Transfer of subsidy to biofuel accelerates deforestation, says Walhi

The Indonesian Forum for the Environment (Walhi) is warning that the government’s policy to shift subsidies from fossil fuels to palm oil-based biofuel will only accelerate deforestation in this country.

“Shifting subsidies to land-based biofuel will worsen deforestation that has occurred at an alarming rate as it would increase the expansion of oil palm plantations in Indonesian forests,” Walhi forest and plantation national campaigner, Zenzi Suhadi, said as quoted by Antara in Jakarta on Monday.

He said it was suspected that the inclusion of biofuel made from crude palm oil as a subsidy beneficiary was the result of lobbies conducted by palm oil plantation businesspeople to the government after the European Union’s (EU) parliament rejected the use of land-based fuel for transportation in the European countries.

Zenzi further said it was also suspected that the shifting of the fuel subsidy was for the benefit of business groups that were currently promoting bioethanol monoculture plantations that had threatened around 1 million hectares of forests in Kalimantan, Maluku, Papua, Sulawesi and Sumatra.

“The current plan to shift the fuel subsidy should provide momentum the government can use to take strategic measures to tackle environmental problems by promoting abundant alternative, renewable energy sources in Indonesia, namely wind and solar,” said Zenzi.

If the plan to shift the fuel subsidy was undertaken because of its heavy impact to the budgets of people in the low income brackets, the government should have been able to use the subsidy allocations to finance environment conservation activities directly conducted by people, micro economic activities that could increase the production capacity of rural communities, or recovering damaged environments caused by fossil fuel emissions.

Energy and Mineral Resources Minister Sudirman Said previously stated that in 2015 the fossil fuel subsidy would be shifted to the development of more productive sectors, such as biodiesel and bioethanol.

In the draft 2015 Revised State Budget (RAPBN-P) bill, the ministry proposed an increased subsidy for biodiesel from the current Rp 1,500 (12 US cents) per liter to Rp 5,000 and from Rp 2,000 per liter to Rp 3,000 for bioethanol.

With such increases, the amount of the biofuel subsidy increased by Rp 14.31 trillion from Rp 3.09 trillion in the APBN 2015 to Rp 17.40 trillion in the RAPBN-P 2014.

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