Home TIS Intelligence Insight: Energy Mix to Avoid Hazards for the Environment

Insight: Energy Mix to Avoid Hazards for the Environment

Energy Mix - Photo: Special

JAKARTA (TheInsiderStories) – Indonesia’ dependence on crude oil use is still very high. But unfortunately, the country’ oil reserves are currently only 3.15 billion barrels of oil, from reserves of 9 billion barrels of oil in 2004.

With this, its estimated that Indonesian oil will run out the production in the next 10-12 years, assuming the output is an average of 750,000 barrels oil per day (BPD).

Data from the Energy and Mineral Resources ministry showed that in terms of production, Indonesia only produce 775,000 BPD. While, every day Indonesia must import fuel and crude oil as much as 1.8 million BPD.

To reduce this dependence, the government has set a national energy policy as a foundation for developing and increasing energy supply capacity called mix energy with a composition: 32.7 percent coal, 30.6 percent natural gas, 26.2 percent petroleum, hydropower, 2.4 percent, 3.8 percent geothermal energy, and others 4.4 percent.

To be more precise, the government is also developing alternative energy sources that are environmentally friendly in the form of renewable energy. At least, there are several renewable energy sources, such as bio-ethanol as a substitute for gasoline, biodiesel as diesel, geothermal power, micro hydro, solar power, wind power, even garbage or waste.

Bio-ethanol can be produced from plants such as sugar cane, cassava, sweet potatoes, and corn. While biodiesel from plant materials such as palm oil, coconut, distance, and much more. But not infrequently, the second production of energy is not only profitable, but it’s difficult to build a production chain that starts from farmers as the main actors who provide production land, to the energy distribution channels produced.

The choice of biodiesel as Indonesia’ renewable energy source is actually based on the availability of raw materials, where Indonesia has an abundance of raw materials for biodiesel production, namely Crude Palm Oil (CPO) and jatropha oil and 40 other alternative raw materials.

Presidential Regulation Number 5 Year 2006 concerning National Energy Policy states that biodiesel development will be carried out for 25 years, starting with preparation in 2004 and execution since 2005. This period is divided into three phases: the first phase (2005-2010), which is the minimum biodiesel utilization of 2 percent or equal to 720,000 kilograms to meet national fuel needs.

The second phase (2011-2015), namely the use of plants as raw material, where the plant will produce 30,000-10,000 tons per year. The production meets 3 percent of diesel consumption or equivalent to 1.5 million kiloliters (KL). In the third phase (2016-2025), production is expected to reach 5 percent of national consumption or equivalent to 4.7 million KL.

In 2018, the utilization of biodiesel reached 4.02 million KL and saved foreign exchange of $2.01 billion or Rp28.42 trillion. While production continues to increase, from 3.32 million KL in 2014, rising to 1.62 million KL in 2015, 2016 3.65 million KL, 2017 3.41 million KL, and 2018 reaching 6.01 million KL.

To accelerate the use of biodiesel, the government has also set a mandatory B20 that will take effect from 1 September 2018 to increase Indonesia’s biodiesel production along with the increasing use of domestic biodiesel. The implementation of B20 has saved foreign exchange of $937.84 million, equivalent to Rp13 trillion in the period up to January 2019.

It’s even predicted that it can save $5.5 billion or around Rp79.2 trillion in a year. With the strong oil and gas trade balance deficit affecting the national trade deficit of $6.65 billion (Jan-July 2018), the adoption of biodiesel is increasingly strategic.

The government is also focused on efforts to continue the B20 program towards B100, with the expectation 30 percent of the current total palm oil production of around 46 million tons will be absorbed into the biofuel mix program in fuel oil.

However, the availability and sustainability of big projects that use palm oil as raw material are considered to be able to disrupt the agricultural and environmental ecosystems in general, despite it would potentially erode CPO prices and encourage prices of fresh fruit bunches at the farm level.

As has happened recently, negative campaigns by the European Union and the United States on Indonesia’ palm oil exports have been caused by the government’s neglect of environmental damage and deforestation due to exploration of oil palm land and new land clearing.

This environmental disaster is not new in the Indonesian palm oil industry. It’s still warm in the public’s memory, the 2015 peatland fire disaster in Sumatra and Kalimantan which has had a huge social impact on society and the world. The total forest and burned land amounted to 2.089,911 hectares, killing 100.300 peoples and the country suffered a loss of Rp221 trillion.

Although after that the government continues to make efforts to recover, but the fact that oil palm exploration has never stopped, even the government itself has targeted expansion of oil palm land to 50 thousand hectares per year. Moreover, there is still evidence that peatland fires are still occurring, in Riau province recently, for example.

Therefore, the government’s efforts to boost the utilization of biodiesel through increasing palm oil production must continue to pay attention to the latent impacts that follow it, so as not to prioritize the one and ignore the other. Because there are interlinked value chains between the sectors concerned.

Written by Daniel Deha, Email: daniel@theinsiderstories.com

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