Hidden (Carbon) Liabilities of the Glowing Palm Oil Investment in Indonesia

Arief WicaksonoPolitical Advisor - Greenpeace Southeast Asia

Listen to What Consumers & Market Want

– Global public awareness: Deforestation is now linked to climate change

– Due to poor governance, the oil palm industry is a major threat to Indonesia’s forests and to global climate

– Business as usual must end:

• The industry shouldn’t seek incentive from the poor governance.

• The oil palm industry must address its impacts on forests and climate

– Good first step: Unilever supports a moratorium on deforestation by the oil palm industry in Indonesia

Factsheet - Palm Oil & Climate Change

– In April 2008, Sir Nicholas Stern told business and political leaders in Singapore:

– ‘Deforestation and burning for land clearance are huge problems for the world in terms of the carbon emissions. Indonesia is the third largest emitter, largely the result of deforestation and peat fires.’

– 85% of Indonesia’s CO2 emissions come from deforestation, forest fires and peatswamp drainage

– The oil palm sector in Indonesia is planning to create 20 million hectares of new plantations.

– If this is based on deforestation, the industry will be responsible for up to half of the country’s growing greenhouse gas (GHG) emissions

Factsheet - Palm Oil & Climate Change

Should be this way?

Factsheet - Palm Oil & Climate Change

Who can control this?

Factsheet - Palm Oil & Climate Change

Annual CO2 emissions from peat degradation,biomass decay and deforestation (1970–2004)

Indonesia is the 3rd largest GHG emitter,after China and the USA. The vast majorityoriginates from the degradation of its peatlands,accounting for 4% of global GHG emissions.

Factsheet - Palm Oil & Climate Change

GHG emissions commitment period and carbon loss through development of deep peat

Three metres of peat stores 1,800 tonnes of carbon per hectare (equivalent to 6552 tonnes of CO2). Palm oil development commits the majority of this carbon to degradation over a 150 year timeframe.

Factsheet – Palm Oil Industry & Investment– Increasing interest to invest in palm oil industry

– Demands in European market– Growing demand in China & India– Fossil fuels alternatives: Biofuels, agrofuels, biodiesel.– The attractive prices of global CPO

– Domestic supply crisis – Indonesia– Riau: Home of 25% Indonesia’s oil palm plantation, people can’t afford

to buy vegetable oils at US$2/kg

– The producers are continuing to ignore the applicable regulations– The case of peatland drainage in Riau– Almost all plantation are not free from destroying the watershed areas

Factsheet – Social & Political Landscape– Provincial government

– The Government of Aceh has implemented a moratorium on industrial logging and forest conversion. Aceh plans to develop 200,000 hectares of oil palm without deforestation

– Governor of Central.Kalimantan is reviewing permits for oil palm plantations – rogue economics, landbanking, peat burning

– The Governors of Papua and West Papua are reviewing forest conversion plans – social concerns

– A greater voice from the Indonesian civil society for better governance to control palm oil industry expansion through moratorium:

– Sawit Watch (member of RSPO Executive Board)– WALHI – Friends of the Earth Indonesia– AMAN – Indonesia Indigenous People Network– Palm Oil Smallholders Association (SPKS)

Key Questions

– How would the industry be part of solution in curbing the climate change?

– What are the strategic roles of the industry to solve serious governance issues in the natural resources-rich developing countries, like Indonesia?

Moratorium of Deforestation!Moratorium of Deforestation!

Transitional stage towards a healthy, better and conducive business environment …

Answer Sought – Moratorium of Deforestation

Maps for the basis of zero deforestation in Southeast Asia and Western Pacific: Remaining tropical rainforests as of July 2007 and areas of deforestation since 2000

Moratorium of Deforestation – Minimum Criteria for the Palm Oil Sector

– Moratorium on plantation expansion within mapped forest areas until:

• Peat soils are protected from clearance, drainage and degradation

• High Conservation Values forests/areas are protected

• Indigenous peoples’ and other forest dependent communities give their free, prior and informed consent to new plantation developments on their customary lands

• Full supply chain traceability and segregation systems are established which exclude palm oil from groups that fail to meet these criteria