producing companies stop clearing forests to expand plantations, deforestation should drop dramatically.

Our preliminary results from ongoing research suggest that recent corporate commitments to stop clearing forests in concessions of oil palm and pulpwood are associated with less conversion of forests to industrial plantations in Borneo, at least for oil palm and pulpwood.

We find that this company-driven deforestation peaked in concessions in 2009 and again in 2012, and has since been decreasing since 2012. In 2016, it had decelerated to 14-year low. This decreasing trend appears in Indonesian and Malaysian Borneo, and suggests that ‘No Deforestation’ commitments have slowed forest conversion within concessions in both countries. But that is not the whole story.

Despite this positive finding, the area of forest cleared since 2013 has in fact increased in Borneo. In Kalimantan — Indonesian Borneo — in particular, forests in 2016 were cleared at the fastest rate since 1997, with nearly 400,000 hectares lost that year. Much of this deforestation was caused by uncontrolled El Niño fires during late 2015, but appeared in 2016 satellite data because of cloud cover.

We find that much of this deforestation occurred outside concessions, and on peatlands, highlighting the urgent need to prevent peatland fires in the future, and to find solutions to deforestation outside concessions, where companies do not have jurisdiction. We also see a troubling trend in concessions where a lot of forest remains. In those forest-rich concessions, company-driven deforestation has not slowed, suggesting that ‘business as usual’ has continued in undeveloped concessions.

Read more: Financing farmers: Can funds for oil palm help save our forests?

How do you measure or observe the impact of commitments on forests?

We have mapped then analyzed the area of forest converted each year to industrial oil palm and pulpwood plantations from 2001 to 2016, looking mainly at land under company management – that is, concessions. We use LANDSAT satellite imagery to monitor the annual expansion of plantations.

We combine this information with annual maps of forest loss also derived using LANDSAT satellites by Matthew Hansen’s research group at the University of Maryland. The Hansen dataset, as we call it, produces very accurate tree loss maps over the humid tropics, and combined with a good forest mask, reveals where old-growth forests have been cleared.  However, this dataset does not tell us why forest has been cleared, or who cleared it.

By combining our annual maps of plantations with this forest loss dataset, we can extract the area of forest converted each year to industrial plantations by producing companies. This is what we call company-driven deforestation.

What about the effect outside of concession areas, or in nearby forests?

Deforestation caused by fire is even more dramatic in Borneo outside concessions, where it recently jumped by 400 percent to a 16-year high in 2016.

What plans do you have for researching this further, and drawing recommendations for action?

We now aim to understand other drivers of deforestation in the Borneo landscape. For example, we are quantifying the impacts of forest fires, and smallholder and mining activity. We aim to equip governments, NGOS and companies with the capacity to see the full impact of the human enterprise on Borneo forests, and to act accordingly to bring the rate of forest loss down to zero.

By Catriona Croft-Cusworth, originally published at CIFOR’s Forests News

For more information on this topic, please contact David Gaveau at [email protected].


This research forms part of the CGIAR Research Program on Forests, Trees and Agroforestry, which is supported by CGIAR Fund Donors.

This research was supported by UK aid from the UK government and the United States Agency for International Development (USAID).

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  • New map helps track palm-oil supply chains in Borneo

New map helps track palm-oil supply chains in Borneo

A woman begin to harvest oil palm fruit in Kalimantan. Photo by I. Cooke Vieira/CIFOR
Posted by

FTA COMMUNICATIONS TEAM

A woman begin to harvest oil palm fruit in Kalimantan. Photo by I. Cooke Vieira/CIFOR

The updated Borneo Atlas offers new data to measure the impact of mills and plantations on forests.

In 2013, a number of major palm-oil buyers, traders and producers promised to stop clearing natural forests. The global multi-billion-dollar business of palm oil is among the world’s most controversial agro-industries. It has been implicated in numerous cases where species- and carbon-rich forests have been cleared, yet it also contributes to the elimination of poverty in producer countries.

Indonesia and Malaysia are the world’s top two producers of palm oil. Their area of industrial plantations more than quadrupled in extent from 1990 to 2015. Over the same period, regional rates of forest loss rose to among the world’s highest. Forest clearance is driven by a number of factors — establishing plantations is one factor. The development of mills and associated infrastructure to extract and transport palm oil also impacts forests.

The latest version of the Atlas of Deforestation and Industrial Plantations in Borneo, or what we call the Borneo Atlas, part of the work of the CGIAR Research Program on Forests, Trees and Agroforestry (FTA) launched this week allows users to verify the location and ownership of 467 palm-oil mills in Borneo, the island shared by Indonesia, Malaysia and Brunei Darussalam. It includes a new tool called Analyze Land Use near Mills to provide verified information on the location of palm-oil mills, and the deforested area within a 10-kilometer radius, as detected annually by satellites.

The new tool can be used together with an earlier tool called Analyze Land Use in Concessions, to track the footprint of palm-oil growers on forests. It links the company-driven forest loss (i.e. the forest area converted each year to industrial plantations) detected annually using satellites with publicly available concession maps. Combined, these two tools are useful for the increasing number of palm-oil buyers, traders and government officials who have begun tracing supply chains to mills and plantations. Buyers are currently focusing their attention on traceability to mills, because the location of a mill is a good indicator of the approximate location of its supplier.

Understanding where mills and plantations are is also useful to better understand the overall impact of industrial palm-oil developments on tropical rainforests.

Try it: Atlas of Deforestation and Industrial Plantations in Borneo

ADDED FEATURES

Via the interactive map, users can zoom in on a 10-kilometer radius of each mill — the distance fresh palm fruit can travel without spoiling. The actual distance that fruit has travelled to reach the mill in fact vary depending on commercial agreements, road networks and terrain, and does not fall into a perfect disc around the mill.

However, this simplified added feature does offer a more complete view of the impacts of industry on forests. Users can rank concessions and mills by recent clearing, and access statistics on forest health and land use. They can visualize poorest and best performing mills and concessions by company, soil type (peat and non-peat), by remaining forest area, and by type of certification.

The idea is to offer the opportunity to investigate to what extent plantation companies have cleared forests in Borneo, and to what extent they have avoided forest loss by planting on non-forested lands. Understanding where companies practice sustainable planting is key to engaging and promoting positive actions by companies.

We developed this dataset by reviewing online documentation on company dashboards, NGO websites, certification agencies (RSPO and ISPO), mapping websites and social media. The source documents for these data are linked in the results of each search so they can be consulted by users. A link to the mills’ location on high-resolution imagery from Google Maps and ArcGIS World Imagery is also provided for each search, to prove that the mill exists.

Future developments will include linking mills to supplier plantations, to ports and refineries, and incorporating time-lapses to reveal how industrial oil palm has expanded.

Read more: What a difference 4 decades make: Deforestation in Borneo since 1973

Individual oil palm fruits are seen in Kalimantan. Photo by I. Cooke Vieira/CIFOR

AN INDUSTRIAL-SCALE ISSUE

Palm oil is produced by industrial means. It is in everything from cosmetics to processed food, and biofuels to drive cars. It requires extensive infrastructure, including processing mills and refineries. Ultimately, huge tankers ship the oil to every corner of the globe.

Oil palm isn’t the only industrial crop. Today, most of the world’s food production and supply is done by industrial means. Industrial agriculture is a system of chemically intensive food production, featuring gigantic single-crop farms and production facilities, controlled by large conglomerates.

Intensive monoculture depletes soil and leaves it vulnerable to erosion. Herbicides and insecticides harm wildlife and people. Biodiversity in and near monoculture fields takes a hit, as populations of birds and beneficial insects decline. In fact, the abundance of flying insects has plunged by three-quarters over the past 25 years in the European countryside because of industrial agriculture, according to a new study.

In the humid tropics, industrial production of palm oil, soy, pulpwood and beef depletes biodiversity by being responsible for between 35% and 68% of all tropical forest loss.

Rates of forest loss and oil-palm developments are particularly marked on Borneo. Forest losses averaged 350,000 hectares annually from 2001 to 2016, while by 2016 the area of industrial oil palm plantations reached 8.3 million hectares (Mha) — about half of the estimated global planted area of 18 Mha. From 2005 to 2015, the expansion of industrial oil palm plantations was responsible for 50 percent (2.1 Mha) of all of Borneo’s old-growth forest area loss (4.2 Mha).

Tools like the Borneo Atlas, and its new feature to assess the impact of mills, aim to equip governments, NGOS and companies with the capacity to see the full impact of industrial agriculture on forests, and to act accordingly to bring the rate of forest loss in their supply chains down to zero.

Read more: For a better Borneo, new map reveals how much terrain has changed

By David Gaveau and Mohammad Agus Salim, originally published at CIFOR’s Forests News


For more information on this topic, please contact David Gaveau at [email protected] or Mohammad A. Salim at [email protected].

This research forms part of the CGIAR Research Program on Forests, Trees and Agroforestry, which is supported by CGIAR Fund Donors

This research was supported by UK aid from the UK government and the United States Agency for International Development (USAID).

  • Home
  • New map helps track palm-oil supply chains in Borneo

New map helps track palm-oil supply chains in Borneo

A woman begin to harvest oil palm fruit in Kalimantan. Photo by I. Cooke Vieira/CIFOR
Posted by

FTA COMMUNICATIONS TEAM

A woman begin to harvest oil palm fruit in Kalimantan. Photo by I. Cooke Vieira/CIFOR

The updated Borneo Atlas offers new data to measure the impact of mills and plantations on forests.

In 2013, a number of major palm-oil buyers, traders and producers promised to stop clearing natural forests. The global multi-billion-dollar business of palm oil is among the world’s most controversial agro-industries. It has been implicated in numerous cases where species- and carbon-rich forests have been cleared, yet it also contributes to the elimination of poverty in producer countries.

Indonesia and Malaysia are the world’s top two producers of palm oil. Their area of industrial plantations more than quadrupled in extent from 1990 to 2015. Over the same period, regional rates of forest loss rose to among the world’s highest. Forest clearance is driven by a number of factors — establishing plantations is one factor. The development of mills and associated infrastructure to extract and transport palm oil also impacts forests.

The latest version of the Atlas of Deforestation and Industrial Plantations in Borneo, or what we call the Borneo Atlas, part of the work of the CGIAR Research Program on Forests, Trees and Agroforestry (FTA) launched this week allows users to verify the location and ownership of 467 palm-oil mills in Borneo, the island shared by Indonesia, Malaysia and Brunei Darussalam. It includes a new tool called Analyze Land Use near Mills to provide verified information on the location of palm-oil mills, and the deforested area within a 10-kilometer radius, as detected annually by satellites.

The new tool can be used together with an earlier tool called Analyze Land Use in Concessions, to track the footprint of palm-oil growers on forests. It links the company-driven forest loss (i.e. the forest area converted each year to industrial plantations) detected annually using satellites with publicly available concession maps. Combined, these two tools are useful for the increasing number of palm-oil buyers, traders and government officials who have begun tracing supply chains to mills and plantations. Buyers are currently focusing their attention on traceability to mills, because the location of a mill is a good indicator of the approximate location of its supplier.

Understanding where mills and plantations are is also useful to better understand the overall impact of industrial palm-oil developments on tropical rainforests.

Try it: Atlas of Deforestation and Industrial Plantations in Borneo

ADDED FEATURES

Via the interactive map, users can zoom in on a 10-kilometer radius of each mill — the distance fresh palm fruit can travel without spoiling. The actual distance that fruit has travelled to reach the mill in fact vary depending on commercial agreements, road networks and terrain, and does not fall into a perfect disc around the mill.

However, this simplified added feature does offer a more complete view of the impacts of industry on forests. Users can rank concessions and mills by recent clearing, and access statistics on forest health and land use. They can visualize poorest and best performing mills and concessions by company, soil type (peat and non-peat), by remaining forest area, and by type of certification.

The idea is to offer the opportunity to investigate to what extent plantation companies have cleared forests in Borneo, and to what extent they have avoided forest loss by planting on non-forested lands. Understanding where companies practice sustainable planting is key to engaging and promoting positive actions by companies.

We developed this dataset by reviewing online documentation on company dashboards, NGO websites, certification agencies (RSPO and ISPO), mapping websites and social media. The source documents for these data are linked in the results of each search so they can be consulted by users. A link to the mills’ location on high-resolution imagery from Google Maps and ArcGIS World Imagery is also provided for each search, to prove that the mill exists.

Future developments will include linking mills to supplier plantations, to ports and refineries, and incorporating time-lapses to reveal how industrial oil palm has expanded.

Read more: What a difference 4 decades make: Deforestation in Borneo since 1973

Individual oil palm fruits are seen in Kalimantan. Photo by I. Cooke Vieira/CIFOR

AN INDUSTRIAL-SCALE ISSUE

Palm oil is produced by industrial means. It is in everything from cosmetics to processed food, and biofuels to drive cars. It requires extensive infrastructure, including processing mills and refineries. Ultimately, huge tankers ship the oil to every corner of the globe.

Oil palm isn’t the only industrial crop. Today, most of the world’s food production and supply is done by industrial means. Industrial agriculture is a system of chemically intensive food production, featuring gigantic single-crop farms and production facilities, controlled by large conglomerates.

Intensive monoculture depletes soil and leaves it vulnerable to erosion. Herbicides and insecticides harm wildlife and people. Biodiversity in and near monoculture fields takes a hit, as populations of birds and beneficial insects decline. In fact, the abundance of flying insects has plunged by three-quarters over the past 25 years in the European countryside because of industrial agriculture, according to a new study.

In the humid tropics, industrial production of palm oil, soy, pulpwood and beef depletes biodiversity by being responsible for between 35% and 68% of all tropical forest loss.

Rates of forest loss and oil-palm developments are particularly marked on Borneo. Forest losses averaged 350,000 hectares annually from 2001 to 2016, while by 2016 the area of industrial oil palm plantations reached 8.3 million hectares (Mha) — about half of the estimated global planted area of 18 Mha. From 2005 to 2015, the expansion of industrial oil palm plantations was responsible for 50 percent (2.1 Mha) of all of Borneo’s old-growth forest area loss (4.2 Mha).

Tools like the Borneo Atlas, and its new feature to assess the impact of mills, aim to equip governments, NGOS and companies with the capacity to see the full impact of industrial agriculture on forests, and to act accordingly to bring the rate of forest loss in their supply chains down to zero.

Read more: For a better Borneo, new map reveals how much terrain has changed

By David Gaveau and Mohammad Agus Salim, originally published at CIFOR’s Forests News


For more information on this topic, please contact David Gaveau at [email protected] or Mohammad A. Salim at [email protected].

This research forms part of the CGIAR Research Program on Forests, Trees and Agroforestry, which is supported by CGIAR Fund Donors

This research was supported by UK aid from the UK government and the United States Agency for International Development (USAID).

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  • Towards responsible and inclusive financing of the palm oil sector

Towards responsible and inclusive financing of the palm oil sector

Posted by

FTA COMMUNICATIONS TEAM

The global palm oil sector faces ongoing threats to sustainability caused by deforestation, peatland development, labor rights violations and land right conflicts. Additionally, integrating smallholders into sustainable palm oil supply chains continues to be a challenge for the industry. Financial service providers (FSPs) could play a role in stimulating sustainability commitments from the palm oil companies they finance. Their potential influence stems from their capacity to set environmental, social and governance (ESG) conditions for financial services.

This research shows that European and US FSPs are further along than their counterparts in Asia in adopting policies that include ESG risk assessments as part of the process for providing financial services. However, attention to smallholder inclusion is insufficient in the policies of all FSPs included in this report. Differences between European and US versus Asian FSPs in adopting ESG standards, as well as the unique markets they finance, present a risk that two parallel but separate financial systems could emerge. Efforts by both government and nongovernmental organizations should emphasize the prevention of a two-tiered marketplace with different quality requirements for palm oil.

All actors in this sector still require a significant shift in thinking on the benefits of including ESG standards in cultivation and production processes. In palm oil producing countries, the lack of specific banking regulations emphasizing sustainability concerns regarding the sector forms a further hindrance to positive developments.


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