Thursday, June 26, 2008

Social implication cautious While Setting Biofuels Target

For immediate release
Press release
Wednesday, 25th June 2008

Social implication cautious While Setting Biofuels Target

In today’s report “Another Inconvenient Truth” launched by international agency Oxfam, it said Biofuels for developing countries may provide genuine development opportunities, but the potential social, economic and environmental costs are severe.
“Biofuels may provide opportunity to reduce the amount of fuel subsidy in national budget, provide opportunity of employment, opportunity of increase income and alternative energy self-sufficiency in rural area, however the implication is fatal if not proceed with caution,” said report author, Oxfam’s Biofuels policy adviser Rob Bailey.

In attempt to reduce oil consumption, Indonesia targeting 5 percent of Biofuels consumption in the total national energy mix by 2025. The government hope that the effect of reducing oil imports will bring a reduction in oil subsidy as energy diversify through Biofuels development.

“Based on information received from government institutions, as far as budgeting concern, Biofuels industry development will require Rp100 trillion (about $10.8bn) to Rp250 trillion (about $27bn) over five years– nearly five times the 2007 budget for the national poverty reduction program.” Tata Mustasya, Policy and Advocacy Officer from Oxfam in Indonesia, explained.

Through Biofuels development, government also targeting to safe US$5-6billion per year, an amount which can be spent on poverty reduction programs. But this is not happening, as the soaring palm-oil price tends makes biodiesel uncompetitive with (heavily subsidized) petroleum products

The palm-oil sector-which until 2010 will be the main commodity for Biofuels in Indonesia is inextricably linked to land conflict as the interests of politicians, plantation companies, indigenous peoples, and resettled communities collide. The explosion of Biofuels targets is a huge driver of palm-oil expansion. Indonesia as one the biggest producers of palm oil aim to supply a fifth of EU biodiesel demand. Twenty million hectares has been identified for expansion by 2020 – more than three times the area currently under cultivation. Five million indigenous people in West Kalimantan, according to UN, may lose their land because of this Biofuels development.

“Access to land is a critical part of livelihoods for men and women in rural areas. Biofuels expansion practice which not supported by clear policy and consistent implementation of law regulations will lead to increase of social conflict, poverty, and the destruction of entire communities. “ Bailey said. “ More often than not, they will be women, who are more vulnerable than men to displacement as a result of systematic and pervasive discrimination within land tenure systems throughout the developing world”, He continued.

Un even relations between companies and smallholders also characterize the palm oil industries. Higher palm-oil prices should be a good news for farmers or small-scale producers and indeed

they have felt the benefit. However, transmission price is not enjoyed fully by smallholders mainly because mills as price fixer owned by big companies with local processing monopolies.

“Independent smallholders can gain better prices by selling their harvest to smaller independent mills, but farmers are confined to handover their harvest to big mills at farm-gate prices that are calculated according to a set formula” said Tata Mustasya further.

In the report paper it stated many of the problems arisen associated with the exploitation of labor in Biofuels production. In humane conditions including exhausting work over long hours, lack of adequate safety guarantee particularly regarding the use of pesticides and use of piece-rate systems that systematically discriminate against women, may result in the exhaustion of workers and triggers the use of child labor, are the conditions faced by workers in this palm oil sectors.

Biofuels development has been contributing to the increase in food price in Indonesia. Shift in domestic agriculture away from food production to fuel production may increase food insecurity. In 2007 the consumer price of cooking oil went up 40 percent, and continues to rise in still 2008.

“ Biofuels policy strategies must be consistent and clear, fully integrated with other relevant policies ensuring its fullest contribution for energy diversification and poverty reduction, and in line with governments’ goals and laws regulations applied .” Added Bailey.


For more information and to arrange interviews, kindly contact:

Dian Kartikasari
Media and External Relations Officer
Email :
Mobile: 0811 190980

Tata Mustasya
Policy and Advocacy Officer

Phone number : +62 21 7811 827
Message from the green side