Chapter 7
Bioeconomy in the Oil Palm Republic
of Indonesia
Abstract Biofuels give but a prelude of broader bioeconomy development in the
Southeast Asian nation. Although many biofuel production chains were initially
envisaged in Indonesia, palm oil reigns supreme as the only feedstock commercially
used on a large scale. Its production occurs primarily in industry-owned plantations or through farming contracts between private companies and rural households.
These arrangements have provided rural workers or smallholders with a much-needed
income that alleviates their poverty; however, the allocation of rights, roles, benefits
and burdens is highly inequitable. Moreover, the environmental degradation from
oil palm plantations further makes their expansion unsustainable, despite attempts
to frame them as climate-friendly due to their role as carbon sinks. Foreign investments play a significant role, but domestic promotion policies arguably remain the
only sine qua non cause for biofuel expansion in Indonesia. State and private-sector
advocates of agribusiness have firmly pushed for plantations as a form of land use
and development. Meanwhile, adversaries advocating for conservation have not yet
offered a clear alternative development path. Most criticize the mainstream agenda
without saying much about how to address Indonesia’s development needs sustainably. Credible alternatives may be imperative for the country’s land use and to develop
its bioeconomy on a more sustainable footing.
Keywords Biofuels · Palm oil · Biodiesel · Tropical forests · Equity · Governance
Maybe nowhere else in the world is the bioeconomy so dependent on one single
crop as it is in this still megadiverse country. Indonesia is the world’s largest supplier
of vegetable oil, whose demand has considerably increased in recent years—among
other uses, for biofuels. Its crop of choice is oil palm, a high-yielding oil-bearing
tree of West African origin. It has adapted very well to Southeast Asian climates
and has given Indonesia its most lucrative export product after coal (Ministry of
Trade 2020). However, while this agroindustry brings large sums of foreign exchange
to the country, its sustainability has been contested. Growing biofuel production
and broader bioeconomy ambitions have further inflamed the debate, raising many
questions about land-use changes from oil palm expansion, the role of policies from
importers such as the European Union (EU), and also how equitable this palmcentered development is.
© Springer Nature Switzerland AG 2021
M. G. Bastos Lima, The Politics of Bioeconomy and Sustainability,
https://doi.org/10.1007/978-3-030-66838-9_7
147
Bioeconomy in the Oil Palm Republic
of Indonesia
Abstract Biofuels give but a prelude of broader bioeconomy development in the
Southeast Asian nation. Although many biofuel production chains were initially
envisaged in Indonesia, palm oil reigns supreme as the only feedstock commercially
used on a large scale. Its production occurs primarily in industry-owned plantations or through farming contracts between private companies and rural households.
These arrangements have provided rural workers or smallholders with a much-needed
income that alleviates their poverty; however, the allocation of rights, roles, benefits
and burdens is highly inequitable. Moreover, the environmental degradation from
oil palm plantations further makes their expansion unsustainable, despite attempts
to frame them as climate-friendly due to their role as carbon sinks. Foreign investments play a significant role, but domestic promotion policies arguably remain the
only sine qua non cause for biofuel expansion in Indonesia. State and private-sector
advocates of agribusiness have firmly pushed for plantations as a form of land use
and development. Meanwhile, adversaries advocating for conservation have not yet
offered a clear alternative development path. Most criticize the mainstream agenda
without saying much about how to address Indonesia’s development needs sustainably. Credible alternatives may be imperative for the country’s land use and to develop
its bioeconomy on a more sustainable footing.
Keywords Biofuels · Palm oil · Biodiesel · Tropical forests · Equity · Governance
Maybe nowhere else in the world is the bioeconomy so dependent on one single
crop as it is in this still megadiverse country. Indonesia is the world’s largest supplier
of vegetable oil, whose demand has considerably increased in recent years—among
other uses, for biofuels. Its crop of choice is oil palm, a high-yielding oil-bearing
tree of West African origin. It has adapted very well to Southeast Asian climates
and has given Indonesia its most lucrative export product after coal (Ministry of
Trade 2020). However, while this agroindustry brings large sums of foreign exchange
to the country, its sustainability has been contested. Growing biofuel production
and broader bioeconomy ambitions have further inflamed the debate, raising many
questions about land-use changes from oil palm expansion, the role of policies from
importers such as the European Union (EU), and also how equitable this palmcentered development is.
© Springer Nature Switzerland AG 2021
M. G. Bastos Lima, The Politics of Bioeconomy and Sustainability,
https://doi.org/10.1007/978-3-030-66838-9_7
147