Oil Palm Plantations Replacing Indonesian Forests at Alarming Rate

A paper published this week in Nature Climate Change confirms that expansion of oil palm plantations in Indonesia is destroying the country’s rainforests while simultaneously increasing global carbon emissions.  The study, led by Yale and Stanford University researchers, used Landsat satellite analyses to discern multiple land covers, coupled with above-and below-ground carbon accounting. The study looks at the possibility of REDD “displacing” oil palm plantations by comparing how much the government could get from palm oil taxes.  Read more below.

For more information on rainforest destruction in Borneo, please visit: https://borneoproject.org/borneo/overview-of-current-threats


A paper published this week in Nature Climate Change confirms that the expansion of oil palm plantations in Indonesia has come largely at the expense of the country’s forests. Between 1990 and 2010, 90% of oil palm plantations in Kalimantan were established on forested land (47% intact, 22% logged, 21% agroforests).

By the end of 2010, oil palm plantations in Kalimantan covered more than 3.1 million hectares, out of a total of about 7.65 million hectares of oil palm plantations in Indonesia. The study, led by Yale and Stanford University researchers, “Carbon emissions from forest conversion by Kalimantan oil palm plantations”, uses“Landsat satellite analyses to discern multiple land covers, coupled with above- and below-ground carbon accounting, [to] develop the first high-resolution carbon flux estimates from Kalimantan plantations.”

But the report doesn’t only look at past emissions from palm oil plantations. The Indonesian government has plans to expand palm oil production massively. Even worse, many of the concessions for this expansion have already been allocated. The study found that 79% of allocated leases in Kalimantan “remain undeveloped”.

Between 1990 and 2000 carbon emissions from conversion to oil palm plantations totalled 0.09  gigatons of carbon. Between 2000 and 2010, this figure increased dramatically, to 0.32 gigatons of carbon. Conversion of the undeveloped leases to oil palm plantations would result in the emission of 1.52 gigatons of carbon between 2010 and 2020.

The project leader of the study, Lisa Curran said in a press release from Stanford University that,

“These plantation leases are an unprecedented ‘grand-scale experiment’ replacing forests with exotic palm monocultures. We may see tipping points in forest conversion where critical biophysical functions are disrupted, leaving the region increasingly vulnerable to droughts, fires and floods.”

In September this year, there were 868 hotspots in Central Kalimantan and visibility in Palangkaraya was down to 15 metres. In early October, the Ministry of Forestry’s “Indofire” website showed extent of the problem:


Indofire - Kalimantan


Central Kalimantan is, of course, the pilot REDD province under the Indonesia-Norway US$1 billion REDD deal. The moratorium on forest concessions under the Indonesia-Norway REDD deal does not apply to existing concessions.

The Nature Climate Change study looks at the possibility of REDD “displacing” oil palm plantations by comparing how much the government could get from palm oil taxes with the gross revenues from carbon credits generated by avoided emissions. The authors look at two scenarios: Peatland protection, where peatland within oil palm leases cannot be converted; and Forest protection, where intact or logged forest would be protected (but not agroforest areas). The authors look at the carbon emissions from land clearing using fire and plantation establishment without fire. (The authors point out that existing regulations that prohibit using fire to clear lands for plantation establishment are not enforced.)

The results are pretty devastating for proponents of REDD as a carbon trading mechanism. Assuming a 15% tax on palm oil exports, revenue from oil palm concessions is US$10,000 per hectare. The authors then assume a carbon price of US$10 per ton of CO2. Here’s what they found (click on the image for a larger version):


oil palm tax vs REDD credits


Only under the peat protection scenario, assuming that fire would have been used to clear the land (illegally), does the income from REDD carbon credits exceed the export tax on palm oil. Nevertheless, the authors manage to conclude that: 

Under certain market conditions and land management practices, REDD+ initiatives aimed at mitigating these emissions may generate national government revenues similar to oil palm export revenues.

Here are some of the gaping flaws in this analysis:

    • The authors compare gross income from REDD carbon credits against export tax on palm oil. A fairer comparison would surely be tax on REDD carbon credits against export tax on palm oil. The authors do not consider the profits made by oil palm companies. There is no attempt to calculate any of the costs of setting up a REDD project or the large percentage of the money that intermediaries would pocket. The authors also do not consider allowing a percentage of the money from REDD carbon credits to go to the communities living in and around the forest.
    • The export tax on palm oil in Indonesia in October 2012 is 13.5%, down from 15% earlier this year. It’s likely to fall further as the price of crude palm oil is currently low.
    • The price of UN offsets is nowhere near US$10. In September 2012, analysts at Barclays put out a report titled “CDM RIP” (Clean Development Mechanism Rest In Peace). Barclays’ analysts do not expect the price to increase to more than US$4. Ever.

The study in Nature Climate Change provides important data about the greenhouse gas emissions released from the establishment of oil palm plantations and raises the problem of already allocated concessions that could massively increase these emissions. However, the authors’ assumptions that generating REDD carbon credits may help address these problems are pure fantasy.