Palm oil Plantation Development in Indonesia and the

Palm oil Plantation Development in Indonesia and the Market Demand on Bio Fuel “ Presentation By : Rudy Lumuru Sawit Watch Fighting Spirit

Following Issue Related to Bio Fuel Demands: 1. Energy security and the peaking of oil supplies globally 2. Biofuels as tested substitutes for fossil fuels; 3. Abundance of land for producing energy crops in tropical countries; 4. Biofuels’ potential to reduce fuel import bills and fossil fuel dependence; 5. Biofuels production is a rural industry and can promote social inclusion; 6. Countries with even low levels of science and technology can get a start in biofuels, and they can create thereby a ‘development bloc’ that can drive industrial development; 7. Biofuels are greenhouse gas neutral and can earn countries carbon credits; 8. Developing countries can develop their own distinctive latecomer institutional innovations to capture benefits Biofuels promote South-South cooperation; and Biofuels represent simply the first step on a clean technology development trajectory.

Policy of the Government of Indonesia • The development applies large-scale plantation system; • Conversion of forests for plantations, planting unproductive forestlands (Presidential Instruction No. 1 Year 2006) • Presidential Regulation 5/2006 states biofuel production should be achieved more than 5% of national energy production; • Presidential Regulation 10/2006 about The national Team of Bio. Energy • Bio fuel latest development issues, only commodity of palm oil, ethanol and jatropha are most promoted

Government STRATEGY 1. Developing investment and finance scheme to support biofuel program 2. Developing price mechanism, starting from feedstock up to biofuel product. 3. Increasing domestic potential 4. Increasing availability of feedstock and production needs 5. Establishing biofuel trading system 6. Accelerating land availability 7. Developing Special Biofuel Zone and Self Sufficient Energy Village 8. Improving local Government and community participation in Biofuel business 9. Biofuel security of supply

STRATEGY ON BIOFUEL FEEDSTOCK SUPPLY

STRATEGIC PLAN UNTIL 2015

BIOFUEL DEVELOPMENT PROGRES • Availability of Biofuel Development Blue Print • Availability of Biofuel Development Regulations • Biodiesel (B-5), has been sold in 201 gas stations in Jakarta and 12 gas stations in Surabaya • Bioethanol (E-5), which is known as Bio-Premium has been sold in Malang and • Jakarta. Started December 2006 Bio-Pertamax has been sold in 1 gas station in Jakarta • Started of Energy Self Sufficient Village using Biofuel • Commitments of Investor to develop Biofuel (January 2007)

Indonesian Oil palm Industry and the Biofuel Development Planning • Oil palm is non-native plant imported from West Africa by the Dutch in 1848 and 4 seedlings grown in Bogor botanical garden; • First large-scale and commercial plantation established in 1911 • 30 big groups (national/multinational) control more than 600 oil palm plantation subsidiaries • Within five years (1999 -2004) an annual planting rate to have reached 400, 100 hectares • Cultivate 7. 3 MHa planted oil palm (Dec 2007) • Estimated 600, 000 to 1 Mha (palm oil used for biodiesel production) future expansion annually • Abundant land available for biodiesel development – Critical land reaches 22 million hectares (Statistic Indonesia 2004, BPS) – Planning of 20 million hectares for oil palm plantation development (Sawit Watch, 2006)

Biodiesel Producers in Indonesia Producer Current Capacity (MTPY) Eterindo Group Additional Capacity (MTPY) 120. 000 Platinum Industry 50. 000 - Indo biofuel Energy 20. 000 180. 000 Energy Altrenative IND 3. 000 - Rekayasa Industry 5. 000 - Wilmar Bio. Energy 350. 000 700. 000 Sumi Asih Group 100. 000 643. 500 1. 100. 000 Total Note : Bioethanoel Produscer : Molindo 50. 000 , Medco Chemichal 50. 000 Source : APOBRI 2007

Biodiesel Producers in Indonesia (Cont’d) Producer Capacity Asian Agro 150. 000 Darmex Oil 200. 000 Sampurna/PTPN XI 160. 000 Monopoly 150. 000 Sinar mas Group 100. 000 Musi Mas 100. 000 Sari Dumai Sejati 100. 000 Indo Biofuel 200. 000 Bakrie Sumarekin 100. 000 Energy Indo Pratama 100. 000 Karya Prajonanly 100. 000 Rekin/PTMN 5. 000 Artha Trans Jaya 1. 200 Rejeki Anugrah 1. 650 Total 1. 667. 850 Source : APOBRI 2007

Concern of The Parties • The Development Bio Energy sector in Indonesia just Based on the Market Demand • Palm Oil is Commodity That Priorities by Indonesian Government for Competition in Bio Fuel market • The Financial Mechanism from Investor Require the Huge Amount of Forest Land for New Development of Palm oil Plantation for Bio Fuel Project : e g. Kalimantan Border Project, Papua Bio fuel Project. • Deforestation, conversion, drainages and cultivation of peat land, foods for peoples vs cars, social and humananimal conflicts, and ongoing consequences make climate change mitigation and adaptation almost impossible!!!!

RSPO : The Commitment of Sustainability in Palm Oil Sector Vision RSPO ensures palm oil contributes to a better world Mission • RSPO promotes the production, procurement and use of sustainable palm oil, through development, implementation and verification of credible global standards, supported by engagement of and communication to stakeholders along the supply chain www. rspo. org

RSPO Principle & Criteria • Principle 1. Commitment to transparency • Principle 2. Compliance with applicable laws and regulation • Principle 3. Commitment to long term economic and financial viability • Principle 4. Use of appropriate best practices by growers and millers • Principle 5. Environment responsibility and conservation of natural resources and biodiversity • Principle 6. Responsible consideration of employees and individuals and community affected by growers and mills • Principle 7. Responsible development of new planting • Principle 8. Commitment to continuous improvement in key areas of activity www. rspo. org

RSPO Bio-energy Position • The palm oil market is open and not within scope of RSPO todecide upon allocation based on end use. • Our mission - provide certified sustainable palm to the market in clear and transparent manner. • The new demand for renewable fuels increasesimportance of deliveringsustainably produced feed stocks from all sources including palm, rapeseed, soybean, sugar cane, corn and sugar beet. Based on the RSPO position: • First generation feed stocks should provide clear greenhouse gas benefits considering life cycle of raw material. • recognise potential need for additional criteria specific to greenhouse gas. • We welcome all in both the traditional and the renewable fuel sectors to join RSPO in our efforts. www. rspo. org

Thanks You