We reported earlier that biofuels superpower Indonesia recently launched a bioenergy crash program with planned investments of up to €17.5 billion (US$ 22 billion) by 2010. In a statement made today, the Indonesian government stresses that it will pursue this development explicitly within a framework of poverty alleviation.
Major institutions like the EU, the UN's FAO, the World Bank and environmental institutes like the SEI have often pointed to bioenergy projects as a way to lift farming communities out of poverty. The potential for social and economic development of the rural poor is there. And indeed, several governments are now radically implementing large-scale biofuels programs with exactly such a perspective in mind (amongst them the governments of Argentina and Brazil).
Millions of farmers in the developing world are already involved in cultivating crops that could serve as the energy feedstocks of the future. In Indonesia, bioenergy crops like coconut, rubber and cassava are predominantly cultivated by smallholders. And even though two-thirds of the country's vast palm oil industry (a real GDP booster) is dominated nowadays by large estates, it still hosts an estimated 1 million smallholders (that is roughly an equal amount of families) [see graph].
That is why Alhilal Hamdi, the newly installed chairman of Indonesia's national biofuel promotion committee, recently said: "The promotion of biofuel could help develop what we call the social economy". The policy, he said, was part of the government's triple-track strategy of promoting biofuel, which was intended to promote growth and employment, and reduce poverty. According to figures from the Central Statistics Agency (BPS), the number of poor people in Indonesia stood at some 50 million last year. But many analysts say that the true number accounts for almost 60 percent of the total Indonesian population of 220 million. They note that the government's decision to raise fuel prices by an average of 120 percent last year had particularly impacted on the number of people living in poverty.
Various efforts, ranging from specially designed pro-poor programs to promoting foreign investment, have long been pursued by the government with a view to reducing the incidence of poverty. But their results to date leave a lot to be desired. This time around, however, the government is confident that the new biofuel-promotion policy will provide an effective tool for tackling the poverty problem. By the year 2010, the government hopes that the biofuel industry will employ a total of 3.6 million people in biofuel processing plants, and in castor oil, palm oil, cassava and sugar cane plantations covering some 6-million hectares across the archipelago:
ethanol :: biodiesel :: biobutanol :: biomass :: bioenergy :: biofuels :: energy :: sustainability :: Indonesia ::
Mines and Energy Minister Purnomo Yusgiantoro has said that it is expected that Indonesia can produce 720,000 kiloliters (kl) of biofuel per year on average between 2005 and 2010, 1.5 million kl per year over the five years after that up to 2015, and 4.7 million kl per year over the following ten years up to 2025.
By the year 2010, he said, the country would be able to substitute some 10 percent of its oil-based fuels with the environmentally friendly biofuel, which emits zero carbon dioxide. Research and Technology Minister Kusmayanto Kadiman said that there were 60 different types of plants that could be used to produce biofuels. All 60 plants can be easily grown across the archipelago. Some of them are already widely cultivated. Others, like castor oil, are as yet not so common.
Biofuels consist of biodiesel, bioethanol, bio-oil and biogas. Bio-diesel serves as an alternative to oil-based diesel, bio-ethanol can replace gasoline, bio-oil can substitute for kerosene, and bio-gas can serve as an alternative to kerosene. These can all be produced from liquid waste; poultry droppings; and plants such as corn, grains, rice and sunflowers.
Analysts have long advocated the idea of developing alternative fuels as a way of promoting the social economy and thereby reducing poverty.
They argue that ordinary people in rural areas can become involved in biofuel production with only small amounts of capital.
For example, Alhilal says that an investment of only Rp 3 million is required for every hectare planted with castor oil, which starts bearing fruit after six months.
Castor oil is the easiest one to grow of all the plants, and bears fruit all year round. Having many strains and two genera -- Jatropha curcass and ricinus -- the castor oil plant can be easily grown on all kinds of land across Indonesia.
Castor-oil growers can process their castor-oil harvests into bio-diesel using their own small-scale processing machines.
Private firm PT Tracon Industri manufactures portable machines with production capacities ranging from five kilograms to 50 kilograms per hour.
If farmers were to purchase the five-kilogram-capacity machines, which cost less than ten million rupiah each, they could process their produce and then sell the oil to either state power utility PLN or state oil and gas firm Pertamina.
Alhilal said that the government would also guarantee that PLN and Pertamina would buy the biofuel from the micro-businesses. "We're also designing fiscal incentives, including tax holidays, for people who want to enter the biofuel business," he said.
Minister of Research and Technology Kusmayanto Kadiman told members of the House of Representatives on Monday that the government would tightly and equitably regulate the biofuel industry.
With this promise in mind, he said the government hoped that many people would be encouraged to set up businesses in the sector, which would help generate economic growth, create new jobs and reduce poverty.
However, such hopes could easily come to naught if the government fails to deliver on all the promises it has made to the public. As Minister Kusmayanto warns: "If this fails, then it will be very difficult to motivate the general public to continue developing the biofuel industry."
Australian Centre for International Agricultural Research: Contract farming in Indonesia: Smallholders and agribusiness working together. An interesting study analysing how the parties that are often seen as enemies can create mutually beneficial relationships. Full study, here [*.pdf].
Jakarta Post: Promoting biofuel as a way of alleviate poverty, Juli 31, 2006.