Question: How much reduction in CO2 emissions is Indonesia actually getting from its biofuels policy?
Short answer: zero.
Long answer: Indonesia is actually increasing its CO2 emissions substantially.
Indonesia’s policies promoting the development of biofuels has always been portrayed as a way to reduce greenhouse gas emissions. Government officials and the oil palm industry assert that implementation of 20% biofuel blending mandate would reduce carbon dioxide emissions by 9 million to 18 million tonnes a year.
This forecast reflects an incomplete calculation. Lifecycle CO2 emissions from biodiesel appear lower than those from fossil diesel if we consider direct production and combustion emissions alone. This is because carbon sequestration from the growth of new plants partly offsets emissions from the burning of biofuels.
But this is only one side of the biofuel calculus. We can see the whole picture only by taking into account the additional CO2 emissions that come from land use change, or agricultural expansion resulting from higher commodity prices and increased demand for biofuel feedstock. In Indonesia, biodiesel comes almost exclusively from palm oil. Expanding palm cultivation is responsible for the country’s high rate of deforestation and peat drainage – both of which release large volumes of GHG.
Pushing for increased biofuels mix in Indonesia leads to increasing GHG emissions from land use, land use change and forestry (LULUCF), already the largest source of Indonesia’s GHG emissions. Here we did the math to calculate how much the country’s biofuels mandate will change CO2 emissions. If Indonesia meets the Ministry of Energy and Mineral Resources target that biodiesel accounts for 30% of diesel fuel in 2020, we are looking at production of about 14 million tonnes of palm biodiesel that year. (The country missed the ministry’s mandate for blending rates of 15% to 25% in 2015. The U.S. Department of Agriculture estimated that Indonesia consumed just 1.4 billion liters of biodiesel - equivalent to 1.2 million tonnes, indicating about a 5.6% blending rate, in 2015).
We estimated the amount of land use change that has occurred already and how much more will happen to meet the 2020 target. This enabled us to work out total CO2 emissions from expected biomass and soil carbon loss. We added direct emissions from biodiesel production, including fertilizer, palm oil milling, biodiesel refining, and transport of fuel and feedstock, to total emissions from the biodiesel mandate.
Our results are summarized in the graphic below. Accounting only for direct production and combustion emissions as well as fossil diesel displacement, the amount of biodiesel consumed in 2015 reduced Indonesia’s CO2 emissions by around 1 million metric tonnes. However, when emissions from land use change are taken into account, total CO2 emissions increased by about 2 million tonnes, rather than decreasing.
For 2020, we estimate a reduction of 30 million tonnes of direct CO2 emissions from replacing 30% of conventional diesel fuel with palm biodiesel. But accounting for much higher CO2 emission from land use change, we find that the net lifecycle CO2 emissions will actually increase by about 52 million tonnes.
Total CO2 emissions from Indonesia’s biofuel mandate
To put these numbers into perspective, we looked into Indonesia’s 2011 National Action Plan for Greenhouse Gas Emissions Reduction. This served as a basis for the country’s Intended Nationally Determined Contribution submitted in advance of the Paris climate negotiation in 2015.
In its plan, Indonesia pledged to reduce GHG emissions to a level 26% below a business-as-usual projection by 2020. This would amount to 672 million tonnes a year under the “Forestry and Peatland” category and 38 million tonnes a year under the “Energy and Transportation” category.
The conclusion is clear: Despite contributing to a significant reduction of CO2 emissions in the energy and transportation sector (30 million tonnes based on direct emissions, out of the goal of 38 million tonnes), Indonesia’s biofuels mandate is hurting its goals of reducing GHG from the forestry and peatland sector. Land use change will result in an increase of more than 80 million tonnes of CO2 – almost 12% of the in-sector reduction goal.
This analysis makes clear that increased emissions related to land use change overshadow CO2 reductions from the displacement of conventional diesel fuel. The government could dramatically reduce emissions from land use change by implementing appropriate sustainability standards guaranteeing zero deforestation and peatland drainage. Policies could also support lower-carbon advanced biofuels such as cellulosic biofuel made from palm residues. Until that happens, increasing the biofuel mix will never result in a reduction of GHG emissions.