162
7 Bioeconomy in the Oil Palm Republic of Indonesia
Brazil remains open for debate.) Indigenous peoples and farmers’ unions also play
relevant roles as agents.
The dominant coalition, which can be referred to as the plantation coalition,
is formed by the state and the private sector, with minor participation from the
scientific community. They believe biofuels can and should replace fossil fuels on
a large scale in Indonesia, but without significant changes in fuel distribution or
consumption patterns (Government of Indonesia 2006; Legowo et al. 2007; World
Growth 2011). In their view, Indonesia should become a major producer and, to a
degree, also an international supplier of palm-oil biodiesel, particularly to EU and US
markets (World Growth 2011). These dominant agents see no food vs. fuel conflict in
the country but food and cash-crop production going hand in hand. Moreover, some
argue that as Indonesia still has significant forest cover (far above the world average),
it is acceptable to convert land to agriculture for the sake of economic growth, food
and energy security (World Growth 2011; Personal interviews). Biofuel production
is thus seen as part of a poverty reduction and development agenda, where plantation
expansion provides jobs and income to the rural poor and improves their access to
infrastructure and services. In this view, the imposition of sustainability requirements
by import markets such as the US or the EU is seen as an unjustified form of “green
protectionism” or as a trade war—an attempt to benefit their biofuel producers at
the expense of Indonesia’s more competitive ones (World Growth 2011; Personal
interviews).
Although such policy-core beliefs have remained mostly unchanged, this coalition
has revised many of its secondary beliefs, related to more specific aspects and policy
instruments. For one, the plantation coalition believed that high levels of biofuel
blending could materialize quickly, but targets had to be lowered. Similarly, it had
initially thought that biofuel production would be economical even without subsidies,
benchmark procurement prices, or blending mandates — another belief that proved
wrong and had to change. Finally, as in India and elsewhere, jatropha was believed
to achieve high yields without water or other agricultural inputs, even in poor soils.
The coalition later reconsidered that, and its members became focused on R&D
investments to increase jatropha yields before largely abandoning it to favor palmbased biodiesel (see Slette and Wiyono 2011, 2013).
As the government and the private sector control different stages of the biofuel
production chain, they are “symbiotically interdependent”—as in the Brazilian and
Indian cases. It means they need one another to concretize their individual policy
goals (Fenger and Klok 2001). Such interdependence is evident in the continuous
negotiation on biofuel prices and policy incentives: success or failure of these negotiations has determined Indonesia’s biodiesel and ethanol sectors’ contrasting fates.
An additional bonding factor is that they use complementary resources in agency
(see Weible 2006; Sabatier and Weible 2007). While the private sector finances plantations and agro-industrial facilities, the government uses its legal authority to navigate investors through the bureaucracy and give them the necessary land-investment
permits. This pattern is different from Brazil’s case, for instance, where financing
is largely public and investors can buy private lands relatively independently of the
7 Bioeconomy in the Oil Palm Republic of Indonesia
Brazil remains open for debate.) Indigenous peoples and farmers’ unions also play
relevant roles as agents.
The dominant coalition, which can be referred to as the plantation coalition,
is formed by the state and the private sector, with minor participation from the
scientific community. They believe biofuels can and should replace fossil fuels on
a large scale in Indonesia, but without significant changes in fuel distribution or
consumption patterns (Government of Indonesia 2006; Legowo et al. 2007; World
Growth 2011). In their view, Indonesia should become a major producer and, to a
degree, also an international supplier of palm-oil biodiesel, particularly to EU and US
markets (World Growth 2011). These dominant agents see no food vs. fuel conflict in
the country but food and cash-crop production going hand in hand. Moreover, some
argue that as Indonesia still has significant forest cover (far above the world average),
it is acceptable to convert land to agriculture for the sake of economic growth, food
and energy security (World Growth 2011; Personal interviews). Biofuel production
is thus seen as part of a poverty reduction and development agenda, where plantation
expansion provides jobs and income to the rural poor and improves their access to
infrastructure and services. In this view, the imposition of sustainability requirements
by import markets such as the US or the EU is seen as an unjustified form of “green
protectionism” or as a trade war—an attempt to benefit their biofuel producers at
the expense of Indonesia’s more competitive ones (World Growth 2011; Personal
interviews).
Although such policy-core beliefs have remained mostly unchanged, this coalition
has revised many of its secondary beliefs, related to more specific aspects and policy
instruments. For one, the plantation coalition believed that high levels of biofuel
blending could materialize quickly, but targets had to be lowered. Similarly, it had
initially thought that biofuel production would be economical even without subsidies,
benchmark procurement prices, or blending mandates — another belief that proved
wrong and had to change. Finally, as in India and elsewhere, jatropha was believed
to achieve high yields without water or other agricultural inputs, even in poor soils.
The coalition later reconsidered that, and its members became focused on R&D
investments to increase jatropha yields before largely abandoning it to favor palmbased biodiesel (see Slette and Wiyono 2011, 2013).
As the government and the private sector control different stages of the biofuel
production chain, they are “symbiotically interdependent”—as in the Brazilian and
Indian cases. It means they need one another to concretize their individual policy
goals (Fenger and Klok 2001). Such interdependence is evident in the continuous
negotiation on biofuel prices and policy incentives: success or failure of these negotiations has determined Indonesia’s biodiesel and ethanol sectors’ contrasting fates.
An additional bonding factor is that they use complementary resources in agency
(see Weible 2006; Sabatier and Weible 2007). While the private sector finances plantations and agro-industrial facilities, the government uses its legal authority to navigate investors through the bureaucracy and give them the necessary land-investment
permits. This pattern is different from Brazil’s case, for instance, where financing
is largely public and investors can buy private lands relatively independently of the