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Citation: Djatmika, P.; Listiningrum,
P.; Sumarno, T.B.; Mahira, D.F.;
Sianipar, C.P.M. Just Transition in
Biofuel Development towards
Low-Carbon Economy: Multi-Actor
Perspectives on Policies and Practices
in Indonesia. Energies 2024,17, 141.
https://doi.org/10.3390/en17010141
Academic Editor: Seung-Hoon Yoo
Received: 30 September 2023
Revised: 19 December 2023
Accepted: 23 December 2023
Published: 27 December 2023
Copyright: © 2023 by the authors.
Licensee MDPI, Basel, Switzerland.
This article is an open access article
distributed under the terms and
conditions of the Creative Commons
Attribution (CC BY) license (https://
creativecommons.org/licenses/by/
4.0/).
energies
Article
Just Transition in Biofuel Development towards Low-Carbon
Economy: Multi-Actor Perspectives on Policies and Practices
in Indonesia
Prija Djatmika 1, Prischa Listiningrum 1, * , Theresia B. Sumarno 2, Dararida F. Mahira 1
and Corinthias P. M. Sianipar 3 ,4 ,*
1Faculty of Law, Brawijaya University (UB), Malang 65145, Indonesia
2Aberdeen Business School, Robert Gordon University (RGU), Aberdeen AB10 7QE, UK
3Department of Global Ecology, Kyoto University, Kyoto 606-8501, Japan
4Division of Environmental Science and Technology, Kyoto University, Kyoto 606-8502, Japan
*Correspondence: p.listiningrum@ub.ac.id (P.L.); iam@cpmsianipar.com (C.P.M.S.)
Abstract: Justice and sustainability are the foundation of fair and equitable biofuel development.
Policies and practices are consequently necessary to support a just transition towards a low-carbon
economy. Therefore, this study aimed to understand multi-actor perspectives on policies and practices
relevant to the just transition in biofuel development. Applying a socio-legal approach based on
the JUST framework, this study focused on the Indonesian biofuel industry, which is primarily
driven by crude palm oil (CPO) production. This study also added comparative perspectives
from Thailand’s biofuel industry. The primary data were gathered from in-depth interviews and
focus group discussions (FGDs), while the secondary data were from research, policy, and other
government archives. Based on the results, oil palm plantations in Indonesia and Thailand are
crucial for macroeconomic development. However, smallholder farmers in Indonesia, especially
independent ones that do not join farmer groups, remain marginalised by the current regulations.
In fact, many benefits from biofuel practices and policies accumulate disproportionately towards
large corporations, while marginalised groups bear the costs. The Indonesian Sustainable Palm Oil
(ISPO) certification that should induce market accessibility and competitiveness has not fully reached
most rural farmers. Furthermore, various overlapping regulations and perplexing data differences
exist from multiple ministries and administrative levels. Thus, palm oil stakeholders in Indonesia
demand a dedicated institution for integrated regulation and monitoring of the industry, similar to
the National Palm Oil Policy Committee in Thailand. The myriad of legal, political, socio-economic,
and justice issues thus necessitates all hands on deck to ensure a just transition for all stakeholders of
the Indonesian biofuel industry.
Keywords: energy transition; energy policy; renewable energy; energy justice; socio-legal analysis;
multi-actor systems; rural development; energy sustainability; bioenergy; fairness and equity
1. Introduction
The world is gradually shifting from production and consumption activities pow-
ered by fossil fuels to a low-carbon economy fuelled by renewable energy sources [
1
].
Biofuels have a significant role in the energy transition due to their compatibility with
existing infrastructure and technologies that are technically difficult to decarbonise [
2
,
3
].
As countries attempt to reduce greenhouse gas (GHG) emissions as part of climate change
mitigation, biofuels thus act as a crucial bridge between the current fossil fuel-dependent
economic systems and a desirable low-carbon future predominantly powered by renewable
alternatives [
4
]. However, the critical role of biofuels in energy transition raises debates
revolving around sustainability-related issues. To begin with, biofuel production requires
substantial amounts of water and agricultural inputs [
5
], leading to water scarcity and
Energies 2024,17, 141. https://doi.org/10.3390/en17010141 https://www.mdpi.com/journal/energies
Energies 2024,17, 141 2 of 29
pollution from fertilisers and pesticides. It also triggers changes in land use for biofuel crop
cultivation or subsequent production processes [
6
]. Then, the total lifecycle emissions vary
significantly depending on the feedstock and production processes used [
7
]. In some cases,
the emissions are comparable to, or even greater than, those of fossil fuels.
Furthermore, biofuel development is traditionally centred on techno-economic issues.
Indeed, a solid focus on improving the technical efficiency and cost-effectiveness of biofuels
is undeniably important. However, it is increasingly recognised that other issues, particu-
larly those related to justice and sustainability in the pursuit of a just transition, are also
crucial [
8
]. Just transition demands a fair and equitable transition to a low-carbon economy,
minimising negative impacts on vulnerable groups and ensuring a fair distribution of
benefits [
9
,
10
]. It implies how biofuel production and consumption impact various stake-
holders [
11
]. For example, biofuel development can impact rural livelihoods by changing
land use, tenure, and access. Smallholder farmers may lose land to large biofuel projects
without proper consent or compensation [
12
], making implementing measures to safeguard
local communities essential. Further, labour practices in biofuel feedstock plantations and
processing facilities should be ethical and fair, avoiding exploitation [
13
]. In addition, the
benefits of biofuel production and consumption may be overly distributed to major biofuel
companies while smallholder farmers struggle daily [
14
]. It demands structural changes
for an equitable sharing of benefits across biofuel value chains.
In industrialised countries [
15
–
17
], biofuel development has begun integrating sus-
tainability and justice issues towards a just transition [
18
]. However, most developing
countries, including Indonesia, still struggle with various concerns arising from biofuel
production and consumption [
19
,
20
]. As the world’s largest producer of crude palm oil
(CPO) [
21
], Indonesia has made the CPO industry the main driving force of its energy
transition. Shifting to biofuels has helped the country fulfil its commitment under the 2015
Paris Agreement [
22
,
23
] and the recently announced Just Energy Transition Partnership
(JEPT) [
24
,
25
]. However, CPO-based biofuel production in Indonesia has raised various
socio-ecological concerns [
26
,
27
]. The massive expansion of oil palm plantations has led to
significant deforestation [
28
], biodiversity loss [
29
], and land conflicts [
30
]. Further, biofuel
production by smallholder farmers is considerably expensive when considering the costs of
sustainable production practices [
31
]. Despite government subsidies, sustainability-related
cost competitiveness remains challenging, leading to difficulties in fostering the transi-
tion to biofuels. These issues undermine the benefits of biofuels and pose challenges to
Indonesia’s commitment to Sustainable Development Goals.
Despite hosting massive renewable energy sources [
32
–
34
], Indonesia requires sub-
stantial transformations of policies and practices for a just transition towards a low-carbon
economy. Still, the country’s energy consumption between 1961 and 2018 revealed that
energy consumption, dominated by fossil fuels, did not have a significant long-term as-
sociation with GDP growth [
35
]. In that sense, energy consumption in Indonesia mainly
occurred in mere nonproductive activities. It drives biofuel development practices and
policies to focus on resolving technical issues and fostering economic growth [
36
] rather
than maintaining socio-ecological balance, making it difficult for a just transition to emerge.
Thus, this research aimed to investigate how the biofuel industry in Indonesia could ac-
celerate an energy transition while ensuring justice in the process. Further, this study
attempted to identify complex challenges in the country’s biofuel industry as the basis
of recommendations for the government in achieving a just energy transition. Notably,
this research strove to discover how policies and practices could be improved for fairer
socio-ecological and financial outcomes towards different stakeholders in the industry and
society. This study thus attempted to answer the following questions:
•
RQ1 What framework could be used to understand the complex requirements for the
Indonesian biofuel industry to pursue a just transition?
•
RQ2 How do current policies and practices in the CPO-centred biofuel industry
support the just energy transition?
Energies 2024,17, 141 3 of 29
•
RQ3 What recommendations can the government follow to improve policies and
practices for the country’s CPO industry in fostering the just energy transition?
2. Literature Review
2.1. An Overview of the CPO-Driven Biofuel Industry in Indonesia
There are positive correlations between economic growth and carbon emissions [
37
–
39
]
that, at times, lead to environmental degradation [
40
–
42
]. As countries develop their economies,
industrial activities accelerate, resulting in increased GHG emissions that contribute to climate
change. Indonesia is no exception. Domestically developing clean energy sources provides
environmental and economic benefits [
43
]. Biofuels play a pivotal role in its energy transition by
reducing GHG emissions while growing the economy. With volatile global energy markets and
abundant renewable energy sources, diversifying energy supplies through domestic sources
reduces reliance on imported oil [
44
]. Since the 2000s, Indonesia has developed biofuels to shift
from imported petrol [
36
], constituting 30% of total domestic demand. The leading biofuel
is CPO, which produces biodiesel to substitute fossil-based diesel fuel. The country’s CPO
industry contributes significantly to economic growth, especially in rural areas [
45
]. Still, volatile
CPO prices negatively impact smallholder planters and rural communities that rely on the CPO
industry [
21
]. The government, to maintain the CPO industry’s growth, rural livelihoods, and
ecological balance, should thus implement policies and practices to support a just transition.
CPO is derived from oil palm, an extremely productive oil crop that generates up to
ten times more oil per hectare than other plants [
46
]. It can be harvested frequently, up to
every 10–15 days, over the tree’s long productive lifespan of around 25 years [
47
]. This
exceptional yield and productivity supported the massive development of Indonesian oil
palm plantations since the 1970s [
48
]. By the 1980s, the country had already developed
294,000 hectares of oil palm plantations amid rapid expansion [
49
], progressively increasing
to over 15 million hectares by 2019 [
50
]. Figure 1depicts the spatial distribution of oil palm
plantations throughout Indonesia. This growth enabled Indonesia to become the world’s
largest CPO producer. Despite the steady year-on-year production increase, compounded
factors have severely constrained Indonesia’s CPO trade, resulting in fluctuated exports.
Contributing to this trend, India, a major importer, raised import tariffs on CPO by 44% and
CPO products by 54% in 2018 [
51
], reducing demand. Further, EU countries implemented
non-tariff barriers, citing environmental concerns about palm oil expansion [
52
]. The EU
also accused Indonesia of unfairly subsidising CPO for biodiesel production [
53
], prompting
anti-dumping inquiries. Then, negative media campaigns portrayed Indonesian palm oil
as destructive [54], discouraging consumption.
The EU Renewable Energy Directive (RED) has significantly impacted Indonesia’s CPO
exports and domestic biofuel development. It was first introduced through the Renewable
Energy Directive 2009/28/EC [
55
] and the Fuel Quality Directive 2009/30/EC [
56
]. The
initial purpose was to act as transitional regulations to prepare for broader biofuel adoption
across Europe. A decade later, however, the EU re-evaluated its positioning by issuing
a recast (EU Directive 2018/2001; RED II) in December 2018 [
57
]. The new directive
established stricter limits to the production and consumption of biofuels, bioliquids and
biomass fuels that have high risks of indirect land use change (ILUC), with a phase-out
by 2030 [
58
]. ILUC refers to clearing land originally destined for crop cultivation and feed
markets induced by the diversion of the cropland for biofuel production. RED II targets
feedstocks like palm oil that drive deforestation in tropical regions when diverted for
European biofuel manufacturing [
59
]. It directly affects CPO-based biofuels from Indonesia,
which are classified as high ILUC risk. With Indonesia being the largest CPO exporter
to Europe, the RED II is projected to reduce CPO demand for Indonesia significantly.
In response, the Indonesian government has started initiatives to utilise CPO supply,
previously meant for export, for domestic biodiesel production.
Recently, the government developed the B30 program as a domestic solution to offset
declining CPO exports by absorbing excess supply through biodiesel production [
60
]. The
program mandates 30% biodiesel content in diesel fuel [
61
], providing a sizable domestic
Energies 2024,17, 141 4 of 29
market for CPO-based biodiesel. In fact, Indonesia is poised to become the world’s third-
largest biodiesel producer through a successfully implemented B30 program [
62
]. However,
infrastructure limitations, particularly outside Java Island, constrain biodiesel distribution
and the utilisation of CPO surpluses nationally. Financial incentives for biodiesel pro-
ducers could hence encourage investments in infrastructure modernisation to foster the
program. While biodiesel development addresses CPO oversupply concerns, long-term
growth requires balancing productivity gains with sustainability practices [
21
]. Proactive
engagement with the EU is needed to meet sustainability criteria and restore market access
by considering restrictive trade policies like RED II. Sustainability certification would
demonstrate Indonesia’s commitment to sustainable palm oil production [
63
], complement-
ing domestic biodiesel policies. Ultimately, implementing the B30 program and instituting
sustainability measures pave the optimal pathway for Indonesia’s CPO industry to thrive
in the global market while bolstering the national energy transition.
Energies 2024, 17, x FOR PEER REVIEW 4 of 30
Figure 1. Spatial distribution of oil palm plantations in Indonesia [50].
Recently, the government developed the B30 program as a domestic solution to offset
declining CPO exports by absorbing excess supply through biodiesel production [60]. The
program mandates 30% biodiesel content in diesel fuel [61], providing a sizable domestic
market for CPO-based biodiesel. In fact, Indonesia is poised to become the world’s third-
largest biodiesel producer through a successfully implemented B30 program [62]. How-
ever, infrastructure limitations, particularly outside Java Island, constrain biodiesel distri-
bution and the utilisation of CPO surpluses nationally. Financial incentives for biodiesel
producers could hence encourage investments in infrastructure modernisation to foster
the program. While biodiesel development addresses CPO oversupply concerns, long-
term growth requires balancing productivity gains with sustainability practices [21]. Pro-
active engagement with the EU is needed to meet sustainability criteria and restore market
access by considering restrictive trade policies like RED II. Sustainability certification
would demonstrate Indonesia’s commitment to sustainable palm oil production [63],
complementing domestic biodiesel policies. Ultimately, implementing the B30 program
and instituting sustainability measures pave the optimal pathway for Indonesia’s CPO
industry to thrive in the global market while bolstering the national energy transition.
2.2. Towards Just Transition: The JUST Framework
Looking at the overview, the CPO-driven biofuel industry in Indonesia faces pressing
challenges, both domestically and overseas. Invigorating the CPO-biofuel sector requires
a holistic approach that will lead to fairer outcomes for all stakeholders. Particularly, ap-
plying a holistic framework balancing justice along with sustainability policies and prac-
tices will ensure the continued growth of the biofuel industry [8], contribute to Indonesia’s
energy and climate targets for 2030 [64] and foster a just energy transition [65–67]. At this
point, the JUST framework [68] offers a systemic way for a holistic policy analysis of an
extractive industry towards a just transition. Basically, the framework [69] accounts for (1)
justice at various regional levels, (2) universal forms of justice, (3) all relevant locations of
the industry, and (4) timelines for industrial activities, energy transition, and climate tar-
gets. The framework aims to foster strong relationships among relevant stakeholders,
manage the risk profile of the industry, and eventually ensure mitigation and adaptation
measures to lessen environmental impact [70]. Focusing on justice and inclusivity via the
JUST framework can ultimately catalyse an equitable and just energy transition [71], ben-
efiting Indonesia and the global community.
Figure 1. Spatial distribution of oil palm plantations in Indonesia [50].
2.2. Towards Just Transition: The JUST Framework
Looking at the overview, the CPO-driven biofuel industry in Indonesia faces pressing
challenges, both domestically and overseas. Invigorating the CPO-biofuel sector requires a
holistic approach that will lead to fairer outcomes for all stakeholders. Particularly, applying
a holistic framework balancing justice along with sustainability policies and practices will
ensure the continued growth of the biofuel industry [
8
], contribute to Indonesia’s energy
and climate targets for 2030 [
64
] and foster a just energy transition [
65
–
67
]. At this point,
the JUST framework [
68
] offers a systemic way for a holistic policy analysis of an extractive
industry towards a just transition. Basically, the framework [
69
] accounts for (1) justice
at various regional levels, (2) universal forms of justice, (3) all relevant locations of the
industry, and (4) timelines for industrial activities, energy transition, and climate targets.
The framework aims to foster strong relationships among relevant stakeholders, manage
the risk profile of the industry, and eventually ensure mitigation and adaptation measures
to lessen environmental impact [
70
]. Focusing on justice and inclusivity via the JUST
framework can ultimately catalyse an equitable and just energy transition [
71
], benefiting
Indonesia and the global community.
The JUST framework [
69
] is designed to engage with policymakers and financiers for
whom the risk profile of an extractive industry is exceptionally crucial. In the decision-
making process, it could deliver valuable information to consider whether an extractive
industry, i.e., the CPO industry, should proceed financially and acquire a social licence to
Energies 2024,17, 141 5 of 29
operate [
70
], whether formally or informally. Conceptually, the framework encompasses
four key elements [
72
]: justice, universal forms of justice, space considerations, and time-
related issues (Figure 2). Justice (J) involves three sub-elements essential for ensuring
sustainable and equitable development from an extractive industry: distributive justice,
procedural justice, and restorative justice [
73
–
77
]. Distributive justice examines crucial
aspects of revenue management and transparency concerning resources management.
Meanwhile, procedural justice focuses on the legal and regulatory processes throughout
an industrial lifecycle. For the CPO industry, this starts from the initial planning stages
of cultivation to utilising CPO as a renewable energy source. Then, restorative justice is
fundamentally concerned with restoring oil palm plantations and related lands to their
original roles in the local and global socio-ecological systems. Policies and practices under
restorative justice should be planned for at the beginning rather than as an afterthought.
Energies 2024, 17, x FOR PEER REVIEW 5 of 30
The JUST framework [69] is designed to engage with policymakers and financiers for
whom the risk profile of an extractive industry is exceptionally crucial. In the decision-
making process, it could deliver valuable information to consider whether an extractive
industry, i.e., the CPO industry, should proceed financially and acquire a social licence to
operate [70], whether formally or informally. Conceptually, the framework encompasses
four key elements [72]: justice, universal forms of justice, space considerations, and time-
related issues (Figure 2). Justice (J) involves three sub-elements essential for ensuring sus-
tainable and equitable development from an extractive industry: distributive justice, pro-
cedural justice, and restorative justice [73–77]. Distributive justice examines crucial aspects
of revenue management and transparency concerning resources management. Mean-
while, procedural justice focuses on the legal and regulatory processes throughout an in-
dustrial lifecycle. For the CPO industry, this starts from the initial planning stages of cul-
tivation to utilising CPO as a renewable energy source. Then, restorative justice is funda-
mentally concerned with restoring oil palm plantations and related lands to their original
roles in the local and global socio-ecological systems. Policies and practices under restor-
ative justice should be planned for at the beginning rather than as an afterthought.
Figure 2. The JUST Framework.
Then, the other three key elements are universal forms of justice (U), space consider-
ations (S), and time (T). The second key element (U) involves recognition and cosmopoli-
tanism [78,79]. Recognition addresses justice concerns at the local level, specifically in
terms of recognising and upholding the rights of various groups, including indigenous
communities and residents. It is crucial to ensure that these communities are not margin-
alised or disadvantaged by the development of the extractive CPO industry. Meanwhile,
cosmopolitanism is based on the premise of global interconnectedness. In this context, the
Indonesian CPO industry supplies the global biofuel value chains, generating cross-bor-
der impacts from local and regional activities in Indonesia. Furthermore, the third key
element, space, addresses the spatial aspects of an observed industry [80], i.e., where the
industrial activities are happening and the interlinks between the “events,” the global sup-
ply chain, and all relevant stakeholders. Then, the last key element, time, highlights a long-
term perspective when assessing an industry [81]. In this case, it assesses how far the
country remains on course to meet its energy and climate targets for 2030 and beyond. It
is centred on asking whether the extractive industry in question, i.e., the exploration of
palm oil as a source of biofuel, can be delivered according to the timelines.
3. Methodology
3.1. Research Design
Founded on the JUST framework as the conceptual basis, this study applied a quali-
tative socio-legal approach [82–84] through a three-stage research design involving sam-
pling, data collection, and data analysis. The first stage aimed to select potential respond-
ents among relevant stakeholders, including industrial practitioners, palm oil farmers,
and local communities. Furthermore, the second stage focused on gathering primary and
secondary data. The primary data were designated to discover socio-legal situations re-
garding the Indonesian CPO industry and biofuels in general. The primary data were
gathered through a multi-method approach combining in-depth interviews and focus
Figure 2. The JUST Framework.
Then, the other three key elements are universal forms of justice (U), space considera-
tions (S), and time (T). The second key element (U) involves recognition and cosmopoli-
tanism [
78
,
79
]. Recognition addresses justice concerns at the local level, specifically in terms
of recognising and upholding the rights of various groups, including indigenous commu-
nities and residents. It is crucial to ensure that these communities are not marginalised
or disadvantaged by the development of the extractive CPO industry. Meanwhile, cos-
mopolitanism is based on the premise of global interconnectedness. In this context, the
Indonesian CPO industry supplies the global biofuel value chains, generating cross-border
impacts from local and regional activities in Indonesia. Furthermore, the third key element,
space, addresses the spatial aspects of an observed industry [
80
], i.e., where the industrial
activities are happening and the interlinks between the “events”, the global supply chain,
and all relevant stakeholders. Then, the last key element, time, highlights a long-term
perspective when assessing an industry [
81
]. In this case, it assesses how far the country
remains on course to meet its energy and climate targets for 2030 and beyond. It is centred
on asking whether the extractive industry in question, i.e., the exploration of palm oil as a
source of biofuel, can be delivered according to the timelines.
3. Methodology
3.1. Research Design
Founded on the JUST framework as the conceptual basis, this study applied a qualita-
tive socio-legal approach [
82
–
84
] through a three-stage research design involving sampling,
data collection, and data analysis. The first stage aimed to select potential respondents
among relevant stakeholders, including industrial practitioners, palm oil farmers, and local
communities. Furthermore, the second stage focused on gathering primary and secondary
data. The primary data were designated to discover socio-legal situations regarding the
Indonesian CPO industry and biofuels in general. The primary data were gathered through
a multi-method approach combining in-depth interviews and focus group discussions
(FGDs) [
85
,
86
], with a particular focus on collecting primary data relevant to the justice
(J) and universal justice (U) elements of the JUST framework. Meanwhile, the space (S)
and time (T) elements were investigated through secondary data only since they were
typically recorded as part of research, policy documents, or other government archives.
In addition, the secondary data collection was designated to gather further perspectives
Energies 2024,17, 141 6 of 29
on the first two key elements (J and U) from relevant documents, adding complementary
insights to related primary data [
87
]. In this data collection stage, the interviewees and
FGD participants would also assist this study in searching for information on various
non-human actors, such as policy implementation or other practical issues, allowing for a
comprehensive qualitative investigation based on multi-actor perspectives [
88
]. Moreover,
the third research stage focused on synthesising primary and secondary data using the four
key elements of the JUST framework. It would allow an enhanced direct interpretation of
the results for more thorough socio-legal findings on policies and practices in Indonesia’s
CPO-driven biofuel industry. The three research stages explained above, including their
purposes and methods, are visualised in Figure 3.
Energies 2024, 17, x FOR PEER REVIEW 6 of 30
group discussions (FGDs) [85,86], with a particular focus on collecting primary data rele-
vant to the justice (J) and universal justice (U) elements of the JUST framework. Mean-
while, the space (S) and time (T) elements were investigated through secondary data only
since they were typically recorded as part of research, policy documents, or other govern-
ment archives. In addition, the secondary data collection was designated to gather further
perspectives on the first two key elements (J and U) from relevant documents, adding
complementary insights to related primary data [87]. In this data collection stage, the in-
terviewees and FGD participants would also assist this study in searching for information
on various non-human actors, such as policy implementation or other practical issues,
allowing for a comprehensive qualitative investigation based on multi-actor perspectives
[88]. Moreover, the third research stage focused on synthesising primary and secondary
data using the four key elements of the JUST framework. It would allow an enhanced
direct interpretation of the results for more thorough socio-legal findings on policies and
practices in Indonesia’s CPO-driven biofuel industry. The three research stages explained
above, including their purposes and methods, are visualised in Figure 3.
Figure 3. Research Design.
Since the Indonesian CPO industry is stagnating, partly due to less benchmarking
against other major CPO producers, this study required alternative insights from another
major CPO-producing country. The three world’s largest CPO producers are in Southeast
Asia, i.e., Indonesia, Malaysia, and Thailand [21,89]. They cover as much as 87.5% of the
global CPO production [90], making it logical to run the benchmark among them. How-
ever, Indonesia and Malaysia’s palm oil industries and CPO markets are interlinked [91]
since many of their plantations are co-run by corporations from both countries. Shared
industrial chains between Indonesia and Malaysia could lead to co-correlations, making
it highly possible to produce biased comparisons. Meanwhile, the Thai CPO industry is
technically disjointed from Indonesia, with the extent of correlation only in the global CPO
market. Thus, this research added comparative perspectives from Thailand’s CPO indus-
try. Since gathering primary data was impossible for technical reasons, this study con-
ducted content analyses on secondary data from the Thai CPO industry. This was made
possible since the Thailand CPO industry has been well documented in research, policies,
and other official archives to increase accessibility for global CPO consumers. Data from
Thailand were comparatively analysed by briefly applying the same framework [69]. The
comparison allowed this study to contribute to the literature on biofuels and the energy
transition in Southeast Asia, where biofuels have become an integral part of the strategy
to accelerate the energy transition and reduce emissions [92–94].
3.2. Data Collection and Analysis
For the primary data collection, this study conducted interviews and FGDs (Figure
3) to build in-depth and fine-grained syntheses of the observed issues according to multi-
ple perspectives [95–97]. The interviews and FGDs involved three common parties in
Figure 3. Research Design.
Since the Indonesian CPO industry is stagnating, partly due to less benchmarking
against other major CPO producers, this study required alternative insights from another
major CPO-producing country. The three world’s largest CPO producers are in Southeast
Asia, i.e., Indonesia, Malaysia, and Thailand [
21
,
89
]. They cover as much as 87.5% of the
global CPO production [
90
], making it logical to run the benchmark among them. However,
Indonesia and Malaysia’s palm oil industries and CPO markets are interlinked [
91
] since
many of their plantations are co-run by corporations from both countries. Shared industrial
chains between Indonesia and Malaysia could lead to co-correlations, making it highly
possible to produce biased comparisons. Meanwhile, the Thai CPO industry is technically
disjointed from Indonesia, with the extent of correlation only in the global CPO market.
Thus, this research added comparative perspectives from Thailand’s CPO industry. Since
gathering primary data was impossible for technical reasons, this study conducted content
analyses on secondary data from the Thai CPO industry. This was made possible since the
Thailand CPO industry has been well documented in research, policies, and other official
archives to increase accessibility for global CPO consumers. Data from Thailand were
comparatively analysed by briefly applying the same framework [
69
]. The comparison
allowed this study to contribute to the literature on biofuels and the energy transition in
Southeast Asia, where biofuels have become an integral part of the strategy to accelerate
the energy transition and reduce emissions [92–94].
3.2. Data Collection and Analysis
For the primary data collection, this study conducted interviews and FGDs (Figure 3)
to build in-depth and fine-grained syntheses of the observed issues according to multi-
ple perspectives [
95
–
97
]. The interviews and FGDs involved three common parties in
development studies [
98
–
100
], i.e., those with issue-specific expertise, community mem-
bers, and the government. Further, the interviewees and discussants originated from six
provinces in Indonesia, i.e., East Kalimantan, Central Kalimantan, North Sumatra, Riau,
Jambi, and Aceh, representing Kalimantan (Borneo), northern Sumatra, and central part
of Sumatra that host the country’s three largest oil palm plantation areas [
101
,
102
]. In
total, this research employed 22 interviews and 4 FGDs. In terms of interviewees, this
Energies 2024,17, 141 7 of 29
study used purposive sampling [
103
,
104
] to choose potential interviewees. This research
conducted separate/individual interviews with representatives from industrial organi-
sations/corporations, smallholder planters/farmers, and local communities. In the first
category (Table 1), this research involved six (6) people, including four from the GAPKI or-
ganisation (Association of Indonesian Palm Oil Corporations; 1A, 1B, 1C, 1E) and two from
corporations directly (1D, 1F). For the group of smallholder planters/farmers (Table 2), this
study interviewed nine (9) people (2A–2I). This research also interviewed seven (7) people
from local communities living around oil palm plantations (Table 3, 3A–3G).
Table 1. Interviewees from industrial stakeholders.
Code Position Organisation
1A Chairman GAPKI
1B Vice Chairman for Trade and
Sustainability Affairs GAPKI
1C Deputy Secretary General GAPKI
1D General Manager PT. Kharisma Iskandar Muda,
Nagan Raya, Aceh
1E Executive Secretary GAPKI, Chapter Central Kalimantan
1F Plantation Manager PT. Hutan Hijau Mas (KLK Group),
Berau, East Kalimantan
Table 2. Interviewees from smallholder planters/farmers.
Code Position Location
2A smallholder plantation 1 Paser, East Kalimantan
2B smallholder plantation 2 Paser, East Kalimantan
2C smallholder (plasma) plantation 1 Pekanbaru, Riau
2D smallholder plantation 2 Pekanbaru, Riau
2E smallholder plantation Rokan Hulu, Riau
2F smallholder plantation Pelalawan, Riau
2G smallholder plantation West Tanjung Jabung, Jambi
2H Berau Smallholder Plantation Association
(Asosiasi Sawit Rakyat Mandiri Berau)Berau, East Kalimantan
2I smallholder plantation Berau, East Kalimantan
Note: Plasma farmers partnered with oil palm corporations to manage their plantations.
Table 3. Interviewees from local communities.
Code Position Location
3A local communities Deli Serdang, North Sumatra
3B a leader of the Dayak ethnic group Berau, East Kalimantan
3C local communities 1 Berau, East Kalimantan
3D local communities 2 Berau, East Kalimantan
3E local communities 3 Berau, East Kalimantan
3F local communities Pekanbaru, Riau
3G local communities Nagan Raya, Aceh
Furthermore, this study oversaw four separate FGDs with different groups of stake-
holders. The first FGD (Table 4) involved eight (8) representatives from GAPKI (4A–4H) to
discuss the role of the palm oil industry towards the just energy transition. Meanwhile, the
second FGD (Table 5) also involved GAPKI representatives (5A–5C) to discuss the sustain-
ability aspects of the palm oil industry, primarily related to the impact on the environment,
including the potential for the overall utilisation of biomass, waste management, and its
relation to the circular economy. The third (Table 6) and fourth FGDs (Table 7) involved
discussants from two leading NGOs in biofuel research and development (Traction Energy
Asia; CoAction Indonesia), Indonesian Biodiesel Producer Association (APROBI), Palm
Oil Farmers Union (SPKS), and two government agencies (TNP2K; ESDM). The last two
Energies 2024,17, 141 8 of 29
FDGs focused on the implementation of biofuel regulations and policies, particularly those
relevant to the B30 program. The four FGDs complement each other to gather the complete
picture of the issues in question.
Table 4. Participants of Focus Group Discussion I.
Code Position Organisation
4A Chairman GAPKI
4B Vice Chairman for Trade and Sustainability Affairs GAPKI
4C Deputy Secretary General GAPKI
4D Head of Sustainability GAPKI
4E Executive Director GAPKI
4F Executive Board—Board of Trustees GAPKI
4G Program Officer GAPKI
4H Secretariat GAPKI
Table 5. Participants of Focus Group Discussion II.
Code Position Organisation
5A Head of Sustainability GAPKI
5B Executive Director GAPKI
5C Executive Board—Board of Trustees GAPKI
Table 6. Participants of Focus Group Discussion III.
Code Position Organisation
6A Engagement Manager Traction Energy Asia
6B Executive Director Traction Energy Asia
6C Research and Development Manager CoAction Indonesia
6D Head of Secretariat for Communication
and Partnership
National Task Force for the Acceleration
of Poverty Reduction (TNP2K)
Table 7. Participants of Focus Group Discussion IV.
Code Position Organisation
7A
Coordinator of Bioenergy Investment and
Cooperation, the Directorate of New and
Renewable Energy, and Energy Conservation
Ministry of Energy and Mineral
Resources of Indonesia (ESDM)
7B Head of Analysis and Evaluation, the
Research and Development Division
Ministry of Energy and Mineral
Resources of Indonesia (ESDM)
7C Vice Chairperson Indonesia Biofuels Producer
Association (APROBI)
7D Secretary-General Palm Oil Farmers Union (SPKS)
In the primary data collection, the interviews and FGDs were held for approximately
2–3 h. All statements were recorded digitally with permission from the interviewees during
the interviews. Semi-structured interviews were held by following a list of questions
(Appendix B). After all the interviews were completed, the records were transcribed.
Further, the results of FGDs were compiled according to the issues covered. The raw data
from interviews and FGDs were then coded and categorised according to the four key
elements of the JUST framework. The empirical data were analysed using NVivo version
12 to classify the information obtained. The data were sorted, with further sub-categories
developed. Qualitative data analysis as such would allow for the statements and claims
of various interviewees to be corroborated against other interviewees. Methodically, it
involved a validity process, which is central to qualitative research [105].
Energies 2024,17, 141 9 of 29
4. Results and Discussion
4.1. Justice (J)
4.1.1. Distributional Justice
Biofuel production can open opportunities for new employment in rural areas [
106
].
In 2020, oil palm plantations in Indonesia provided 7.1 million direct jobs, or approximately
a 30% increase in employment since 2015 [
107
,
108
]. Based on FGDs with respondents
from GAPKI, 12 million indirect workers are involved in the industry, including those in
supporting or downstream industries outside of plantations and CPO factories, e.g., in
refineries and other biodiesel-related activities. In total, more than 19 million people
depend on this sector, which is approximately equal to 10% of the productive population
in Indonesia. According to the interviews with communities and smallholder farmers,
approximately 40.79% of smallholder oil palm farmers in Indonesia [
107
,
108
], mostly, or
approximately 90%, work on their own land. The interviews also confirmed the noticeable
presence of migrants from Java Island and Nusa Tenggara Islands to CPO-producing
regions, which was induced by higher job opportunities and wages promised by the CPO
industry. Approximately 30–50% of those working in privately owned oil palm plantations
and the rest of the industrial chains come from outside the regions. These facts show
that, to some extent, the palm oil sector helps fulfil the right to employment, which is
constitutionally guaranteed by Article 27 Paragraph 2 of the 1945 Constitution (Fourth
Amendment) [109] and Article 38 of the country’s Human Rights Act [110].
Further, the FGD with TNP2K reveals several vital roles that CPO-based biofuels play
in promoting renewable energy in Indonesia. First, they can substitute fossil fuels in diesel-
type engines. According to policy documents discussed during the FGD, CPO-based biofuel
has blended with traditional diesel fuels up to 30% (B30), replacing 13.61 million kilolitres
of pure petroleum-based diesel fuels annually. This substitution effect reduces reliance on
imported fossil fuels while utilising domestically produced CPO feedstock for biofuels. Second,
reducing fossil fuel imports provides significant savings in foreign exchange reserves. Based
on the Bank of Indonesia’s balance of payments statistics, substituting CPO-based biodiesels
for 13.61 million kilolitres of petroleum-based diesel fuels contributes USD 5.39 billion in
savings from reduced fuel import bills. Third, CPO-based biodiesels generate substantial tax
revenues for the government. Using CPO production data from the CPO industry and the
Ministry of Finance tax data, the FGD found that CPO and CPO-based biodiesels contributed
IDR 2.62 trillion in CPO export taxes and biofuel value-added taxes. Fourth, CPO-based
biodiesels help mitigate climate change by reducing CO
2
and other GHG emissions. On
average, CPO-based biodiesels emit 51% less GHG emissions than petroleum-based diesel
fuels. By substituting 13.61 million kilolitres of traditional diesel fuels for CPO-based biodiesel,
Indonesia avoided nearly 20.35 million metric tonnes of CO2and other GHG emissions.
Developing biofuels in Indonesia is viewed as having helped enhance national energy
security while promoting economic growth. Empirical analyses indicate that the biofuel
industry accounted for 3.5% of Indonesia’s total GDP increase, underscoring its emerging role
as a critical driver of macroeconomic progress [
111
]. At the regional level, biofuel cultivation
and production have stimulated the economies of palm oil-producing provinces, creating
employment opportunities and revenue streams that have lifted provincial incomes [
30
]. At
the local level, municipalities administering plantations have witnessed microeconomic gains,
as biofuel companies made contractual arrangements with smallholder farmers to supply
feedstock and provide infrastructural improvements like roads and electricity access to rural
communities. However, several significant trade-offs inherent in Indonesia’s biofuel model
have become evident. First, the massive expansion of oil palm plantations has generated high
environmental costs in the form of deforestation, biodiversity loss, GHG emissions, degrading
ecosystems, and intensifying climate change [
45
,
112
]. Second, the economic benefits of
the industry have been unevenly distributed, as a select group of large conglomerates and
major producers capture a disproportionate share of the profits, while smallholder farmers
remain in a state of vulnerable livelihoods [
113
,
114
]. Third, Indonesia’s weak governance and
Energies 2024,17, 141 10 of 29
law enforcement have enabled biofuel companies to improperly acquire community lands,
restricting local access to vital natural resources and precipitating social conflicts [30,115].
4.1.2. Procedural Justice
Furthermore, the government of Indonesia has implemented extensive regulations to
promote the development of various biofuels. Despite opportunities for multiple biofuel
sources, only CPO-based biodiesel has reached commercial viability in the past 15 years.
As of 2020, new and renewable energy (NRE) accounted for 10.90% of Indonesia’s primary
energy supply. Of the amount, biodiesel (B30 blend) contributed approximately 34% [
116
].
The government aims to continue increasing biofuel blending and production into the
future to meet renewable energy goals. Regulation no. 12/2015 from the Minister of
Energy and Mineral Resources [
117
] mandated a 30% biodiesel blend target (B30) for
2020, markedly increasing the previous 15% blend requirement (B15). Additionally, the
government has set a minimum biofuel production target of 15.6 million kilolitres by 2025,
covering deliveries for public consumption and power generation. This includes biodiesel
blending targets of 30% (11.6 million kilolitres), bioethanol blending of 20% (3.4 million
kilolitres), and bioavtur blending of 5% (0.1 million kilolitres). Procedural support for long-
term plans is even more ambitious. According to Presidential Regulation no. 22/2017 [
118
],
the Indonesian government further established biofuel production goals of 54.2 million
kilolitres for 2050. However, it remains to be seen whether non-CPO biofuel sources will
become commercially viable and contribute to meeting these goals.
The government has taken a proactive role in ensuring the quality and readiness
of biofuel through comprehensive studies and periodic monitoring. A government-
commissioned study assessed the impacts of various biodiesel blends on engine per-
formance across a range of vehicle types in both laboratory conditions and nationwide
real-world driving scenarios. The government, to enable ongoing quality control, mandates
that all biodiesel distributors submit to periodic audits. The government has also insti-
tuted financial penalties for non-compliance with biodiesel blending mandates. Further,
sanctions and fines apply to any biodiesel producers and petroleum companies who fail to
meet the stipulated blending ratios. In extreme cases, licences can also be revoked. The
government has also taken steps to safeguard consumers by issuing quality standards and
guidelines for biodiesel usage. The National Standard of Biodiesel Specification specifies
the technical properties and composition required. Additionally, the General Guidelines
for Handling and Storage of B100 and B30 have been published to ensure quality retention
across the supply chain. In addition, the government also issued the Technical Guidelines
for B20 Handling and Storage for Heavy Equipment Applications in Mineral and Coal
Mining. Roughly speaking, the rigorous technical assessments, the implementation of
oversight mechanisms, and the institutionalised standards and penalties indicate that the
government has proactively addressed concerns regarding biodiesel quality and readiness.
However, the governance of the palm oil industry in Indonesia suffers from a lack of co-
ordination and oversight from a centralised advisory body. The absence of a single institution
that can reconcile conflicting policies, aggregate industry data, and provide recommendations
leads to inconsistencies across different ministries and levels of government. For instance, the
Ministry of Industry has set a target to achieve 15.6 million kilolitres of biodiesel production
by 2020 through the B30 mandate, requiring approximately 3.5 million hectares of new oil
palm plantations. However, Presidential Instruction (Inpres) no. 8/2018 [
119
] concurrently
imposed a moratorium on issuing permits for new plantations. At least 11 different Indone-
sian institutions play some role in governing palm oil [
120
]. The Ministry of Agriculture, for
example, oversees cultivation and harvest practices. Meanwhile, the Ministry of Environment
and Forestry attempts to balance palm oil expansion with forest protection and biodiversity
conservation. The Ministry of Industry manages refining and biodiesel production from CPO,
while the Ministry of Trade regulates international and domestic trading, pricing mechanisms,
and stockpiling for food security. Then, the Ministry of Finance administers tax policies
and subsidies impacting competitiveness. This siloed approach means that policies from
Energies 2024,17, 141 11 of 29
different ministries may undermine each other, and none possess a complete picture of the
palm oil system.
Consequently, data on palm oil plantation areas from different government-affiliated
institutions induce confusing inconsistencies. Statistics Indonesia [
121
] reported in 2018
that 49.81% of oil palm plantations were held by large corporations, 49.81% by individual
smallholder farmers, 45.54% by communal plantations, and only 4.65% by state-operated
plantations. However, one directorate in the Ministry of Agriculture shared markedly dif-
ferent figures for the same year, stating that 55.09% of plantations were operated by large
corporations, 40.62% by communal plantations, and just 4.29% by state-operated ones [
107
].
These striking discrepancies in the palm oil plantation data underline the critical need for
a central regulatory institution to align strategies and unify data collection methodologies
across ministries and jurisdictions. A centralised advisory body on palm oil could serve as
an authoritative institution for harmonising data and policy analysis from the vast array of
governmental bodies regulating the palm oil industry. With systematic data aggregation into a
unified framework, an overarching institution could produce coherent, evidence-based recom-
mendations to coordinate strategies across ministries and engage industry stakeholders more
effectively. Standardised data collection and consolidated data streams would reduce contra-
dictory statistics from different agencies, providing consistency and transparency essential for
productive policymaking and oversight of the palm oil sector in Indonesia.
In general, according to FGDs with government institutions and NGOs, the regulatory
frameworks surrounding biofuel development in Indonesia have numerous problematic
aspects that hinder further development of the biofuel industry. For example, no regulation
provides incentives to encourage developments towards second- and third-generation
biofuels. Without supportive policies, companies lack the push to invest in developing
novel feedstocks and conversion processes that could enable more sustainable and efficient
biofuel production. This regulatory gap indicates a failure to keep pace with advanced
technological development in the biofuel sector. On the other hand, colour clarity standards
for biodiesel derived from used cooking oil (UCO) pose another barrier for the UCO-based
biodiesel sub-sector. As revealed in the FGDs, achieving the specified colour clarity thresh-
olds is technically infeasible with UCO-based biodiesels. The colour of the final product
is chemically linked to the waste oil feedstock. Thus, it is unrealistic to conform to colour
standards that were intended for first-generation biodiesels made from virgin vegetable
oils. Without revisions to account for feedstock-specific characteristics, these standards will
continue to hinder the development of UCO-based biodiesel and its associated benefits of
waste oil utilisation and improved sustainability. Therefore, in a broader sense, targeted
regulatory reforms could help overcome these bottlenecks and catalyse a more innovative
domestic biofuel industry.
4.1.3. Restorative Justice
The environmental impacts of palm oil production in Indonesia have faced ongoing
criticism, particularly regarding deforestation, forest fires, and biodiversity loss. Govern-
ment regulations still permit land clearing by burning [
122
], obscuring the causes of fires
that often spread to palm oil concessions. In fact, ambiguous regulations enable deforesta-
tion and burning on lands prone to uncontrolled fires. Government agencies repeatedly
fail to investigate whether burned land was cleared for planting, ignited naturally, or
intentionally set ablaze by humans. For example, in Nagan Raya, Aceh [
123
], local disas-
ter management authorities claimed forest fires resulted from community land clearing.
However, interviews with local communities revealed that the burned areas were not
intended for oil palm plantations. Meanwhile, ecological hazards represent another form
of environmental concern. Three of the seven communities surveyed attributed specific
environmental impacts to nearby plantations. One community in Deli Serdang, North
Sumatra, suspected oil palm plantation activities were causing a worsened environmental
quality, including recurrent flooding and smog. Local people in Berau, East Kalimantan,
also reported flooding issues. Meanwhile, an indigenous Dayak leader in Berau worries
Energies 2024,17, 141 12 of 29
about river pollution from improper wastewater treatment at some CPO mills. Thus,
stronger environmental protections and enforcement are necessary to clarify the causes of
fires, safeguard forests, uphold community rights, and monitor mill discharges.
Concerning CPO mills, the upstream sector of palm oil production (plantations and
mills) has implemented the concept of zero waste. For instance, oil palm fronds and empty
fruit bunches (EFBs) are repurposed as mulch and organic fertiliser. Further, fibre and
kernel shells serve as raw combustible materials to fuel factory boilers. Palm oil mill
effluent (POME), the liquid byproduct of CPO production, can be applied to land as an
organic fertiliser or utilised as a feedstock for biogas power plants via anaerobic digestion.
Furthermore, the biomass residues of palm oil production represent abundant bioenergy
sources with many more potential applications [
124
,
125
]. However, according to data
from Traction Energy Asia, only 10% of existing CPO mills have installed methane capture
technology to reduce GHG emissions from POME [
126
]. The interviews with industry
representatives provide vital insights into the lack of investment in POME treatment
facilities. Not all companies, including larger corporations, constructed facilities as such
since the treatment facilities demand considerable capital equivalent to building entirely
new CPO mills, presenting significant financial barriers. In fact, current regulations do not
include mechanisms like carbon taxes or cap-and-trade systems that could incentivise GHG
emission reductions through private sector investment. The feed-in tariff for electricity
from POME-based biogas also offers limited profit potential.
On the other hand, Indonesia has made notable progress in addressing on-farm sus-
tainability issues in palm oil production. Approximately 51% of the world’s oil palm
plantations certified by the International Roundtable on Sustainable Palm Oil (RSPO) stan-
dard are in Indonesia. It highlights the country’s leadership in adopting more sustainable
practices. At the national level, the Indonesian government introduced the mandatory In-
donesian Sustainable Palm Oil (ISPO) certification system in 2011 [
127
], which was further
strengthened in 2015 [
128
], to improve the environmental and social impact of palm oil
companies operating in the country. According to the Indonesian Oil Palm Estate Fund
Agency (Badan Pengelola Dana Perkebunan Kelapa Sawit, or BPDP-KS), Indonesia, as of 2021,
has granted ISPO certificates for around 45% of the total productive oil palm plantations.
The ISPO-certified lands are owned by large corporations (5.45 million ha), government-run
plantations (320 thousand ha), and communal plantations (12.7 thousand ha) [
129
]. The
government has made it mandatory for all oil palm plantations to have ISPO certificates
by 2025. While work remains to be done, these findings suggest that government and
industry efforts to implement sustainability certification on Indonesian oil palm plantations
are gaining traction and translating to on-the-ground improvements. Technically, oil palm
plantations must adhere to seven principles covered in the ISPO certification:
1. Compliance with laws and regulations;
2. Implementation of good plantation practices;
3. Management of the environment, natural resources, and biodiversity;
4. Employment responsibilities;
5. Social responsibility and economic empowerment public;
6. Implementation of transparency; and
7. Sustainable business improvement.
A further look into the BPDP-KS data reveals minimal participation and engagement
of smallholder farmers in obtaining ISPO certification for their plantations. Interviews with
smallholder farmers, local communities, and industry representatives further confirm a
lack of promotion and outreach regarding the ISPO certification process and requirements.
Consequently, numerous palm oil business actors, particularly smallholder planters, still
demonstrate inadequate comprehension and awareness of the mandatory ISPO certification
protocols. Initially implemented in 2011 through Regulation no. 19/2011 of the Ministry
of Agriculture [
127
], the ISPO certification mandate only applies to large-scale corporate
plantations over a specified scale threshold. This gap indicates that exclusively mandating
ISPO certification fails to address the barriers to participation experienced by smallholders
Energies 2024,17, 141 13 of 29
with limited resources and expertise. Thus, Presidential Regulation No. 44/2020 [
130
]
and Regulation no. 38/2020 of the Minister of Agriculture [
131
] have expanded ISPO
certification to include smallholder farmers, though their participation remains voluntary.
Achieving widespread ISPO compliance, even among smallholders, is critical for increasing
international acceptance of Indonesian palm oil products, given the negative environ-
mental stigma surrounding the sector’s perceived role in deforestation and biodiversity
loss. Extensive outreach and educational campaigns remain necessary to promote ISPO
certification among smallholder farmers and demonstrate how compliant plantations can
gain credibility and open export opportunities.
Meanwhile, there are promising developments in the downstream palm oil sector
in Indonesia. Government agencies, including the Ministry of Industry and the Office of
Coordinating Minister for the Economy (Kemenko Perekonomian), are preparing another ex-
pansion of the ISPO certification system to involve downstream industries such as cooking
oil and biodiesel production. This regulatory effort indicates policymakers’ recognition
that sustainability practices must expand beyond plantations and mills to incorporate the
entire supply chain. In addition to top-down government policies, grassroots initiatives
from local communities and NGOs are emerging to improve the management of CPO
waste. For instance, some groups are exploring the conversion of waste cooking oil into
second-generation biofuels. Companies such as PT Adaro Energy and PT Tirta Investama
(Aqua Danone) have expressed willingness to purchase the biofuels produced. However,
converting waste into biofuel faces limitations without supportive regulations and poli-
cies from the government. Looking at these findings, while sustainability efforts in the
downstream palm oil sector hold promise, a continued multi-stakeholder collaboration
in conjunction with issue-specific policies as non-human actors will be critical to over-
coming existing barriers and scaling up innovative solutions. Further efforts should thus
continue investigating policy mechanisms and partnership models that could accelerate
the development of second and third-generation biofuels in Indonesia.
The FGD with APROBI revealed their commitment to utilising the most advanced
technologies for constructing a biodiesel plant based on sustainability principles and
environmental friendliness. This aligns with the government’s efforts to expand the role
of CPO in a just energy transition without necessitating further land clearing. One such
initiative is introducing an oil palm rejuvenation programme for smallholder farmers,
funded by the BPDP-KS. It aims to enhance productivity among smallholder oil palm
growers. As is known, small-scale palm oil plantations only yield 16.80 million metric
tons of CPO annually, far short of the 29.39 million metric tons generated by large-scale
plantations [
107
]. To support the rejuvenation program for smallholder farmers initiated
by the government, six GAPKI-affiliated companies, the state-owned plantation company
PTPN VI, 18 Village Cooperatives (Koperasi Unit Desa, or KUD), farmer group associations
(Gabungan Kelompok Tani, or Gapoktan), and members of the Indonesian Palm Oil Farmers
Association (APKASINDO) from South Kalimantan (Kotabaru), North Sumatra (Serdang
Bedagai), Jambi (Muaro Jambi and Merangin), and Riau (Kampar and Indragiri Hulu)
have agreed to collaborate on revitalising smallholder plantations [
132
]. This solution
for smallholder farmers and the large-scale solution by APROBI members would foster
Indonesia’s effort to pursue a just transition in the biofuel industry.
Looking at the findings above, the Indonesian government has implemented restora-
tive solutions intended to address past and ongoing injustices by pursuing a just tran-
sition for smallholder farmers. However, a substantial loophole in related regulations
marginalises independent smallholder farmers that do not join farmer groups. The reju-
venation programme, which provides subsidies and technical assistance for replanting
aged and unproductive oil palm trees, is applicable only to certain formally recognised
farmer groups. Thus, the programme, designed to address restorative justice concerns,
has not been comprehensively applicable to all independent smallholder farmers. Other
recent government efforts that, to some extent, apply the principles of restorative justice
in pursuing a just transition include the 2018 moratorium about the postponement and
Energies 2024,17, 141 14 of 29
evaluation of the clearing of forest land for oil palm plantations [
119
], the 2019 moratorium
about the termination of licencing permits for new oil palm plantations [
133
], and the
establishment of the Peatland Restoration Agency (Badan Restorasi Gambut, or BRG) tasked
with restoring degraded peatland areas [
134
]. While these policies indicate increasing
awareness of restorative justice concerns, the government and civil society should remain
cautious to ensure a truly equitable and comprehensive application of restorative justice
principles for all smallholder farmers across Indonesia.
4.2. Universal Forms of Justice (U)
4.2.1. Recognition
Smallholder farmers manage approximately 40.79% of Indonesia’s oil palm planta-
tions, while private and state-owned businesses control a majority share of 54.94% and
4.27%, respectively [
107
]. However, an in-depth analysis shows that government incentives
disproportionately benefit large palm oil corporations rather than smallholder farmers [
135
].
These incentives do not originate from the government budget itself. Instead, they are
funded through an oil palm plantation fund (Dana Perkebunan Kelapa Sawit) established
under Article 93 of the Plantation Act no. 39/2014 [
136
]. It accumulates levy payments
collected from the export of CPO and its derivatives. The FGDs with SPKS revealed that
approximately 89.86% of the fund turns into incentives for corporate entities. Meanwhile, a
much smaller portion aids smallholder farmers through programmes like oil palm rejuve-
nation (8.3%), research and development (0.85%), partnership promotion (0.64%), human
resource development (0.42%), and facilities/infrastructure (0.22%). Further, SPKS and
two NGOs (i.e., Traction Energy Asia and Coaction Indonesia) are concerned about the
marginalisation of smallholder farmers from the CPO supply chain. Their investigations re-
veal that smallholder farmers are only allowed to sell fresh fruit bunches to CPO companies
within a 5-kilometre radius. Beyond this range, they must go through intermediaries and
collectors. These situations reveal an urgent need to re-evaluate government incentives,
the use of the oil palm fund, and the involvement of small actors in the CPO supply chain
to ensure more equitable distribution between smallholder farmers and big companies in
Indonesia’s palm oil industry.
Furthermore, the interviews across six provinces revealed critical issues regarding
the recognition and treatment of female workers in the Indonesian palm oil sector. While
female employees are active in administrative roles and plantation maintenance, their
contributions often go unrecognised, and many are relegated to informal work collecting
fallen fruits, spraying pesticides, or spreading fertiliser. More troublingly, children aged
5–18 living near plantations are frequently expected to assist their parents after school
for pocket money, losing the complementary educational opportunities typically received
by their peers outside the plantations. This underscores the vital need for programmes
supporting children’s right to education under the 1945 Constitution. To that end, the
Palm Oil Scholarship Programme (Beasiswa SDM Sawit) launched by BPDP-KS represents a
constructive step, fulfilling the mandate in Article 28C paragraph (1), Article 28E paragraph
(1), and Article 31 paragraph (1) to provide educational access [
109
]. By leveraging funds
from the Plantation Fund Raising mechanism outlined in Article 10 paragraph (2) of the
Government Regulation (PP) no. 24/2015 on Plantation Fund Raising (Penghimpunan Dana
Perkebunan) [
137
], this initiative aims to cultivate human capital by targeting scholarships
at children from palm oil farming families. While promising, a programme of this nature
and scale should help address the lack of recognition for women’s labour and children’s
education that currently plagues the sector. Sustained support and oversight will be critical
to ensuring a meaningful impact of the scholarships, providing equitable access to schooling
for vulnerable youth.
4.2.2. Cosmopolitanism
Palm oil has become an international trade commodity, with Indonesia and Malaysia
producing up to 85% of global yields. The economic benefits from palm oil exports have
Energies 2024,17, 141 15 of 29
been immense for these countries. However, the industry faces criticism and opposition
from global powers, situating it within a complex power struggle between international
actors, the Indonesian government, and local civil society. Domestically, Indonesian biofuel
policy has promoted increased use of palm oil, with regulations enacted since 2015 [
117
]
targeting 20% blending in transportation and industrial applications. This blending target
was further increased to 30% (B30) in 2018, necessitating substantial land clearing and
higher palm oil production volumes to meet the 15.6 million kilolitre demand. Interviews
with communities in palm oil-producing regions like Deli Serdang and Berau reveal local
concerns about the immediate environmental impacts. A prevalent issue is the burning
of land to clear space for new plantations, which creates widespread smoke and haze.
Many stakeholders believe this smoke spreads into settlements and across national borders,
contributing significantly to regional air pollution and global climate change. However,
groups like APROBI and ESDM cite the benefits of substituting palm oil for fossil fuels
to meet domestic energy needs. However, civil society organisations like SPKS note that
more must be done to promote the participation of smallholder farmers in sustainable
production through strengthened investments, incentives, and support.
Based on FGD with those from APROBI and the ESDM, the government’s plans to
conduct a road test of B40 biodiesel, containing 40% palm oil-based fuel, have met with both
support and concern from stakeholders. BPDP-KS welcomed the move as their funds come
from CPO export levies, so increased domestic biodiesel use would boost the funds. However,
the CPO industry objected to the idea that increasing the current B30 mandate (30% blend) to
B40 (40% blend) could reduce exports and profitability. One proposed solution is the oil palm
rejuvenation programme for smallholder farmers, which, if successfully implemented, would
increase CPO productivity to support B40 without reducing export capacity within three years.
However, the CPO industry remains sceptical about the timeline and feasibility of rapidly
increasing yields through rejuvenation. Alternatively, if the program fails, the government
may need to provide subsidies using state budget funds due to the higher production costs of
biodiesel than petroleum-based diesel fuel. Clarification is also necessary regarding the recently
introduced Presidential Regulation no. 98/2021 on carbon pricing and trading [
138
]. While
the regulation has aimed to incentivise emission reduction efforts, such as biogas capture from
POME, its applicability remains limited since the technical mechanisms for carbon trading have
not yet been detailed in separate regulations. Therefore, incomplete presidential regulation
cannot be fully implemented until the trading scheme details are arranged.
In addition, the government of Indonesia has made concerted efforts to improve the
reputation of palm oil and counter-accusations of unsustainability from the EU. A key
initiative was the release of Presidential Instruction (Inpres) no. 8/2018 [
119
], which im-
posed a temporary moratorium on new permits for oil palm plantations in forested areas.
This moratorium halted the granting of new licenses and investments for plantations on
forested land. It also mandated an evaluation of existing permits and land titles (the Right
of Cultivation; Hak Guna Usaha, or HGU) that had been issued for oil palm plantations
in forest areas. Beyond permitting, the instruction promoted redistributing land cleared
from oil palm plantations to local communities. It aimed to increase the productivity
and sustainability of plantations through the mandatory ISPO certification, aligned with
international benchmarks like RSPO. Agricultural institutions were also lined up to be
strengthened under the instructional regulation. Looking at these points, the moratorium,
albeit temporarily applicable, was part of broader efforts by Indonesia to demonstrate com-
mitment to sustainable palm oil practices [
139
]. While well-intentioned, the moratorium
expired in September 2021 without renewal, raising concerns from multiple stakeholders.
Critics worry this may lead to the widespread clearing of forests for new plantations by cor-
porations. Sustainability advocates argue that the moratorium should be made permanent
to ensure the responsible growth of oil palm in Indonesia.
As evidenced by the government’s own projections, current policies and measures
will not be sufficient to achieve the target of the Indonesian energy mix in 2025 and its
Nationally Determined Contributions (NDC; the nearest phase is in 2030). Thus, additional
Energies 2024,17, 141 16 of 29
programmes are necessary to meet these goals and fulfil Indonesia’s commitments under the
2015 Paris Agreement. As civil society organisations and sustainable palm oil certification
bodies recommended [
140
–
142
], Indonesia should extend the moratorium on granting
permits for new oil palm plantations. It would allow the country to mitigate climate change
while conserving its remaining forests and peatlands. Further, Indonesia should solve the
deforestation ‘mystery’, which witnesses mysteriously occurring land clearing through
natural-like causes such as repeated forest burning or illegal clearing by corporate players.
Targeted investigations into the underlying causes and responsible parties, followed by
actions to increase accountability and transparency, are imperative. Third, Indonesia
should intensify the replanting project (rejuvenation program) for smallholder farmers.
This enables smallholders to meet growing demand without expanding cultivated area,
thus preventing the conversion of forests and peatlands. Finally, Indonesia should seek
alternative energy sources that can complement the role of CPO-based biodiesel, such as
utilising macroalgae to produce biofuels. Diversifying the renewable fuel mix with algal
biofuels can protect against limited palm oil supplies while fostering the development of a
new biotechnology sector.
4.3. Space Considerations (S)
Biofuel development has raised concerns regarding their impact on GHG emissions,
particularly concerning the land use changes associated with production. Numerous studies
have investigated GHG emissions from oil palm plantations in Indonesia [
143
–
146
]. In general,
deforestation driven by the expansion of large-scale plantations is a major contributor to
increased GHG emissions in the country. Clearing carbon-dense tropical forests and peatlands
releases large volumes of stored carbon into the atmosphere while also reducing the capability
of the natural ecosystems in carbon sequestration. Furthermore, immature oil palm trees
cultivated on recently cleared land produce sizeable GHG emissions in their early years before
reaching peak production [
92
]. This is attributed to the rapid biological growth and high
nutritional requirements of juvenile palms grown on rich soils, leading to substantial GHG
emissions from fertilisers. With oil palm plantations expanding into new areas, emissions from
land use change threaten to offset any potential climate benefits of increased biofuel use. This
could open possibilities for biofuels to reduce GHG emissions based on spatial considerations.
The archipelagic nature of Indonesia means fossil fuel resources are unevenly distributed
spatially [
147
], hence the asymmetric price transmission, delivering an underperformed
support to regional population centres, industrial hubs, and transportation infrastructure
networks [
148
], especially outside Java Island. Increased biofuel production from more widely
dispersed agricultural feedstocks could help bridge regional energy supply gaps. Diversifying
transport fuel sources with locally produced biofuels could also enhance energy security.
Numerous studies have exposed the association between deforestation in Indonesia
and the expansionist behaviour of oil palm plantations from the 1990s to the 2000s. Esti-
mates indicate that 52% to 79% of oil palm plantations nationwide were established through
clearing forest areas [
144
,
149
,
150
]. This extensive deforestation for oil palm expansion re-
sulted in Indonesia contributing the most to carbon emissions in Southeast Asia from 2001
to 2010 compared to other countries in the region [
151
]. While oil palm plantations were
a predominant driver of deforestation in Indonesia during this period, their proportional
contribution, among other drivers, has declined in recent years. In 2011, the Indonesian
government enacted a moratorium on issuing new licences for oil palm development in pri-
mary forests and peatlands in a concerted effort to curb deforestation [
152
,
153
]. However,
multiple factors limited the effectiveness of this moratorium, including poor dissemination
of information regarding the moratorium to local agencies [
154
], weak law enforcement
to support the moratorium policies, and resistance from those with vested interests tied
to oil palm expansion [
150
,
155
]. The Indonesian government, to strengthen the initial
effort to prevent the spatial expansion of deforestation, released Presidential Instruction
no. 5/2019 to strengthen the moratorium on new licences for oil palm plantations [
133
].
Nevertheless, the government should keep tracking the contributions of oil palm expansion
Energies 2024,17, 141 17 of 29
to deforestation following the moratorium by identifying spatial approaches for balancing
economic development and forest conservation.
In addition, the Indonesian government implemented another moratorium policy on
new oil palm planting [
119
], prohibiting companies from applying for permits to do new
planting, especially in forested areas. This policy aligns with Indonesia’s aim to reduce
its high rate of deforestation through concerted efforts across ministries and sectors. The
respondents from ESDM and GAPKI have confirmed the multi-sectoral decision-making
process leading to the moratorium. Under this policy, independent smallholder farmers
are the only ones allowed to plant new trees, as they do not require permits to plant
on their own private lands. However, the Ministry of Agriculture continues to closely
monitor and record smallholder planting activities through relevant departments under
the provincial governments. This enables the central government to maintain oversight
and issue Cultivation Registration Certificates (Surat Tanda Daftar Budidaya, or STD-B) for
smallholder plantations [
156
]. The moratorium policy indicates Indonesia’s commitment to
balancing economic development and environmental protection by restricting new planting
permits for industrial plantations while still allowing smallholder production. Ongoing
monitoring and certification of smallholder activities promotes sustainability and prevents
uncontrolled expansion into forests by independent farmers. Scholars and civil society
organisations have praised the policy as a step in the right direction, though its impacts
remain to be thoroughly evaluated [
112
,
157
]. Strict enforcement and coordination across
levels of government will be vital to ensuring the moratorium achieves its objectives of
supporting smallholder livelihoods while reducing deforestation rates.
4.4. Time (T)
Regarding timing and timelines, Indonesia submitted its updated NDC documents
to the UNFCCC in July 2021. It contained no significant changes to the country’s climate
targets compared to the previous iteration. Evidence from the new NDC plan indicates
Indonesia has maintained its commitment to achieving net zero emissions by 2050, as
outlined in the Long-Term Strategy for Low Carbon and Climate Resilience (LTS-LCCR)
2050. [
158
]. The current NDC targets remain unchanged, i.e., achieving a minimum 23%
share of new and renewable energy sources (such as solar, wind, hydroelectric, geothermal,
biomass, and biofuels) in the national energy mix by 2025, in addition to reducing GHG
emissions by 29% compared to the baseline by 2030 or reducing the emissions by 41%
by 2040 with international financial and technical support. Data from 2021 show the
new and renewable energy share of Indonesia’s national energy mix was 10.9%, a 0.3%
decrease from the 2020 level [
159
]. While the updated NDC retains the same targets,
continued implementation and monitoring will be vital in assessing Indonesia’s progress
towards its stated goals. In parallel, periodical assessments would be necessary to examine
factors driving changes in RE penetration, as evidenced by the slight decline in 2021, and
identify potential challenges, opportunities and policy adjustments needed to accelerate
decarbonisation of the energy system in line with both near-term NDC targets and the
longer-term vision of net zero emissions articulated under the LTS-LCCR 2050.
Indonesia has set ambitious targets for increasing the NRE share in the national energy
mix to 23% by 2025 and reducing GHG emissions from the energy and transportation
sectors. However, current estimates suggest the country is falling short on investment
and progress needed to meet these goals. The country’s ESDM estimated that Indonesia
requires a total of USD 36.95 billion in investments to reach the 23% NRE target by 2025 [
160
].
Nevertheless, from 2014 to 2020, RE investments averaged only USD 2.5 billion annually,
far below the projected requirement [
161
–
166
]. At the current rates, Indonesia will likely
miss its NRE target for 2025. Biofuels, mainly biodiesel, offer an additional acceleration
to Indonesia’s NRE growth and emission reductions. As of 2020, biofuels accounted for
18.2% of RE production, behind only hydropower (58.5%) and geothermal (20.3%) [
167
].
With less than three years remaining before 2025, Indonesia must expand NRE’s share
in the energy mix by an additional 12.1%. Biodiesel provided 22.48 million tons of CO
2
-
Energies 2024,17, 141 18 of 29
equivalent reductions in 2020, approximately 59% of the 0.038 gigatonne target for the
energy and transportation sectors. Looking ahead to 2030, biodiesel could provide even
more significant emission reductions, projected at 6% of Indonesia’s revised target. The
contribution of the B30 programme to the energy sector’s NDC is 7.8% [
168
]. Ramping
up biofuel production and consumption would thus remain crucial for Indonesia to boost
NRE, curb GHG emissions, and meet its ambitious energy sustainability goals.
4.5. Comparative Perspectives from Thailand
Thailand is the most recent Southeast Asian country to climb the ladder of the world’s
top biofuel producers. For years, various studies have learned that biofuel development
in the country has had positive socio-economic impacts [
169
–
171
]. On the production
side, Thailand has progressed rapidly in developing its biofuel solutions from different
crops, such as cassava, sugarcane, molasses, and palm. According to Silalertruksa and
Gheewala [
171
], biofuels have contributed to a noticeable increase in the country’s GDP,
with an added value of approximately USD 150 million. Further, the Thai oil palm industry
has significantly improved the country’s direct and indirect employment rates—as much
as 90%. In the country, most oil palm plantations are owned and operated by smallholder
farmers. The Thai government, to the most robust extent possible, put strict measures in
place to limit large-scale expansions by forbidding deforestation. Nevertheless, promoting
palm oil production remains considerably positive for the country’s smallholder farmers,
who represent approximately 70% of Thai palm growers.
In 2017, biofuel contributed 11.4% of total renewable energy shares in the country’s
energy mix. On the consumption side, renewable energy sources in Thailand cover 21.11% of
the country’s final energy consumption [
172
]. The Thai government has actively supported
the industry to foster domestic consumption of biofuels [
93
]. Similar to Indonesia, Thailand
is committed to increasing the share of renewable energy sources in its national energy mix
by imposing biodiesel blending policies for the road transportation sector [
94
]. In fact, the
country also implements blending policies on the production side of its biofuels, which very
much rely on the CPO stocks [
94
]. Therefore, the government requires an effective strategy
for securing CPO stocks to support the biodiesel industry while at the same time developing
progressive plans to manage the impacts of oil palm cultivation on land use change [94].
In its effort to pursue equilibrium, Thailand has established the National Palm Oil Policy
Committee (NPOPC), a specially designated institution with an advisory role for the oil palm
industry. Practically, the government of Thailand has continuously attempted to anticipate
deforestation activities for oil palm plantations by increasing its efforts to bring more lands
under various protected statuses [
173
]. Still, there have been many intrusions into forests and
protected areas, with some adverse environmental impacts due to land clearing for oil palm
plantations being actively reported. Significant examples include repeated peat swamp fires
in Kuan Kreng, Nakorn Sri Thammarat [
174
], which reached no less than a staggering record
of 705 historic fires during 2006–2017 [
175
]. Further, other reported environmental impacts
include soil erosion and GHG emissions [
115
,
176
,
177
]. Aside from land use change and its
immediate derivative impacts, palm oil mills in Thailand produce processable residual solid
waste, such as fibres, shells, EFBs, and POME wastewater [176].
The Thai oil palm industry, to minimise environmental impacts from residual waste,
has applied technologies to recycle and eventually reduce residual waste from palm oil
mills and agriculture cultivation processes [
152
]. In practice, palm oil mills in the country
have taken a step further by recycling some of this waste into non-commercial biofuels
to generate electricity for powering the mills. Further, the palm oil industry biologically
processes the POME wastewater for agricultural irrigation, which is flown to nearby oil
palm plantations [
152
]. In parallel, biogas facilities also capture methane gas naturally
generated from wastewater to generate electricity. This practice contributes to GHG emis-
sions reduction throughout the production processes, allowing the industry to register for
the Clean Development Mechanism (CDM) project [
173
]. Aside from the biofuel-making
solution, the industry used residual EFBs to cultivate straw mushrooms in the oil palm
Energies 2024,17, 141 19 of 29
plantations, effectively fertilising the oil palm trees using a nature-based solution. All these
solutions would foster circularity within the entire CPO industry in Thailand.
In 2010, Thailand officially began promoting the Good Agricultural Practice standards
(Thai GAP) towards the country’s oil palm sector on a voluntary basis without legal pun-
ishments [
173
]. The Thai GAP addresses issues like safety in the use of pesticides, water,
and fertilisers. In practice, the Thai government monitors the level of compliance of oil palm
farmers in implementing standardised good agricultural practices through its Department of
Agriculture. In terms of certification, Thailand applies the Roundtable on Sustainable Palm
Oil (RSPO), the globally accepted standard for sustainable palm oil, in its effort to increase its
competitiveness in the global CPO market. Still, the adoption of RSPO certifications among
smallholder farmers and palm oil mills in Thailand remains insignificant [
178
], which is
way lower than 51% of RSPO-certified plantations in Indonesia. Nevertheless, Thailand has
successfully begun exporting its palm oil to India since 2010 as palm oil prices from Thailand
became competitive against Indonesia and Malaysia in the global market [179].
Unlike Indonesia, in which more than half of oil palm plantations are owned and run
by corporations, the significant majority (70%) of plantations in Thailand are owned and
operated by smallholder farmers [
173
]. The Thai government is extremely concerned about its
smallholder farmers, so the government restricts any import of biofuels to protect the farmers.
Of course, there could be exceptions to the rule to maintain the country’s energy security. Still,
any exception to the rule requires potential importers to obtain approvals from Thailand’s
Ministry of Energy (MoE) [
93
], with which they must have highly reasonable justifications to
import biofuels. The Thai government, to foster both production and consumption, provides
incentives to increase the supply and demand sides of biofuels [
180
]. The incentive policies
are pretty helpful since its domestic market absorbs most CPO-based biofuels produced in
Thailand. The governmental support throughout the industrial chains could be the reason for
fewer “issues” around the development of oil palm plantations in Thailand.
Furthermore, Thailand has also set its NDC target as part of the 2015 Paris Agree-
ment. Its CPO industry has applied different technologies to reduce GHG emissions by
capturing them when processing biogas to generate electricity. This allows the industry to
apply for the CDM since the country manages to reduce emissions under the Kyoto Proto-
col [
115
,
158
]. Prior to the Paris Agreement, the Thai government had already forbidden
any deforestation-causing expansion of oil palm plantations [
171
,
181
], considering their
negative environmental impact on biodiversity and GHG emissions [
171
,
178
]. The only
land allowed for the conversion is some existing croplands (e.g., cassava, paddy fields,
rubber fields). Still, these indirect land-use changes might worsen GHG emissions, except
for rubber fields. Nevertheless, the total GHG emissions produced from converting the
existing croplands are still lower than those from deforestation [
171
]. For smallholder
farmers, the government provides the land required for their oil palm plantations, further
preventing unmonitored and uncontrolled land clearing by non-state actors [21].
Thailand’s updated NDC targets remain the same, aiming for a 20% emission reduction
by 2030 and a 25% reduction by 2030 with international support. Further, the updated NDC
does not amend the RE targets for its national energy mix. The RE share target in its power
sector and final energy consumption by 2036 are 20% and 30%, respectively [
158
]. While
Indonesia has its LTS-LCCR 2050, Thailand stipulates its Long-Term Low Greenhouse Gas
Emission Development Strategy (LT-EDS) to guide the country towards climate-resilient
and low GHG-emission development [
158
]. In 2019, biofuels contributed 95% of total RE
shares, while RE covered 21% of the national energy mix [
182
]. In 2017, the RE shares in
the power sector and the final energy consumption were 9.76% and 21.11%, respectively.
According to its NDC, Thailand should increase its RE shares by 10.24% in its power sector
and 8.89% in its final energy consumption. It has 15 years to achieve these targets, three
times longer than Indonesia has.
Energies 2024,17, 141 20 of 29
5. Conclusions and Recommendations
This research aimed to explore policies and practices in biofuel development in Indonesia,
with an in-depth focus on the country’s CPO industry. Further, this study provided compara-
tive perspectives from the CPO industry in Thailand as the benchmark. Answering the first
research question (RQ1), this study employed the JUST framework covering four key elements,
i.e., justice, universal justice, space considerations, and time, to understand the requirements
for the CPO-driven biofuel industry in Indonesia to pursue a just energy transition. This
study applied qualitative socio-legal analyses to multi-actor data gathered through 22 inter-
views and 4 FGDs. Based on the results, oil palm plantations in Indonesia and Thailand are
crucial for the livelihood of rural people since 40% and 70% of the plantations, respectively,
are owned by smallholder farmers. Recognising the significant contributions of the biofuel
industry to both Indonesia and Thailand, it is consequently necessary for the governments to
provide incentives for the CPO industry, given that it operates under environmentally friendly
principles and applies clean technologies throughout its industrial activities. This could drive
the industry to be more sustainable, eventually helping the countries achieve their climate
goals and fulfil their global commitments, i.e., the 2015 Paris Agreement and JETP.
Furthermore, the biofuel industry plays a significant role in Indonesia’s energy tran-
sition and economic development. Primarily, it helps maintain the country’s gradual
process of moving away from fossil fuels. Answering the second research question (RQ2),
CPO-based biofuels have fostered the energy transition towards a low-carbon economy
in Indonesia by transforming fuel consumption patterns through the policy mandate on
biodiesel (the B30 programme). Still, Indonesia should remain cautious regarding the
distribution of benefits and impacts of the entire biofuel industry, especially for smallholder
farmers who own and run approximately one-third of the country’s oil palm plantations.
They are indeed vulnerable to fluctuating CPO market prices despite holding a significant
share of plantation areas in the country. In addition to various programs targeting cor-
porations or prominent players in the CPO industry, the government must significantly
improve the incentive schemes for smallholder farmers. Concerning comprehensive efforts
to recognise multi-actor interests, coping with all stakeholders should therefore include
thorough considerations for every single individual holding interests within local communi-
ties, including the children of the smallholder farmers. Hence, the right to education, which
the law has constitutionally guaranteed, should remain a priority and be continuously
enhanced in the short and long term.
One striking difference between Indonesian and Thai CPO industries is the use of
technologies that, in Thailand, could actively support the pursuit of a sustainable palm
oil industry [
152
,
177
]. In Indonesia, technologies have not been applied by all business
players, implying significant potential for improvements. Furthermore, land-use changes
from forests to oil palm plantations remain the main contributor to GHG emissions [
181
].
This was the case for Indonesia, where more plantations were converted from forests rather
than agricultural lands, as in Thailand. Regarding environmental impacts, Thailand has
applicable regulations encouraging the biofuel industry to operate under strict ecological
principles. Indonesia strengthened its regulations only recently in 2018, which at last
forbade deforestation for oil palm plantations. Nevertheless, Thailand should aggressively
certify its plantations under RSPO standards since they are still far behind Indonesia.
However, Indonesia must also promote ISPO comprehensively to gain more attention from
all stakeholders. It would help ensure a just transition in the industry by involving and
delivering benefits for all stakeholders (i.e., the government, investors, palm oil companies,
and farmers). Regarding NDC targets, Indonesia remains ahead of Thailand, emphasising
its critical role internationally in reducing GHG emissions.
Moreover, the biofuel industry in Indonesia has yet to reach a sustainable state. How-
ever, the respondents conveyed persistent confidence in a sustainable future for the indus-
trial sector that meets sustainability standards. Still, the interviews, FGDs, and archival
analyses concluded that more serious efforts are necessary to support such confidence. The
foremost desire is the creation of an integrated institution specially dedicated to strictly
Energies 2024,17, 141 21 of 29
regulating and monitoring the palm oil industry. It is primarily intended to minimise
various overlapping regulations between governmental institutions and industrial organ-
isations, including the risk of multiple interpretations of the regulations. Any extreme
kind of substantial legal delegation should also be reduced as necessary to ensure that one
central legislation is adequate. Ultimately, all the solutions and recommendations above
should not be implemented as separate processes. They should be seen as interconnected
chains requiring comprehensive implementation to guarantee the expected outcomes. Then,
despite being better in NRE growth and RE shares than Thailand, Indonesia should persis-
tently continue moving towards achieving its NDC targets by maintaining and improving
its discipline towards the targets. In an optimistic scenario, Indonesia should be able to
achieve its targets approximately one-third faster than Thailand.
Author Contributions: Conceptualisation, P.D., P.L., T.B.S. and C.P.M.S.; methodology, P.L., T.B.S.
and C.P.M.S.; validation, P.D. and C.P.M.S.; formal analysis, P.L., T.B.S. and C.P.M.S.; investigation,
D.F.M.; resources, D.F.M.; data curation, P.L.; writing—original draft preparation, P.L., D.F.M. and
C.P.M.S.; writing—review and editing, P.D. and T.B.S.; visualisation, P.L. and C.P.M.S.; supervision,
P.D., T.B.S. and C.P.M.S.; project administration, D.F.M.; funding acquisition, P.L. All authors have
read and agreed to the published version of the manuscript.
Funding: This research was funded by the Faculty of Law, Brawijaya University, Indonesia, through
grant no. 2/DLK-FHUB/PEN/2021.
Data Availability Statement: The data presented in this study are available on request from the first
corresponding author. The data are not publicly available due to privacy concerns.
Acknowledgments: We would like to express our gratitude to GAPKI, APROBI, SPKS, Traction
Energy Asia, CoAction Indonesia, TNP2K, ESDM, PT. Iskandar Muda, PT. Hutan Hijau Mas (KLK
Group), the oil palm farmers, and the local communities for their involvement in this research as
either interviewees or participating discussants.
Conflicts of Interest: The authors declare no conflict of interest. The funder had no role in the design
of the study; in the collection, analyses, or interpretation of data; in the writing of the manuscript; or
in the decision to publish the results.
Appendix A
Table A1. Indonesia-specific abbreviations and their English translations.
Abbreviation Name/Term in Indonesian English Translation
APKASINDO Asosiasi Petani Kelapa Sawit Indonesia Indonesian Palm Oil Farmers Association
APROBI Asosiasi Produsen Biofuel Indonesia Indonesia Biofuels Producer Association
B15 Biodisel 15% Biodiesel 15%
B30 Biodisel 30% Biodiesel 30%
B40 Biodisel 40% Biodiesel 40%
BPDP-KS Badan Pengelola Dana Perkebunan Kelapa Sawit Indonesian Oil Palm Estate Fund Agency
BRG Badan Restorasi Gambut Peatland Restoration Agency
ESDM Kementrian Energi dan Sumber Daya Mineral Ministry of Energy and Mineral Resources
GAPKI Gabungan Pengusaha Kelapa Sawit Indonesia
Association of Indonesian Palm Oil Corporations
Gapoktan Gabungan Kelompok Tani Farmer Group Associations
HGU Hak Guna Usaha Right of Cultivation
Inpres Instruksi Presiden Presidential Instruction
KUD Koperasi Unit Desa Village Cooperative
Perpres Peraturan Presiden Presidential Regulation
PP Peraturan Pemerintah Government Regulation
SPKS Serikat Petani Kelapa Sawit Palm Oil Farmers Union
STD-B Surat Tanda Daftar Budidaya Cultivation Registration Certificate
TNP2K Tim Nasional Percepatan Penanggulangan
Kemiskinan
National Task Force for the Acceleration of
Poverty Reduction
Energies 2024,17, 141 22 of 29
Appendix B
Interview Guidelines
Date Time
Participant Name Interviewer
Signature Signature
Stakeholder Identity
•Name : . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . ... . .. . .. . .. . .. . .......
•Age : . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . ... . .. . .. . .. . .. . .......
•Gender : . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . ... . .. . .. . .. . .. . .......
•Last Education : . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . ... . .. . .. . .. . .. . .......
•Work : . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . ... . .. . .. . .. . .. . .......
•Mobile Phone Number : . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . ... . .. . .. . .. . .. . .......
•Domicile : . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . ... . .. . .. . .. . .. . .......
•Plantation Location : . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . ... . .. . .. . .. . .. . .......
•Plantation Area : . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . ... . .. . .. . .. . .. . .......
•Land Ownership Status : . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . ... . .. . .. . .. . .. . .......
Distributive Justice
1. Do you agree with the presence of palm oil plantation activities in Indonesia?
2.
How many workers can be absorbed in this industry, and how many are local people?
3. What forms of work are provided in this sector?
4. What is the importance of the palm oil sector to the community?
5.
Please specify any Corporate Social Responsibility (CSR) programme you know in
this industry.
Procedural Justice
1.
Presidential Regulation no. 44/2020 concerning the Certification System for Sus-
tainable Palm Oil Plantations requires all plantations to have certification. Are you
ready for this regulation? Does the ISPO policy impact the surrounding environment,
economy, and society?
2.
Do you think that the existing plantations and industries around you are per the
spatial plan set by the government?
3.
Do you understand the Palm Oil plantation licensing process? Do you know whether
your business has a licence?
4.
Based on Presidential Instruction no. 8/2018 concerning the Postponement and
Evaluation of Palm Oil Plantation Licenses and Increasing Productivity of Palm Oil
Plantations, there is a moratorium policy/stopping the granting of new licenses for
palm oil plantations. Do you think the moratorium policy is running well or not?
5.
Do you think people have access to the Right to Cultivate information? Should it be
transparent?
Restorative Justice
1.
What are the good and bad impacts of palm oil plantations on life, economy, social
and environmental quality?
2.
Has all the biomass potential been utilised, i.e., empty bunches, leaves, twigs, trunks,
trees, and all parts of the Palm Oil plant?
3.
What is the land-clearing method used? Is there any technology used in land clearing
other than the burning method?
Energies 2024,17, 141 23 of 29
4.
Have you ever experienced air pollution caused by fires caused by Palm Oil plan-
tations? If there is a fire on plantation land, what are the efforts to make the fire
immediately extinguished?
5. What is your opinion about palm oil plantations on peatlands?
Recognition
1. Do people know about industrial activities in the surrounding palm oil industry?
2. Are there women and children working in this sector?
3.
Is there any conflict in the palm oil sector with the community? How do you convince
the community that their land can be handed over? Are there any particular methods
used if indigenous peoples own the land?
4.
Is there a place/channel for aspirations between plantation owners and policymakers
in making a policy made by the Government involving the aspirations of the planta-
tion owner? Do you know that local people have the right to provide input and/or
objections to a new Palm Oil plantation business license application?
5.
Have you ever received assistance/advocacy from a non-governmental organisation
(NGO) in dealing with a problem?
Cosmopolitanism
1. What is your opinion about global warming?
2.
What do you think about the farm burning practice that causes a transboundary haze
disaster in neighbouring countries, such as Malaysia, Singapore and Brunei Darussalam?
3. What do you think about the B30 biodiesel program?
4.
What if palm oil biodiesel is considered unsustainable by the international community?
What do you think about this?
5. Has there been any assistance from the government/investors regarding technology
for Palm Oil plantations to make it more environmentally friendly and sustainable?
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