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

    1. 1. Oil palm development and the challenges for sustainable and equitable growth and forest governance<br />D. Andrew Wardell<br />CIFOR South-South Exchange, 21 September 2011<br />
    2. 2. Overview <br /><ul><li>Global and Indonesian contexts
    3. 3. Overview of production and investment trends
    4. 4. Governance systems for oil palm
    5. 5. Socio-economic impacts
    6. 6. Environmental impacts
    7. 7. Improving sector governance
    8. 8. Securing access to credible information
    9. 9. Policy options</li></li></ul><li>Global context <br /><ul><li>Population growth and per capita consumption. Requires an additional 28m tonnes of vegetable oil annually by 2020 (WBG, 2011).
    10. 10. Continued growth in global energy consumption. Energy (in)security and the high cost of fossil fuels
    11. 11. Apprehension associated with global warming and efforts to reduce GHG emissions
    12. 12. National/regional commitments to promote biofuels. </li></ul> 3 major players – USA, Brazil and European Union<br />
    13. 13. Biofuel production trends 2001-09<br />
    14. 14. A “crime against humanity”? <br /><ul><li>....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)
    15. 15. Animal production uses 756 million tons of grain per year
    16. 16. 98% of the 225 million-ton global soy crop is fed to farmed animals </li></ul>Sources: Ferrett, G., 27 October 2007; World Bank, 26 August 2008; Singer, P. 2009 <br />all cited in Safran Froer, J. 2009.<br />
    17. 17. Indonesian context <br /><ul><li>2.0 GtCO2e (2005), projected to grow to 2.6 GtCO2e (2020) – BAU
    18. 18. 80% of GHG emissions – LULUCF, notably conversion of peatlands (total area - 22m ha)
    19. 19. Oil palm - 2m ha (2000) grew to 7m ha (2010), projected to grow to between 16.5 and 26m ha by 2020
    20. 20. 7 provinces account for 75% of LULUCF emissions</li></ul> e.g. East Kalimantan (86% of emissions but also 30% <br /> of GDP and 39% of jobs)<br />
    21. 21. Feedstock Investments <br /><ul><li>Total investments in past 10 years: US$ 25 -36 billion
    22. 22. Of which for biofuel: US$ 2.0 - 2.7 billion
    23. 23. Two-thirds in oil palm </li></li></ul><li>Biofuel Investments <br /><ul><li>Total investments: US$ 5.7 – 6.7 billion
    24. 24. Two-thirds in sugar-based ethanol
    25. 25. One-third in biodiesel from palm oil and soy</li></li></ul><li>Governance systems for biofuels <br /><ul><li>Role and effectiveness of government intervention in promoting domestic production capacity and uptake
    26. 26. Maintain supplies for domestic use (pricing, incentives, single-use feedstocks and progressive export tax)
    27. 27. Importance of government support both on the production and consumption side
    28. 28. Role and effectiveness of government intervention in maximizing benefits of large-scale investments and minimizing costs of sector development
    29. 29. Environmental protection
    30. 30. SEIA - weak compliance
    31. 31. Smallholder participation
    32. 32. Enhancing smallholder productivity and market access
    33. 33. Mechanisms for FPIC, avenues for legal recourse
    34. 34. Land tenure security
    35. 35. Stimulating investments in suitable and available land</li></li></ul><li>Deforestation from industrial plantations<br />Carbon cycle implications<br /><ul><li>Murdiyarso et al (2010) estimate total carbon loss of 1486 ± 183 MgCO2/ha
    36. 36. 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
    37. 37. Wicke et al (2008) estimate 8-16 years payback time from palm-oil based electricity production on logged-over forest</li></li></ul><li>Socio-economic impacts<br /><ul><li>Employees
    38. 38. Livelihood improvements observed in several sites due to increased incomes and improved access to social services
    39. 39. Mixed or negative impacts in others due to poor employment conditions, and not meeting promises or expectations
    40. 40. Gains from regularity of income rather than amounts
    41. 41. Majority of jobs on palm oil plantations go to ‘migrants’
    42. 42. Land losing households
    43. 43. Growing landlessness
    44. 44. Loss of agricultural and forest incomes from displacement of cropland and forest
    45. 45. Additional labour burden due to increased distance of forests and greater dependence on purchased foodstuffs
    46. 46. CSR practices and land compensation payments failed to benefit those most negatively affected</li></li></ul><li>Improving sector governance<br /><ul><li>Avoided Deforestation
    47. 47. Stronger regulation of large-scale producers (policy orientations, bank credit lines, monitoring)
    48. 48. Support to increase smallholder yields
    49. 49. Critical importance of full carbon accounting
    50. 50. Protection of Vulnerable Groups
    51. 51. Controlled expansion of outgrower schemes (legal literacy, contracts, proof of concept)
    52. 52. Protection of customary land users: legal protection of rights + negotiation process inc. detailed/written description of benefits and their distribution
    53. 53. Leveraging co-benefits
    54. 54. Preferential hiring/benefits flows to customary rights holders and land losing households
    55. 55. Overcoming barriers to market entry by poorer households</li></li></ul><li>Governing biofuel finance<br /><ul><li>Apply sustainability criteria (i.e. EU RED) to all forms of foreign public finance including investments by state-owned companies
    56. 56. Stimulate responsible investment among pension funds
    57. 57. Integrate sustainability issues in bank risk management
    58. 58. Make sustainability reporting mandatory
    59. 59. Stimulate financial sector to set up independent compliance and grievance mechanisms</li></li></ul><li>Access to credible information<br /><ul><li>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)
    60. 60. Key misconception – “..two thirds of forest clearance is driven by low-income people in poor countries”
    61. 61. ‘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.”
    62. 62. 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.</li></ul>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/<br />Oxley, A., 2010. Reaction (to above) from Alan Oxley. Available at: http://conservationbytes.com/2010/10/29/wolves-masquerading-as-sheep/<br />
    63. 63. Policy options<br /><ul><li>Target palm oil investments on degraded land – requires improvements in spatial planning
    64. 64. Increase yields by using inorganic nitrogen fertilisers and/or POME as organic fertiliser – in Malaysia required new law prohibiting discharge into waterways
    65. 65. Collection of methane from POME treatment – CERs through CDM projects
    66. 66. Promote Palm Fatty Acid Distillate-based electricity production? (alternative uses include animal feed and soap industry)</li></ul>Sources: Wicke et al, 2008 and 2011<br />
    67. 67. Thank you<br />www.cifor.org<br />

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