White paper

Ecological impacts of palm oil expansion in Indonesia

Palm oil is the most widely used vegetable oil in the world and is a major feedstock for biodiesel and renewable diesel globally. Indonesia is the world’s leading producer of palm oil, supplying approximately half of the commodity worldwide, and is itself driving increased palm oil consumption through a domestic biofuel policy. While the oil palm is a highly efficient crop, there are severe environmental and social consequences of this rapidly expanding industry.
New palm oil plantations often replace forests in Indonesia, including carbon-rich peatland that is home to the native orangutan. Highly biodiverse tropical forests in Indonesia are being destroyed at a faster pace than in Brazil and other regions in the world. More than 60% of Indonesian rainforest species are endemic to that region – iconic species such as the orangutan are replaced with rats and other pests when native forest is converted to oil palm plantations. Deforestation drives climate change through the release of carbon when trees and other plants are cut down. In particular, the drainage of peat soils in Indonesia for palm establishment is associated with massive greenhouse gas emissions. Because of the extensive emissions associated with palm oil expansion, the carbon savings are far outweighed by the losses. Deforestation and peat drainage also lead to wildfires, resulting in hazardous air quality for residents of Indonesia and nearby countries. Fertilizers, pesticides, and palm oil processing wastes cause water pollution. In addition, traditional landowners and indigenous peoples may suffer human rights abuses from the palm oil industry.
It is clear that business-as-usual expansion of the Indonesian palm oil industry will come at a great environmental cost. In order to meet Indonesia’s greenhouse gas reduction goals, protect biodiversity, and reduce air and water pollution, stricter law enforcement is needed and new development must be diverted from forests. Policies that continue to promote growing the use of palm and other oils in biofuel will thus likely exceed the capacity of the industry to expand sustainably. The use of available palm and other agricultural residues in biofuel are more effective solutions for meeting climate and other environmental goals.
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