This short paper talks about circumstances around crude oil industry in Indonesia that is being widely talked by environmentalist and politicians alike.

1. Environmental Impact of Indonesian Crude Palm Oil Industry
Environmental Impact of Indonesian Crude Palm Oil Industry
Abida Muttaqiena
2012
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2. Environmental Impact of Indonesian Crude Palm Oil Industry
Environmental Impact of Indonesian Crude Palm Oil Industry
Crude Palm Oil (CPO) is extracted from the fruit of palm oil tree, or ‘Kelapa Sawit’ in
Indonesian language. This cheap priced oil has many uses; for cooking oil, ingredients of food
and dietary products, and as raw material for biofuel (United States Department of Agriculture,
2007). Campaigns for sustainable living led to the raising demand of biofuel in the past years,
contribute largely to accelerate the expansion of Palm Oil Tree plantation in Southeast Asia,
particularly Indonesia.
CPO gives the biggest outcome of all plantation production in Indonesia, amounted to
13.872.602 ton from 4.888.000 ha planted area on 2009 (Badan Pusat Statistik Republik
Indonesia, 2012). CPO plantation and refinery are held by the Government, smallholding
plantation and big companies such as PT Astra Agro Lestari, Bakrie Group, Cargill, and others.
Indonesia is also one of the world’s major producers of Crude Palm Oil (CPO) along with
neighbor country Malaysia. United States Department of Agriculture (2007) showed impressive
figures on Indonesia’s CPO industry and concluded that Indonesia has all the right factors to
continue to lead the world in CPO production.
However, CPO industry has raised some red flags in global eyes due to the danger it
represents toward the sustainability of tropical rain forests and animals that inhabit them. A part
of CPO demands came from the desire for more sustainable energy, but if its production
endangers environment, then it defeats the purposes. In the circumstances, it is interesting to
analyze the impact of Indonesia’s CPO industry on the environment and the government’s
reaction to the matter.
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3. Environmental Impact of Indonesian Crude Palm Oil Industry
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The Impact of Indonesia’s CPO Industry on the Environment
The use of forest for Palm Oil plantation impedes the use of forest to maintain
environmental balance and biodiversity. Deforestation resulted from Palm Oil plantation
expansion is an inevitable outcome from CPO industry’s growth. In Indonesia, the fastest
deforestation happened in Borneo and Sumatra where Palm Oil plantation mainly exists. The
Economist (2010) reported that between 1967 and 2000 Palm Oil cultivation area expanded from
less than 2,000 square kilometers to more than 30,000 square kilometers. The loss of forests
made its inhabitants escapes to the nearby neighborhood and made it difficult for them to survive.
The threat of CPO plantation toward orangutan species in Borneo (both Indonesia and Malaysia
half of the island) and rare Sumatran tiger (Indonesia) are some of the most quoted
environmental damage in global news reports.
Greenpeace (2007) also mentioned that CPO industry activities contribute 4 percent to
global emissions. These emissions were direct outcome from a number of forest fires that are
said to be caused by smallholders and companies who attempted to expand their plantation by
setting fire to clear the forest from trees and animals. It brings up irony where on one hand
biofuel is hoped to reduce emissions, but on the other hand the effort to produce biofuel from
Palm Oil resulted in more emissions than what biofuel remove.
The Government of Indonesia on the Environmental Impact of CPO Industry
Indonesia joined Roundtable on Sustainable Palm Oil (RSPO) in the effort to set
standards of sustainable products in the CPO industry and coordinate implementation of the said
standards. Beside of that, the government also built its own standards in the shape of Indonesia
Sustainable Palm Oil guide (Departemen Pertanian Republik Indonesia, 2011). The guide breaks
down procedures of certifications and qualifications that are mandatory for every Palm Oil

4. Environmental Impact of Indonesian Crude Palm Oil Industry
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plantations in Indonesia. The guides are based on a number of law and regulations released by
the parliament and a number of ministries.
Through the guide, it was hoped that CPO industry will put more concern on its impact
toward environment and discourage plantation owners and companies to do illegal deforestation.
However, The Economist (2011) claimed that it is difficult to push CPO industry to abide the
law, be it international law as represented by RSPO or Indonesian law. Companies that used
CPO products such as Unilever and Nestle have no choice of supplier, because one way or the
other almost every supplier (in this context, smallholding plantation and big companies) is
infringing the law.
Environmentalist groups such as Greenpeace demanded the Government of Indonesia to
put a moratorium on Palm Oil plantation expansion. But it is not a viable solution in the long run,
because Palm Oil has became a crucial commodity in the international market which is needed to
make many products, from cooking oil, margarine, soap, confectionery, biofuel, and others.
What should be done to counter environmental impacts of CPO industry is raising
citizen’s awareness toward the impact that CPO industry has on environment and promote a
sufficient incentives for industry player who fully abide the law. In addition, there should be hard
punishments or big fines for smallholders and companies who violate the law. The lack of
punishment and rampant bribery are two major factors that should be eradicated to enforce both
RSPO and ISPO.
From above explanation, we can conclude that CPO industry has some negative impact
on environment and much need to be done to address environmental impact of CPO industry in
Indonesia, because the existing regulations have not showed significant result as expected.

5. Environmental Impact of Indonesian Crude Palm Oil Industry
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References
Badan Pusat Statistik Republik Indonesia. (2012). Perkebunan. Statistics Indonesia. Retrieved
from http://www.bps.go.id/menutab.php?tabel=1&kat=3&id_subyek=54
Departemen Pertanian Republik Indonesia. (2011). Pedoman Perkebunan Kelapa Sawit
Berkelanjutan Indonesia (Indonesian Sustainable Palm Oil/ISPO). Retrieved from
http://ditjenbun.deptan.go.id/perbenpro/images/Pdf/kebijakan/lamp1ispo.pdf
Greenpeace. (2007). Palm Oil: Cooking the Climate. Retrieved from
http://www.greenpeace.org/international/en/news/features/palm-oil_cooking-the-climate/
The Economist. (2010). The Other Oil Spill. Retrieved from
http://www.economist.com/node/16423833?story_id=16423833
United States Department of Agriculture. (2007). Indonesia: Palm Oil Production Prospects
Continue to Grow. Retrieved from
http://www.pecad.fas.usda.gov/highlights/2007/12/Indonesia_palmoil/