Palm oil plantations and climate change

A villager walks past a smoldering field lit for land-clearing in order to grow palm oil in Minas, Riau province, Sumatra, Indonesia.

Environmental concerns over palm oil production tend to focus on rainforest felling and the plight of the orangutan. But palm oil companies are now starting to grapple with a lesser-known issue that could make a significant difference in the quest to curb climate change. The rapid expansion of palm oil cultivation has resulted in the creation of vast wastewater lagoons beside plantations in countries such as Indonesia and Malaysia, the world’s two dominant producers.

These murky ponds, containing the brown-hued detritus from processed palm oil fruit, release a huge amount of methane into the atmosphere – a gas so potent it traps around 34 times as much heat as carbon dioxide.

A typical lagoon emits the equivalent of 22,000 cars’ worth of greenhouse gases every year, according to a University of Colorado study published last year. Methane emitted from these lagoons accounts for more than a third of the greenhouse gas emissions created by the production of palm oil.
“If you look at all the palm oil mills globally, the base wastewater carbon emissions are around 135m tonnes annually, which is about the national emissions of Belgium,” says researcher Philip Taylor, one of the study’s authors.
“If you can take that methane and burn it to [produce] carbon dioxide you’re immediately reducing the climate impact 34-fold. It’s a huge climate saving, but unless there’s the economic incentive to do so, it won’t happen. We need to find a win-win for economics and the environment.”
Only a small amount of this methane is currently being captured, but several palm oil businesses are starting to realise there is a more environmentally and financially sustainable use for wastewater than simply leaving it to fester.

A mutual solution

REA Holdings, a British-based firm that owns three palm oil mills in Indonesia’s East Kalimantan province, installed methane capture at two of its mills in 2012, with plans currently being drawn up for the third.

REA Kaltim’s methane capture facilities, East Kalimantan, Indonesia. Photograph: REA Holdings

To capture the methane, huge polyetharane sheets are placed over the lagoons. The gas is then cleaned of various chemicals and water before being fed into a combustion engine, with the energy produced used to power the plantation’s operations. Other uses include methane-powered vehicles and cooking stoves – with wood and charcoal-based cooking linked to around four million deaths a year due to air pollution, this is a potentially crucial upgrade.
Given the remote nature of most palm oil mills, it’s hard for businesses to sell this energy to the electricity grid, but REA Holdings has struck an agreement with Indonesia’s state-owned grid to power a nearby community. The joint venture began in April this year and will supply more than 8,500 households with methane-generated electricity.
“We’ve experienced conflict with some local villages in the past over land compensation, so this is a good way of creating mutual interest,” says Sophie Persey, head of sustainability at REA Holdings. “[It] helps show the community the benefits of our operations, to improve their standard of living. We want to be there for 25, 50, 75 years, so we want to have good relationships and for everyone to benefit.”
There is a financial upside for REA, of course – the company hopes the electricity sold will bring in $230,000 (£149,000) in the first year. What’s more, having slashed its diesel use from 2.8m litres a year to fewer than 500,000 litres, REA is better protected from fluctuations in the global oil price.  
Other firms are seeing the potential, too. Indonesian company PT Musim Mas, headquartered in Singapore, is installing methane capture in its eight mills in Kalimantan and Sumatra, with an initial outlay of between $3-4m.
Gan Lian Tiong, the company’s head of sustainability, told the Zoological Society of London that it would take approximately 10 years to recover the investment costs for the methane digester. However, that assumes that no income is generated from carbon credits and that the methane digester provides electricity for internal use, not the national energy grid.

Securing state support

The main hurdle – aside from upfront costs – has been a perceived lack of government backing. But Persey believes this is changing in Indonesia, with new regulations stipulating that the government must buy any renewable energy produced by palm oil mills. A further rule on mandatory methane capture may follow.
“The palm oil industry has done a lot to promote rural development in Indonesia,” says Persey. “I can see methane capture becoming a useful part of green growth in Indonesia. It will really boost development in local communities.”
Some environment groups are sceptical. Farwiza Farhan, chair of the Forest, Nature and Environment Aceh Foundation, says it’s little surprise that companies are trying to gain favour from local communities, many of which she believes are still resistant to local palm oil developments. She argues that initiatives such as methane capture can’t hide the significant volumes of greenhouse gases companies release into the atmosphere.
“Deforestation is still the main issue. Palm oil companies establish and expand in forested areas, destroying habitat and the livelihoods of local communities,” she says.
Persey, however, points out that REA Holdings has provided nearby communities with diesel on an ad hoc basis for several years, the difference now is that it aims to provide a cleaner alternative in the form of methane-based energy.

Scaling up

With Indonesia aiming to increase its palm oil production to 40m tonnes a year by 2020, the issue of methane will only become more pressing. Taylor says further government help will be required given the collapse in price of the UN’s clean development mechanism, an emissions reduction credit system that has helped fund several methane capture projects.
“I travelled through these countries and thought, ‘Why is no one really capturing this stuff’ and the reason is that the economics have to stand on their own,” he says. “You have countries like Thailand with a guaranteed feed in tariff but there is less infrastructure in place in Indonesia and Malaysia.
“I think the palm oil mills will do it themselves, there are folks visiting from all over the world to see how they are doing it. They are starting to understand the biofuel potential and how to get an additional revenue stream. It’s in its infancy but there’s certainly momentum there.” The Guardian UK. Photograph: Tatan Syuflana/ASSOCIATED PRESS