Oil palm development and the challenges for sustainable and equitable growth and forest governance
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Oil palm development and the challenges for sustainable and equitable growth and forest governance

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  • 95% of the global energy consumption from fossil fuels; Global energy consumption to increase 57% by 2030.Some governments in industrialized countries have adopted blending targets and provide subsidies.This would generate 1458 TW h of electricity and mitigate 1.7 billion tons of CO2 emissions from power coal = 45% of China’s electricity outputs and ca. 28% of CO2 emissions in 2007 (Sang and Zhu, 2011)
  • 95% of the global energy consumption from fossil fuels; Global energy consumption to increase 57% by 2030.Some governments in industrialized countries have adopted blending targets and provide subsidies.This would generate 1458 TW h of electricity and mitigate 1.7 billion tons of CO2 emissions from power coal = 45% of China’s electricity outputs and ca. 28% of CO2 emissions in 2007 (Sang and Zhu, 2011)
  • Future trends in EU biofuels – main land use impacts will be from imported biodiesel which is expected to account for 20% of EU biofuels in 2020
  • ca. Two-thirds in oil palm
  • Smallholder participation in the biofuel value chain still limited Ghana - exclusively large-scale plantationsZambia - tendency towards plantation business models Brazil - < 15 % of sugarcane from ethanol from small-scale farmers; Social Fuel Seal (Biodiesel) limited success Mexico - bids to supply PEMEX only from well-capitalized companies
  • German, L. et al, forthcoming Ecology and Society
  • Majority of jobs on plantations in Indonesia go to migrantsDisplacement of customary land uses/users and growing landlessness
  • Discussion on Basel III; China and Indonesia have set examples in the banking sector Investors can make better informed decisions on investments in feedstock and biofuel companies
  • cf. GHG emissions associated with trade (Peters, PNAS, 2011 and Energy Policy, 2008
  • Palm Oil Mill Effluent Total GHG emissions of PFAD-based electricity production is one-sixth of CPO electricity1000 kg Fresh Fruit Bunches produces 215 kg CPO, 28kg of animal feed and 22kg of surfactants and 670 kg of POME

Oil palm development and the challenges for sustainable and equitable growth and forest governance Oil palm development and the challenges for sustainable and equitable growth and forest governance Presentation Transcript

  • Oil palm development and the challenges for sustainable and equitable growth and forest governance
    D. Andrew Wardell
    CIFOR South-South Exchange, 21 September 2011
  • Overview
    • Global and Indonesian contexts
    • Overview of production and investment trends
    • Governance systems for oil palm
    • Socio-economic impacts
    • Environmental impacts
    • Improving sector governance
    • Securing access to credible information
    • Policy options
  • Global context
    • Population growth and per capita consumption. Requires an additional 28m tonnes of vegetable oil annually by 2020 (WBG, 2011).
    • Continued growth in global energy consumption. Energy (in)security and the high cost of fossil fuels
    • Apprehension associated with global warming and efforts to reduce GHG emissions
    • National/regional commitments to promote biofuels.
    3 major players – USA, Brazil and European Union
  • Biofuel production trends 2001-09
  • A “crime against humanity”?
    • ....by using 100 million tons of grain and corn to ethanol while almost a billion people are starving (Jean Ziegler, UN Special Rapporteur on the Right to Food, 26 October 2007)
    • Animal production uses 756 million tons of grain per year
    • 98% of the 225 million-ton global soy crop is fed to farmed animals
    Sources: Ferrett, G., 27 October 2007; World Bank, 26 August 2008; Singer, P. 2009
    all cited in Safran Froer, J. 2009.
  • Indonesian context
    • 2.0 GtCO2e (2005), projected to grow to 2.6 GtCO2e (2020) – BAU
    • 80% of GHG emissions – LULUCF, notably conversion of peatlands (total area - 22m ha)
    • Oil palm - 2m ha (2000) grew to 7m ha (2010), projected to grow to between 16.5 and 26m ha by 2020
    • 7 provinces account for 75% of LULUCF emissions
    e.g. East Kalimantan (86% of emissions but also 30%
    of GDP and 39% of jobs)
  • Feedstock Investments
    • Total investments in past 10 years: US$ 25 -36 billion
    • Of which for biofuel: US$ 2.0 - 2.7 billion
    • Two-thirds in oil palm
  • Biofuel Investments
    • Total investments: US$ 5.7 – 6.7 billion
    • Two-thirds in sugar-based ethanol
    • One-third in biodiesel from palm oil and soy
  • Governance systems for biofuels
    • Role and effectiveness of government intervention in promoting domestic production capacity and uptake
    • Maintain supplies for domestic use (pricing, incentives, single-use feedstocks and progressive export tax)
    • Importance of government support both on the production and consumption side
    • Role and effectiveness of government intervention in maximizing benefits of large-scale investments and minimizing costs of sector development
    • Environmental protection
    • SEIA - weak compliance
    • Smallholder participation
    • Enhancing smallholder productivity and market access
    • Mechanisms for FPIC, avenues for legal recourse
    • Land tenure security
    • Stimulating investments in suitable and available land
  • Deforestation from industrial plantations
    Carbon cycle implications
    • Murdiyarso et al (2010) estimate total carbon loss of 1486 ± 183 MgCO2/ha
    • Fargione et al (2008) estimate 1294-3452 MgCO2/ha total carbon loss  420 to 840 years to recover the ‘carbon debt’ of peatland forest conversion to palm oil
    • Wicke et al (2008) estimate 8-16 years payback time from palm-oil based electricity production on logged-over forest
  • Socio-economic impacts
    • Employees
    • Livelihood improvements observed in several sites due to increased incomes and improved access to social services
    • Mixed or negative impacts in others due to poor employment conditions, and not meeting promises or expectations
    • Gains from regularity of income rather than amounts
    • Majority of jobs on palm oil plantations go to ‘migrants’
    • Land losing households
    • Growing landlessness
    • Loss of agricultural and forest incomes from displacement of cropland and forest
    • Additional labour burden due to increased distance of forests and greater dependence on purchased foodstuffs
    • CSR practices and land compensation payments failed to benefit those most negatively affected
  • Improving sector governance
    • Avoided Deforestation
    • Stronger regulation of large-scale producers (policy orientations, bank credit lines, monitoring)
    • Support to increase smallholder yields
    • Critical importance of full carbon accounting
    • Protection of Vulnerable Groups
    • Controlled expansion of outgrower schemes (legal literacy, contracts, proof of concept)
    • Protection of customary land users: legal protection of rights + negotiation process inc. detailed/written description of benefits and their distribution
    • Leveraging co-benefits
    • Preferential hiring/benefits flows to customary rights holders and land losing households
    • Overcoming barriers to market entry by poorer households
  • Governing biofuel finance
    • Apply sustainability criteria (i.e. EU RED) to all forms of foreign public finance including investments by state-owned companies
    • Stimulate responsible investment among pension funds
    • Integrate sustainability issues in bank risk management
    • Make sustainability reporting mandatory
    • Stimulate financial sector to set up independent compliance and grievance mechanisms
  • Access to credible information
    • Corporate lobbying (e.g.Alan Oxley, World Growth Institute (WGI) and International Trade Strategies Global (ITS Global) vs NGO advocacy (e.g. Greenpeace and Wahli-FOE-Indonesia)
    • Key misconception – “..two thirds of forest clearance is driven by low-income people in poor countries”
    • ‘An Open Letter about Scientific Credibility and the Conservation of Tropical Forests’ (Laurance et al, 25 October 2010) – “…significant distortions, misrepresentations, or misinterpretations of fact.”
    • WGI/ITS fails to comprehend or is failing to convey accurately the real and growing magnitude of industrial drivers as a threat to tropical forests.
    Laurance, W.F. et al, 2010. ‘An Open Letter about Scientific Credibility and the Conservation of Tropical Forests’. http://conservationbytes.com/2010/10/25/wolvesinsheep’sclothing:industriallobbyistsandthedestructionoftropicalforests/
    Oxley, A., 2010. Reaction (to above) from Alan Oxley. Available at: http://conservationbytes.com/2010/10/29/wolves-masquerading-as-sheep/
  • Policy options
    • Target palm oil investments on degraded land – requires improvements in spatial planning
    • Increase yields by using inorganic nitrogen fertilisers and/or POME as organic fertiliser – in Malaysia required new law prohibiting discharge into waterways
    • Collection of methane from POME treatment – CERs through CDM projects
    • Promote Palm Fatty Acid Distillate-based electricity production? (alternative uses include animal feed and soap industry)
    Sources: Wicke et al, 2008 and 2011
  • Thank you
    www.cifor.org