New venture seeks to eliminate palm oil waste

Veteran carbon entrepreneur Dorjee Sun has launched a new company that seeks to turn palm oil waste into useful fertiliser, which helps the industry reduce its environmental impact even as it reduces costs.

In a recent interview with Eco-Business, the Singapore-based chief executive of Carbon Conservation said the new venture, which began on a trial basis in 2009 and started commercial operations early this year, emerged as a result of two circumstances: unstable carbon prices and higher environmental standards for the palm oil industry.

Backed by private investors, the new start-up Carbon Agro has three projects on the ground, including two in Indonesia and one in Colombia.

Carbon Agro’s sister company, Carbon Conservation, protects rainforest at risk of deforestation. It does this by creating incentives for forest protection generated from carbon credits, which are granted under the United Nation’s clean development mechanism (CDM) and can be sold on regional carbon markets.

Uncertainty in the world’s carbon markets have spurred companies like Carbon Conservation to diversify into new environmental projects. With global climate negotiations making little headway on establishing ambitious emissions reduction targets, prices for carbon emissions reduction certificates have dropped to record lows.

Still, Mr Sun said the company is pushing ahead with its carbon projects - it has applied for carbon credits for one of its Carbon Agro projects, which captures methane gas for energy from its composting process.

Meanwhile, palm oil producers are under increasing pressure from multinational customers and from government to reduce the industry’s environmental impacts.

But higher standards also mean higher costs.

Mr Sun said companies can save money by composting their agricultural waste, since a typical mill that can process 45- tonnes of palm fruit per hour pays about US$200,000 in waste disposal costs each year.

He cited several mills that have tried to compost their own waste, but said that most mills prefer to outsource waste management so they can focus on oil production.

“They just don’t want the headache of dealing with the waste,” he added.

Waste is becoming more of a headache for palm oil companies as governments in the region improve their enforcement of environmental regulations and public scrutiny intensifies.

Palm oil mill waste is the material left over after the fruit from oil palm trees has been pressed to extract oil. It includes empty fruit bunches and a highly polluting sludge that can contaminate local waterways.

“That effluent is chock full of biological compounds that pollute the natural environment for weeks before they break down,” said Mr Sun.

Carbon Agro turns the waste into a nutrient-rich compost in a 25 day process that the company’s scientists developed in field trials over the past three years in Indonesia, where the firm has installed two compost systems worth $10 million combined.

The projects entail installing a series of ten-by-eight metre concrete boxes designed to naturally aerate the compost as it is periodically turned and watered with the watery sludge from the mill. When ready, the compost is trucked back to the oil palm plantations using the same vehicles that bring in the fruit bunches.

Tests have shown that the compost from one plantation can replace 20 to 30 per cent of the chemical fertilisers that growers typically use for the same space, and can improve the soil health in the process.

Mr Sun explained that in places like Malaysia, where many plantations are growing their third or fourth generation of trees, the plants have stripped the soil of nutrients. Growers have compensated by using increasing amounts of inorganic fertilisers that degrade the quality of the soil over time.

The company has recently started a third project at a new 30 tonne mill in Colombia, which has omitted the usual agricultural waste facilities altogether in favour of Carbon Agro’s compost bunkers.

Carbon Agro will talk to over 300 potential clients in Malaysia, Indonesia, Thailand, South America and Africa in the next year or so, estimates Mr Sun, who noted that currently about 1,000 mills around the world process about 40 million tonnes of palm oil produced globally each year.

His firm is not the only group aiming to eliminate the environmental impacts from palm oil mill waste. In Malaysia, where climate experts estimate that palm oil mills are the second largest contributor of methane gas, the Malaysian Palm Oil Board has been working with university researchers and biotechnology companies to find new technologies that turn the waste into useful products such as energy and fertiliser.

The industry’s current push for more sustainable practices is partially due to the work of the industry-led Roundtable for Sustainable Palm Oil (RSPO), whose members include palm oil producers, NGOs, investors and multinational companies that represent a substantial chunk of the global demand for palm oil.

Members commit to deadlines by which they pledge to use or produce only certified sustainable palm oil (CSPO) within their operations. Joined by trade authorities in European countries such as Belgium and the Netherlands, many of them have chosen a 2015 deadline - giving them a mere three years to meet their targets.

The RSPO said in April that annual global production of CSPO has reached 6 million tonnes since certification started in 2008, although it expects Indonesia alone to produce 5.6 million tonnes per year by 2015.

Waste from the mills is only a small part of the RSPO’s focus. The industry faces its biggest challenges – and the most criticism – for its contributions to deforestation.

Mr Sun is no stranger to deforestation issues. He has won numerous awards for his work on deforestation with Carbon Conservation, and was named Time Magazine Environmental Hero for 2009.

He has also had his share of detractors, who criticize his willingness to work with companies that have poor environmental records. He said he is well aware that his methods put him at odds with some NGOs, but he maintains that helping those companies take positive action prompts additional efforts at sustainability.

“Once they start, they tend to keep going,” he said.

He added that, while environmental NGOs play a crucial role in raising awareness and holding companies accountable for their actions, his role is to take a pragmatic approach.

“We ask ourselves one thing: how do we make the industry more sustainable?” he said.

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