Indonesia is facing a dual challenge as its forests are increasingly sacrificed to meet the growing global demand for biomass energy. Since 2020, over 9,740 hectares of forest have been cleared for biomass production, with nearly all of this biomass exported to South Korea (61%) and Japan (38%). The Indonesian government has issued permits for over 1.4 million hectares of energy plantation forests, alarmingly, one-third of which consists of undisturbed forest. This trend raises significant concerns about the sustainability of Indonesia's rich biodiversity and the long-term health of its ecosystems. [3e5a6dcc]
The largest wood pellet exporter from Indonesia, Biomasa Jaya Abadi, has been at the forefront of this industry, capitalizing on the rising demand for biomass as a renewable energy source. The state-owned electricity company, PLN, plans to implement a 10% biomass co-firing strategy for 52 coal plants, which will require an estimated 8 million tons of biomass annually. This ambitious plan underscores the increasing reliance on biomass energy, but it also highlights the potential for further environmental degradation. [3e5a6dcc]
In addition to the pressures from biomass energy, Indonesia's palm oil sector is also under scrutiny due to the European Union's Deforestation Regulation (EUDR), which has been delayed until December 30, 2025. This regulation requires that commodities sold in the EU must not come from deforested land after December 31, 2020. Airlangga Hartarto, Indonesia’s economic affairs minister, noted that the delay was influenced by pressure from various stakeholders, including the US and the WTO. Local farmers are already facing increased compliance costs, which could further strain their financial resources. [8f452acc]
The palm oil sector produced 56 million tonnes last year, generating exports worth US$28.45 billion and employing around 16.2 million people. However, the uncertainty surrounding the EUDR may stall free-trade negotiations with the EU, which Indonesia has been pursuing for nearly a decade. This situation raises critical questions about the future of Indonesia's agricultural exports and its ability to compete in the global market. [8f452acc]
As the EU navigates its regulatory ambitions, the implications of both the EUDR and the rising demand for biomass energy extend beyond Indonesia, affecting global supply chains and raising concerns among farmers and producers in various countries. The EU's attempt to regulate companies outside its jurisdiction has led to tensions with emerging economies, including Malaysia and Indonesia, which are already in conflict with the EU over its refusal to recognize Malaysian standards. [0096a20d]