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  • The Future of Jatropha in Indonesia

    2010 - 02.22

    In 2007, biofuel enthusiasts were promoting jatropha as the answer to the looming energy crisis and the product to wean us off our dependence to fossil fuels. As a tough, drought resistant weed that thrives on marginal land and is able to produce a vast amount of useable oils, jatropha seemed just too good to be true.

    And to be honest it was. Although producing biofuel from jatropha doesn’t require sacrificing food crops such as oil from soybeans and corn based ethanol problems with inconsistent yields, production and land allocation saw support for the tough, little plant wane.

    Tony Wood, president director of the P*yry Forestry Industry, admitted that large-scale operations have little chance of developing in the future, Wood stands by his earlier statement that Indonesia is ideal for small-scale jatropha production.

    “Jatropha fits the Indonesian model of many small-scale producers quite well and should not be given up on,” he said. “Small to medium-sized operations producing biodiesel for local consumption makes much more sense and it is this model that I think we may see in the future.”

    In 2006 no one would have been able to predict that the growth estimates for the jatropha market in Indonesia would drop off so suddenly after only a few years. Indonesia is Southeast Asia’s biggest oil producer and user and for years has faced mounting pressure from the international community to reduce its carbon emissions and to make attempts to mitigate the impacts of greenhouse gases.

    Indonesian scientists working in the biofuels industry immediately recognised the potential possibilities of jatropha. Government officials and investors were fascinated by jatropha’s unique ability to adapt to its environment and produce 30-40% oil content from its seeds. Practically all the plant is used: the oil is processed for biofuels, the trunk is manufactured for fertiliser and the by product forming glycerine is used in organic soaps. The potential in Indonesia is enormous with 22 million hectares of unused marginal and critical land, varied climate, massive labour market and diverse investment channels.

    Despite this by April 2008 only 120,000 hectares of land had been cultivated for jatropha. In 2009 global oil prices dropped significantly and with the onset of the financial crisis investors and the government lost interest and the economic desire to continue pushing forward with the advancement of biofuels. Indonesia was left with a sector lacking in profits, structure and political will to survive, whilst Brazil and Europe surged ahead with their biofuel development. Those who were still interested in continuing the development of jatropha in Indonesia were left struggling against bureaucratic, red tape, convoluted land ownership laws.

    While land may be abundant in Indonesia one of the major problems facing the expansion of the jatropha market is land availability. The procedure behind gaining the rights and certification to develop biofuels is incredibly long and complicated, sometimes dragging into years.

    Even though the Indonesian government has agreed that biofuels can improve economic stability, create jobs, reduce poverty and dependence on fossil fuels it is still reluctant to fully support the industry after its initial setbacks. Campaigners for biofuel argues that the government still favours fossil fuels. The facts seem to collaborate this as in recent years the Yudhoyono administration has given more than Rp 120 trillion in subsidies to the fossil fuel industry. In comparison the biofuel sector is still waiting for promised funding.

    According to Maxensius Tri Sambodo, an economic researcher at the Indonesian Institute of Sciences (LIPI) “The government still provides subsidies for fossil fuels. Studies also show that there is lack of coordination between central and local governments in promoting biofuels.”

    However the biggest obstacle standing in the way of jatropha development in Indonesia is inconsistent yields. While thousands of homes across Belgium are powered on jatropha purchased from Thailand, Indonesian scientists have been battling uneven ripening times and variations in seeds and oil content.

    “What it all boils down to I think is that while jatropha remains a strong potential crop for Indonesia,” Wood said, “right now few people are achieving even close to the yields required to make projects economically attractive on a large scale. I believe that this will come as some good work is being done, but it will take time.”

    Due to its low profits, a practically nonexistent export market and inadequate infrastructure for production, Indonesia’s confidence in jatropha is not high. Currently the government is dealing with the commercial side of jatropha so companies investing now should find a stable situation by the time plantations start producing even yields.

    Dr. Endang Warsiki, coordinator of the Research Center for Jatropha Research and Development in Indonesia, said the focus right now is on ongoing collaborative research with the government and with laboratories in Japan and Singapore.

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