Owing to increasing energy prices and depleting natural deposits of fossil fuel precursors, many countries have been looking for alternative energy sources. The use of biodiesel, which is often produced by the transesterification of vegetable oils with methanol or ethanol, is considered a feasible alternative, presenting additional advantages such as possible reductions of carbon dioxide emissions, carbon monoxide, hydrocarbon, and sulfur oxide emissions compared with conventional fossil fuels (Crabbe et al., 2001; Kallivroussis et al., 2002; Ansori et al., 2005; Mootabadi et al., 2008). A primary raw material for producing biodiesel is the oil obtained from the fruits of the oil palm tree (Elaeis guineensis). Palm oil production is an important source of income and a major contributor to economic growth for many countries in South-East Asia, Central and West Africa, and Central America (Kalam & Masjuki, 2002). Palm oil is widely used as cooking oil, as an ingredient for margarine and many processed foods, as well as a feedstock component for biodiesel production (Supranto, 2003; IOPRI, 2006).
Most countries in the Asian region are net importers of petroleum fuels. Increasing energy demand and spiraling oil prices are putting financial strain on some countries and are also causing environmental degradation (Srivastava, 2000). Energy security has gained greater significance than ever; food production, improved living conditions, and environmental quality are interrelated (Brown & Jacobson, 2005). In this context, the use of biodiesel as an indigenous and renewable energy source can play a vital role in reducing dependence on petroleum imports and can also catalyze the rural economic development (Yi-Hsu et al., 2003).
In Indonesia, oil palm production plays a significant role in the country's economy and society. Today, an estimated 1.5 million small farmers grow oil palms in Indonesia and many more are connected with spin-offs (Ansori et al., 2005). Oil palm production in Indonesia is practiced in diverse farming systems and within different socioeconomical contexts. Thus, Indonesia is a particularly interesting case for studying biodiesel production from palm oil.
Regional differences between palm oil production in Kalimantan and Sumatra
Oil palm trees (E. guineensis) were brought by the Dutch to Bogor (West Java, Indonesia) as ornamental plants and then spread throughout Sumatra in the early 20th century (IOPRI, 2006). In the 1960s, major oil palm plantations were established in Sumatra by the government of Indonesia within the frame of transmigration programs. Thirty years later, that is, from 1987 onward, oil palm plantations were introduced in Kalimantan, imitating the plantation schemes implemented in the transmigration programs in Sumatra (Bangun, 2006). Despite the similar organization of oil palm production in Sumatra and Kalimantan, regional disparities persist due to different ecological environments, (e.g., mineral land and peat land composition in palm oil plantation areas), socioeconomic settings (e.g., know-how of palm oil processing), infrastructure (e.g., better sustained roads and bridges in Sumatra), and timeframes (e.g., due to longer operating experience – Sumatra's palm oil industry was developed 30 years earlier than in Kalimantan).
Business structure of Indonesian oil palm plantations
At present, 51% of the oil palm plantations in Indonesia are owned by large private companies, whereas 37% belong to smallholders and 12% to state-owned companies (Hasibuan, 2006). Recently, the area of smallholder plantations in Indonesia has been rising rapidly, from 0.6 M ha in 1990 to 2.2 M ha in 2005 (IOPRI, 2006). The smallholder plantations can be categorized into two types. These are dependent smallholder (or out grower) plantations and independent smallholder plantations. Dependent smallholders usually own a small piece of land within a large plantation that is managed by a company. They cultivate their own palm trees, but they depend on the company for many aspects, such as fertilizer and pesticides supplies, as well as selling their palm fruits to the mill. It is not viable for single smallholder plantations to build their own mills, so they deliver their fruits to the company's mill for further processing (Brown & Jacobson, 2005; IOPRI, 2006). Dependent smallholders are generally forced to apply the same technologies and practices as those used by large-scale plantations. Therefore, dependent smallholders are normally not free to take their own decisions regarding the cultivation of their plots. Consequently, input application such as fertilizer, herbicides, and pesticides will most likely be as intensive as in the company's plantation. In contrast, independent smallholders are free to manage their plantations according to their own beliefs. However, their lack of know-how and management skills is very often a severe drawback. In addition, independent smallholders are hampered by a lack of capital for purchasing inputs and buying good quality seedlings. Consequently, the yields of independent smallholders tend to be lower compared with those of estates or dependent smallholders, 12 t ha−1 yr−1 fresh fruit bunches (FFB) and 19 t ha−1 yr−1 FFB, respectively (IOPRI, 2006). In general, smallholders face difficulties in acquiring land because they have little collateral to warrant conversion of land for agricultural uses.
Life cycle assessment of palm oil production
Life cycle assessment (LCA; ISO 14044:2006) is an internationally known methodology for the evaluation of the environmental performance of a product, process, or pathway along its partial or whole life cycle, considering the impacts generated from ‘cradle to grave’. Biofuel life cycles are often assessed from ‘cradle to gate’. Several authors (Jusoff & Hansen, 2007; Yee et al., 2009; Schmidt, 2010) have noted that the LCA of palm oil industries often led to diverging results due to different approaches and methodologies, especially in the case of biofuels. An assessment focusing on the mere energy balance of biodiesel production from palm oil in Thailand was carried out to provide reliable information for promotion decisions (Pleanjai & Gheewal, 2009). The energy balance of palm oil biodiesel produced in Colombia and Brazil was determined on the basis of different scenarios (Angarita et al., 2009). From these studies, it is not possible to verify the greenhouse gas (GHG) emissions or the reduction in fertilizer application due to the use of by-products (e.g., empty fruit bunches EFB), as no information is given on the input assumed in the calculations regarding the agricultural phase. An LCA on the energy balances and GHG emissions of biodiesel from palm oil in Brazil considers the use of coproducts for power production, production of organic fertilizers and allocation procedures (De Souza et al., 2010). In their study, they found that fuel consumption is responsible for 18% of the GHG emission in palm biodiesel LCA. The cradle-to-grave methodology was also used to compare two biodiesel systems involving gross and net energy production per hectare per year and the GHG emission reduction (Thamsiriroj & Murphy, 2009). Their results show that the net emissions released from palm oil systems are lower than from the rape system (39.2 kg CO2 GJ−1 compared with 62.2 kg CO2 GJ−1). Comparing LCAs of different energy crops and regions, it is concluded that energy crops should be cultivated on marginal land to meet the increasing demand for agricultural goods and contribute to environmental improvement (Schmidt, 2010). The LCA including the energy balance and GHG emissions of biodiesel from palm oil in Malaysia was carried out to evaluate the potential benefits of palm biodiesel (Pananapaan et al., 2009). Yee et al. (2009) found that the utilization of palm biodiesel would generate an energy yield ratio of 3.53 (output energy/input energy), indicating a net positive energy generated and ensuring its sustainability.
Two major issues need to be addressed when assessing the efficacy of biofuels, namely the net reduction in fossil carbon emissions and the effect of alternative land-use strategies on carbon stores in the biosphere (Righelato & Spracklen, 2007). To mitigate global climate change, biofuels need to be produced with little reduction of organic carbon stocks in the soils and vegetation of natural and managed ecosystems (Fargione et al., 2008). Degraded and abandoned agricultural lands could be used to grow native perennials for biofuel production. This would spare the destruction of native ecosystems and reduce GHG emissions from land-use change (LUC), the latter being significant (Edwards et al., 2008). LUC can result in a decrease of the organic carbon stored in the soil. Although land conversion only happens once, its effect can be large and long-lasting. The soil reaches a new (lower) carbon content at a decaying-exponential rate, characterized by an approximately 20-year time-constant and an annual CO2 emission of the order of 3.7 t ha−1 (Commission of the European Communities, 2009) with the uncertainty range being more than 50%. LUC is concluded to be the most decisive factor in overall GHG emissions (Wicke et al., 2008a). Palm oil energy chains based on land that was previously natural rainforest or peat land have such large emissions that they cannot meet GHG emission reduction targets of 50–70% as demanded by the Cramer Commission in the Netherlands (Cramer, 2006).
The studies presented do not consider different farming systems and regions. However, empirical evidence suggests that major differences exist between farming systems and regions in one country. The knowledge of these differences and the factors leading to different results can contribute to a more environmentally sound development of palm oil production from existing and new plantations in Indonesia and also elsewhere in the world.