Forests in the global bio-economy: Lessons from Indonesia and Brazil

Bioenergy project in Perigi Talang Nangka village in Riau province, Indonesia. CIFOR/Icaro Cooke Vieira

We know we need to ditch fossil fuels and reduce emissions, and fast. But how can we do so in the context of burgeoning global demand for food, fuel and fiber? Many countries are turning to biological sources to meet these needs. The system they’re building may be nascent, but it already has a name: the bio-economy.

The move seems timely. As always, though, there are potential tradeoffs at play, and the stakes are high. For instance, diverting agricultural land from food to energy crops will affect food supply and smallholder livelihoods, and may push food production into forested areas. So when weighing up the merits of various strategies to transition to a bio-based economy, it’s important to keep forests – and the people living in and around them – firmly in the picture.

 As such, a research project “Forests in the Global Bioeconomy” aims to generate knowledge on this topic in order to inform upcoming policy dialogues and processes. The work represents a collaboration between the Center for International Forestry Research (CIFOR), the Bonn-based Center for Development Research (ZEF) and Indonesia’s Bogor Agricultural University (IPB). The project focusses chiefly on experiences in Brazil and Indonesia, which are both key global biomass producers with large tropical forest reserves.

In October, policymakers and researchers gathered at ZEF for a public panel on the role of tropical forests in the global bio-economy, and the kinds of policies needed to bring about sustainable bio-based transformation.

PRICING ISSUES AND PALM OIL: INDONESIAN EXPERIENCE

Indonesia aims to use forest resources to attain food, water and energy sovereignty by 2045, said Nur Hygiawati Rahayu of the country’s Ministry of National Development Planning during the panel. Through its National Energy Policy, the country seeks to source 23 percent of its energy from new and renewable sources by 2025 (up from 4 percent in 2014), and 31 percent by 2050. While the main focus has been to develop new sources (solar, geothermal etc), there is also an opportunity to develop bioenergy by upscaling production of liquid biodiesel from palm oil, and electricity generation using timber.

The main obstacle to upscaling the bio-economy in this context is economic, said CIFOR researcher Ahmad Dermawan. Bioenergy is currently much more expensive than its non-renewable counterparts, and the government is not yet paying high enough subsidies to change that.

“There’s a mismatch between the production cost of bioenergy, and the price that the government is willing to pay for it,” he explained. For producers, venturing into the bioenergy sector carries out significant business risks, but those have not been compensated with the current bioenergy purchasing system. However, he notes, there’s a scheme in place in the biodiesel sector that is working to offset the price difference, and discussion is underway to set up a similar scheme in the electricity sector.

Declining international demand also poses a challenge for upscaling production. There are widespread concerns about oil palm plantations encroaching on old-growth tropical forests, and the European Union recently agreed to phase out food-based biodiesel by 2030. Many biodiesel processing units in Indonesia are now sitting idle, said Arya Hadi Dharmawan of IPB in his presentation at the meeting. While the Indonesian government has made the 20 percent blending target mandatory as of September 2018 to boost domestic demand for biodiesel , biodiesel producers will need to step up their sustainability practices across the board. They will also need to prove it: sustainable certification is a critical piece of the puzzle, Dharmawan emphasized during the panel. Innovations such as bioenergy generation from oil palm waste-water could also provide some profitable, planet-friendly pathways, he added.

SOYBEANS AND BRAZIL’S BIOENERGY QUEST

At present, 28.2 percent of Brazil’s energy comes from biological sources, such as soybean, sugarcane, firewood, charcoal and others. Brazil is the world largest soybean producer, and heavily derived their bioenergy sector from the crop. The crop has been known as one main driver of deforestation in the country.

The challenges the country faces in producing this energy sustainably are similar to Indonesia’s, says Dermawan. “Although the government of Brazil has imposed a number of measures to help stop deforestation, such as soy moratorium” he says, “the indirect land use effect is something that key policymakers do not always take into account.” Paying attention to the indirect land use change (ILUC) is particularly important in the context of the EU proposed renewable energy directive that is currently under discussion. 

Intensifying plantation forestry is an important element of keeping old-growth forests standing, sustaining the bio-economy and contributing to climate change mitigation, said panelist Pedro Alves Corrêa Neto of the Brazilian Ministry of Agriculture, Livestock and Food Supply. What this means, essentially, is “more trees on less land”. Selective breeding is a key component of this process, as are ‘mosaic plantation’ approaches that include corridors for biodiversity, he added.The researchers are now hoping to convene dialogues and promote cooperation between countries in the Global North and South, in order to “learn more lessons from each other” about how best to transition toward a sustainable bio-economy, says Dermawan.