Sustainable Biofuel Production in Indonesia

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May 28, 2013 ... MAIN POTENTIAL OF BIOFUEL: BIODIESEL. • Potential major biodiesel feedstock in Indonesia production of 26 million tonnes. Of the total ...
REPUBLIC EPUBLIC OF INDONES INDONESIA MINISTRY OF ENERGY AND MINERAL RESOURCES

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EDI WIBOWO Directorate General of New, Renewable Energy, and Energy BMZ Conference; Policy Forum Opportunities for Sustainable Bioenergy Developm pment: National Experiences and Global Exchange Berlin, Germany, 28 May 2013

Energy and Mineral Resources for People’s Welfare

ENERGY AND FOOD SECURITY

EMPLOYMENT CREATION AND POVERTY REDUCTION

FOCUSSED OF NATIONAL POLICY

ENVIRONMENT

PRO JOB

PRO POOR

PRO GROWTH

Energy and Mineral Resources for People’s Welfare

PRO ENVIRONMENT

LAW NO. 30 YEAR 2007 concerning on Energy

Priority supply and use of renewable energy, one of them is biofuel.

PRESIDENTIAL REGULATION NO. 5 YEAR 2006 concerning on National Energy Policy

Biofuel target 5% by 2025 from the national energy mix.

PRESIDENTIAL INSTRUCTION NO. 1 YEAR 2006 concerning on Provision and Utilization, of Biofuel as Other Fuel

Instructions related to the Minister, Governor and Mayor to take action in order to accelerate the provision and utilization of biofuel;

MINISTRY OF ENERGY AND MINERAL RESOURCES REGULATION NO. 32 YEAR 2008 concerning on Provision, Utilization, and Procedures of Commerce of Biofuel as Other Fuel

1. Priority of biofuel utilization, 2. Mandatory of biofuel utilization (biodiesel, bioethanol, and biooil) in transportation, industry, commercial, and electricit generation sector, 3. Standard and quality of biofuel, 4. Pricing policy, 5. Commercial activities of biofuel,

Energy and Mineral Resources for People’s Welfare

BIODIESEL (Minimum) Sektor Transportation, PSO

2008

2009

2010

2015

2020

2025

1% (Existing)

1%

2.5%

5%

10%

20%

1%

3%

7%

10%

20%

Transportation, Non PSO Industry

2.5%

2.5%

5%

10%

15%

20%

Electricity Generation

0.1%

0.25%

1%

10%

15%

20%

BIOETHANOL (Minimum) Sektor

2008

2009

2010

2015

2020

2025

Transportation, PSO

3% (Existing)

1%

3%

5%

10%

15%

Transportation, Non PSO

5% (Existing)

5%

7%

10%

12%

15%

5%

7%

10%

12%

15%

Industry

Energy and Mineral Resources for People’s Welfare

Raw Material

Type

Use

Palm oil, coconut, jatropha curcas, “nyamplung”, “kemiri sunan”, and micro-algae

Biodiesel

Substitutes for diesel oil

Sugarcane/molasses, cassava, sago, sorghum, corn, and ligno cellulosic

Bioethanol

substitutes for gasoline

Vegetable oil (straight vegetable oil) Biomass through the process pirolisa and PPO (Pure Plant Oil)

Biooil Biokerosene

- Kerosene substitute Substitute IDO (Industrial Diesel Oil)

MAIN POTENTIAL OF BIOFUEL: BIODIESEL • Potential major biodiesel feedstock in Indonesia on an industrial scale is CPO with a total annual production of 26 million tonnes. Of the total CPO production is only about 8 million tons used in the country for both cooking oil, chemicals, including for biodiesel, while the rest is exported; • With a great potential for the production of CPO is the potential use of biofuel Biodiesel fuel is enormous for fossil fuel substitution. Energy and Mineral Resources for People’s Welfare

The use of biofuels has been started since 2006 with the issuance of Presidential Instruction No. 1/2006 Beginning in 2009, the government imposed a policy of mandatory use of biofuel in the transport, industry and power generation through the Minister of Energy and Mineral Resources No. 32/2008. 2008. Biofuel industry has grown in Indonesia. At present, the installed capacity for the type of biofuel to 4.25 million KL of biodiesel and bioethanol amounted to 153 thousand KL per year. Currently there are 23 producers of biodiesel and 8 producer of bioethanol that have licensed.

1. Utilization BBN currently has carried on: a. Transportation sector (B-7.5 .5), b. Industrial sector (B-2 in subsector mineral and coal mining industries) and will be extended to other industrial sub sub-sectors is gradually c. Electricity generation sector. 2. In 2013 the target of biofuel utilization in the transportation sector will be increased to B-10

Energy and Mineral Resources for People’s Welfare

• Indonesia is the largest palm oil producer in the world.. In 2011, Indonesia's palm oil production amounted to 22.50 million tons, or 44.84% of the world palm oil production. In the last 5 years (2007-2011), Indonesia's CPO production grew with an average of 6.24%. • Based on ownership, the highest productivity of CPO is owned by the government which is 3.04 tons / ha, Following the private and public sectors respectively 2.57 and 2.38. Average productivity of Indonesian palm oil is 2.67 tons / ha. It should be noted that the value is based on ownership of land, not a plant area. Therefore, the productivity is still able to increase. • Meanwhile, MP3EI data showed that the growth of Indonesia's palm oil by 2010 reached 7.8% per year, higher than Malaysia's 4.2% per year. Indonesia's palm oil productivity, according to this book is 3.8 tons / ha, Still far below the potential that is 7 tons / ha, and far from Malaysia that the productivity reach 4.6 tons / ha. • In addition, based on the results obtained on the field, CPO productivity of a company can reach 4.8 tons / ha.

ESDM untuk Kesejahteraan Rakyat

Palm Oil Areas in Indonesia (Ha.) Year

Smallholder

Government

2007

2.752.172

2008

FFB Production in Indonesia (Ton)

Private

TOTAL

606.248

3.408.416

6.766.836

2.881.898

602.963

3.878.986

7.363.847

2009

3.061.413

630.512

4.181.369

7.873.294

2010

3.387.257

631.520

4.366.617

8.385.394

2011 *)

3.620.096

636.713

4.651.590

8.908.399

Palm Oil Productivity (kg/Ha) Year 2004 2005 2006 2007 2008 2009 2010*) 2011*)

Productivit y (Kg/Ha.) 2,833 2,925 3,498 3,634 3,424 3,487 3,552 3,607

ESDM untuk Kesejahteraan Rakyat

Year 2007 2008 2009 2010 2011 *)

Smallhold er 6.358.389 6.923.042 7.517.716 8.458.709 8.627.883

Government 2.117.035 1.938.134 2.005.880 1.890.503 1.937.765

Private

TOTAL

9.189.301 8.678.612 9.800.697 11.608.907 11.942.362

17.664.725 17.539.788 19.324.293 21.958.120 22.508.011

Productivity of palm oil by plantation

 Indonesia biodiesel production in 2011 amounted to 1.38 million MT, about 78% for export. Total production is still far from the capacity of the industry which in 2011 counted 3.77 million MT. Calculating the biodiesel productivity to CPO or land area is pretty hard. This is because there is no accurate data on the amount of CPO produced specifically for biodiesel. As we know that in addition to biodiesel, palm oil is also used for other downstream products such as Olein and Stearin. Similarly, palm oil land uses that are not specifically mentioned for the production of biodiesel.  However, field study shows that the biodiesel productivity reached 0.97 per MT of CPO or 38,412 MJ / ton CPO with land productivity of 4.64 MT PME / Ha.

No. 1.

Item Productivity of palm oil by plantation

Unit Tonnes per ha per year

Study

National 4,8 2,67 (source: BPS calculated) 3,8 (source: MP3EI)

2. 3. 4.

tonne CPO Biodiesel processing efficiencies by MJ/tonne technology Amount of biodiesel end product (mass of Tonnes Tonnes/ha per energy content) year Production cost per unit of biodiesel

ESDM untuk Kesejahteraan Rakyat

USD/MJ

38.412 4,64 3,28 (source: Aprobi)

COST COMPARISON FOR BIOFUEL PRODUCTION Palm oil has the lowest cost of production amongst other vegetable oils 6

Annual Yield per Hectare (tonnes)

5

Palm Oil

4

3

2

Rapeseed Oil

1

Sunflower Oil

Soybean Oil 0 100

200

300

400

500

Production Cost ($/tonne) Source: Oil Worlld

ESDM untuk Kesejahteraan Rakyat

600

700

800

1. 2.

3.

Biofuel potential for energy supply, climate improvement, and encourage the national development; Biofuel development is too fast and not controlled can lead to: a. Competition for natural resources and rising food prices, b. Deforestation and biodiversity decline, c. Marginalization of land ownership by farmers and land ownership, d. Greenhouse gas emissions in addition to the use of fossil fuels excessive, There needs to be concern about sustainability issue. Consultation planning and monitoring

Conservation & biodiversity

Greenhouse gas emissions

Soil

Legality

Human and labor rights

Water Sustainable Biofuels Rural and social development

Food security

ESDM untuk Kesejahteraan Rakyat

Economic efficiency

Land rights

Air

1. Biofuel sustainability: biofuel production chain in ffrom farm or forest up to the gas station and the final

2.

3.

4.

5.

6.

7.

8.

release of emissions into the air Sustainable development is a mandate of Indonesia Constitution: “national economy based on economic democracy with the principles of togetherness, efficiency of justice, sustainability, environmental friendliness, independence, and balancing economic progress and national unity” Biofuel sustainability in Indonesia: Indonesia Sustainable Palm Oil (ISPO); ISPO declaration on 30 of March 2011 and formally applied since March 2012; Has been establish Regulation of Minister of Agriculture No. 19/Permentan/OT.140/3/2011 concerning on Guidelines Indonesian Sustainable Palm Oil (ISPO); Objective of ISPO: a. Increase awareness of the importance of producing sustainable palm oil, b. Improve the competitiveness of Indonesian palm oil in the world market; c. Indonesia's commitment to supporting pelestaraian Natural Resources and environmental functions as well as results of the Copenhagen Meeting 2009. Because ISPO is based on the laws and regulatio ations in force in Indonesia, this mandatory must be implemented for businesses plantations in Indonesia. ISPO based on Indonesia regulation, law, and constitution ESDM untuk Kesejahteraan Rakyat

Obligations that must be met by sustainable palm oil development industries includes seven principles: 1. Licensing System and Plantation Management, 2. Technical Guidelines for the Application pplication of Cultivation and Processing of Oil Palm, 3. Management and Environmental Monitoring, 4. Responsibilities to Workers, 5. Corporate Responsibility on Individuals ndividuals and Communities, 6. Community Empowerment Economic Activity, 7. Commitment to Continuous Improvement mprovement Economics.

ESDM untuk Kesejahteraan Rakyat

.

ENERGY SECURITY:

2.

ECONOMIC IMPACT IMPACT:

a.

Improved energy access.

b.

Reducing the use of fossil energy.

b.

Reducing dependence on fuel imports.

Enhance investment in supporting industries..

c.

Enhance economic development through local manufacture of products and components, assembly and installation, operation and/or servicing of equipment.

c. d.

Diversifying the energy sources.

e.

Conserve a country’s natural resource base.

a.

3.

Job creation and enterprise development.

Energy and Mineral Resources for People’s Welfare

ENVIRONMENTAL IMPACT: a.

Reduction of greenhouse gases:

– By using biodiesel and bioethano in transportation sector (substitute the fossil fuel);

– By using biodiesel and biooil in industrial sector (substitute the fossil fuel/industrial diesel oil in industrial sector);

– By using biokerosene in domestic/household use (substitute kerosene and fuel wood for cooking and lighting).

b.

Reduction of air pollution levels.

c.

Improving air quality and enhancing the general health and well being of local communities.

GOVERNMENT SIDE 1. Identify the detail environtment impact of biofuel development; 2. Threshold determination of allowable environmental impact. 3. Development of best practice guidelines for feedstock production systems that meet the rules of the environment (biodiversity, water, air, soil, land use)  RSPO. 4. Development of Monitoring, Evaluation and Reward to ensure and encourage the achievement of the development of biofuel hat meet environmental rules  uses an existing system (PROPER, EIA, Green Industry Award, Certification). 5. Institutional Development System (WHO IS DOING WHAT). BUSINESS SIDE 1. Develop technologies or systems that minimum environmental impact. 2. Self-assessment to ensure achievement of the development of biofuel that comply with environmental rules. ESDM untuk Kesejahteraan Rakyat

Vielen Dank

www. www.ebtke.esdm.go.id

Directorate General of New, Renewable Energy and Energy Conservation Jl. Pegangsaan Timur No. 1A,, Cikini, Jakarta,, Phone/Fax: +62 +62-21 31924585; email: [email protected] Energy and Mineral Resources for People’s Welfare