Proposed Plan to Boost Biofuel Subsidy Angers Local Environmentalists

A worker unloads palm oil fruits from a lorry inside a palm oil factory in Salak Tinggi, outside Kuala Lumpur on Aug. 4, 2014. (Reuters Photo/Samsul Said)

Jakarta. Indonesian environmentalists have protested the government’s plan to use a portion of funds from fuel subsidy cuts to drive the growth of the biofuel industry, saying it will only exacerbate Indonesia’s already alarming deforestation rate.

Energy and Mineral Resources Minister Sudirman Said told a hearing with legislators in Jakarta last week that the government planned to shift some of the funds saved from fossil fuel subsidies to finance biofuel subsidies instead, in order to support the growth of the industry.

“In the future, [fossil] fuel subsidies will be gradually reduced and the budget will be allocated for more productive sectors, such as biofuel and bioethanol industries,” Sudirman said.

The Energy and Mineral Resources Ministry has proposed a more than sixfold increase in biofuel subsidies in this year’s state budget revision, from an initial figure of Rp 3.09 trillion to Rp 19.4 trillion ($244 million to $1.53 billion).

Sudirman said this meant a subsidy of Rp 5,000 per liter from Rp 1,500 per liter for biodiesel and Rp 3,000 per liter from Rp 2,000 per liter for bioethanol.

With the subsidies, the minister said, the portion of biofuel used in the fuel mix was expected to eventually increase to 20 percent from less than 10 percent now.

Zenzi Suhadi, a forest campaigner at the Indonesian Forum for the Environment (Walhi), said President Joko Widodo’s administration was making “a big blunder” with the plan, arguing that boosting biofuel production would require clearing more forested land for oil palm plantations to produce the palm oil needed in biofuel.

“This is a wrong strategy taken by the government. Imposing the policy is like opening the gate to palm oil companies to besiege our forests, which have already been destroyed,” Zenzi told the Jakarta Globe on Monday.

“The policy will stimulate palm oil companies’ expansion into Indonesian forests. This is something we don’t want to happen. Our remaining forests are at stake because of this plan.”

He added that the policy, if enacted, was also expected to increase the number of cases of land grabs by big corporations from local residents in forested areas.

This would contradict Joko’s promise to favor local farmers as opposed to big corporations that he made during a visit to Sungaitohor village in Meranti Islands district, Riau, last year, according to Zenzi.

Joko said then, while addressing the issue of forest fires and haze crises that continue to plague Riau and surrounding provinces, that people’s farming had a minimal impact on the environment when compared to corporate monoculture plantations, which he identified as the main cause of environmental damage in the district.

“With this [biofuel subsidy] policy, the government is violating its commitment to saving our environment and supporting local people to independently cultivate their lands,” Zenzi said.

“The only group that will benefit from this policy are private palm oil companies.”

He added it would be better for the government to use the subsidy funds to support the growth of other alternative, renewable energies that would not harm the environment, such as wind and solar power.

Forest Watch chairman Togu Manurung, meanwhile, urged the government to prioritize on the sustainability of Indonesian forests while thinking through its policies on the development of renewable energy sources.

“The government has the responsibility to stop forest crimes. It must stop conversion of forests [into plantations],” Togu said.

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