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Indonesia the Focus of Massive $12.4 Billion in Biofuels Investments; Signing Ceremony in Jakarta

Sixty-seven contracts representing US$12.4 billion in investment for biofuels development in Indonesia were signed in a ceremony in Jakarta, Indonesia this morning. The signing, conducted under the auspices of a program called the Joint Initiative for Biofuel Development, was attended by 9 Ministers of the Indonesian government and was hosted by the Ministry of Energy and Mineral Resources.

The $12.4 billion in investments covers the entire range of activities from upstream (production) to downstream (sales), according to the Chairman of the National Team for Bioenergy Development, Al-Hilal Hamdi.

Chinese firms took the lead with China oil major China National Offshore Oil Company (CNOOC) and Hong Kong Energy partnering with Indonesian palm oil producer PT SMART Tbk in a US$5.5 billion investment. Malaysia-based Genting Energy is investing US$3 billion.

Among the Indonesian institutions involved with the MoUs are Bandung Institute of Technology (ITB), Bogor Institute of Agriculture (IPB), the Research and Development Division of the Ministry of Energy and Mineral Resources are also among the institutions that signed the MOUs.

“This is part of our efforts to promote the use of alternative energy,” Head of the Biofuel National Team Alhilal Hamdi said during the MoU signing ceremony.

Banks are also expected to disburse US$2.7 billion in loans to support local farmers in supporting the biofuels project. The loans are in addition to the planned investments.


Rafael Seidl

The big question is where will all the land for the palm oil plantations come from. My concern is that a lot of virgin rainforest is about to be clear-cut. Note that Indonesia is actually a net importer of oil.

Nevertheless, much of the palm oil or the biodiesel produced from it is probably destined for Western nations desperate to wean themselves off fossil fuels. Europe is already importing 2/3 of its biodiesel feedstock and will need to import more if it is to meet its target of 5.75% of on-road fuels by 2010.

Don't get me wrong, I think biofuels do make a lot of sense from an energy security perspective. In many cases, including that of biodiesel from tropical feedstocks, there are also net CO2 emission benefits, plus new markets for modern, relatively clean diesel engine technology. However, don't allow the marketing mavens to sweep the issue of rainforest depletion under the rug. There is no such thing as a free lunch.

Even open ocean algaculture in tropical waters would come with a price tag in terms of massive capital investment and containment risks.


The most interesting route I think is to use biomass produced in the tropics for the generation of electricity that can be used in electric vehicles.

This allows for the creation of socalled BECS systems: Bio-Energy with Carbon Storage -- a *carbon negative energy system*. It's the only real carbon negative system that can be implemented on a large scale. You pump the CO2 generated in the biomass power plants underground.

Scientists see this as the only feasible geo-engineering strategy that can take us back to pre-industrial CO2 levels without endangering our energy security.
Of course, this strategy would only be implemented in case of 'abrupt climate change'.

Check out more here:


Somehow I doubt COONC is looking to sell biofuel to the west. They are competing with the west all over the globe to lock up oil supplies they desperately desire. They are doing the same thing the US is doing...rapidly ramping up biofuel capacity to replace declining oil supplies. They are doing it in Indonesia, as they need every bit of Chinese land to produce food for the overpopulated country. Whereas the US is doing it in the heartland (and strongly resisting imported biofuel from South America).



I posted the idea of gasifying biomass for H2 and sequestering the CO2 months ago on this site. There were no comments. It is a VERY good way to REDUCE CO2 in our atmosphere and create energy at the same time. I am glad that you posted the idea.


Rafael, the issues of deforestation and water degradation seem to be very real concerns in my estimation.


You mean overpopulated Java. Yes, the much of the rest of Indonesia is irreplacable rainforest, but 124+ million (of 245.5 million) Indonesians live on Java. That is an area smaller than Greece (or Louisiana), with more people than Mexico (or a bit less than Japan).


No. It seems biofuel industries would be focused on the eastern part of Indonesia including Celebes, Mollucans, Bali, south-east regions, and Papua. Regulations over rainforest protection and conservation on the other hand are not likely to lay off the blueprint for biofuel feedstock plantations since Merdeka Palace also prioritized the forest-protection program and will initiate such enforcements before June or July (about time when wildfires starts to spread around).

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