The European Union, as the member of Annex I created in post UNFCCC, has committed to reduce CO2 emission by developing bioethanol and biodiesel for transportation due to the increasing demand for fuel. The natural-based fuel has been publicized as an effective way to reduce air pollution from the existing means of transportation or other vehicles. However, on the economic perspective, the usage of natural-based fuel intended to avoid high cost production because radically shifting the usage of water-based fuel or solar-based fuel for vehicle’s fuel.
Due to the commitment to reduce CO2 emission, the European Union has brought the mechanism to minimize fossil fuel consumption. The EU has taken several channels for energy diversification, internal energy market creation, and energy stockpiling. The EU efforts have been pushed after series of energy supply interruption started from Chernobyl accident up to the current Russia-Ukraine price conflict on natural gas.
Despite the high consumption on fossil fuel, the feasible long term of energy supply to the EU was developing biofuel. Regarding this, the EU intends to increase the production of bio-fuel among member countries by establishing several directives to support the development of biofuel. Those policies are Directive 2009/28 on Renewable Energy, EU Climate, and Energy Package, and Directive 2003/96 on Taxes and Common Agricultural Policy (CAP).
EU Renewable Energy Policy
Biofuel policy was first introduced by the EU through directive on the promotion of the use of biofuels or other renewable fuels for transport (2003/30/EC). The purpose of the policy was to mitigate the impact of energy usage mainly fossil fuels to the increasing of climate change. The policy aimed to increase the use of biofuel in the transportation sector started from 2 percent in 2005 up to 5.75 percent in 2010. However, the policy was not exhaustive since the use of biofuel were doubled between 2003-2005 and has not met the target of 2 percent 2005. It reached only 1.4 percent of total use of biofuel.
Later on 2006, the EU had issued Strategy for Biofuels based on Biomass Action Plan to include six strategies for developing of biofuel within the EU and developing countries. On these strategies, the EU Commission emphasized the importance of compliance to national targets on biofuel use and its production by using sustainable raw materials. In order to meet this target, the EU issued Green Paper that aims to reduce climate change by promoting the use of renewable and efficient energy to improve competitiveness within EU internal energy market. Furthermore, the Green Paper purposes to securitize energy supply by establishing better coordination among EU member states.
The EU later issued renewable energy roadmap in 2007 by targeting 20 percent of total energy usage in 2020 with a minimum of 10 percent use of biofuel on the transportation sector. The legal aspect of renewable energy roadmap has been shifted from voluntary up to legally binding and mandatory within EU member states. The targets of renewable energy roadmap related to the use of renewable energy due to the increasing of CO2 emission by (a) reducing 20 percent of total energy consumption in 2020 to be more efficient, (b) applying 20 percent of renewable energy use to total energy consumption in 2020, and (c) applying 10 percent of bio-fuels use for transportation sector in 2020.
Furthermore, the EU Commission proposed a legislative package in January 2008 to implement the above targets that have been filed in March 2007. The legislative package was legally binding by the EU leaders and Parliament in December 2008 that later known as Climate and Energy Package that has been enacted in April 2009 or 20-20-20 targets. The legislative package was not only to meet the target for renewable energy within the EU but also to meet the EU’s obligation to Kyoto Protocol and further global environment negotiations. The new legislative package generates the EU to use the second generation of biofuel that derived from agricultural products and their remaining reserves in order to stabilize chain of food or forest.
Meanwhile, the EU set the 2009/28 directive to meet the target of 10 percent use of biofuel on the transportation sector as a threshold to reduce green house effect up to 35 percent that was expected in 2017 and its sustainability. The criteria of sustainability will have an impact to develop the biodiesel derived from palm and other crops as well as biofuel products resulting from environmental friendly and sustainable production. As the 2009/28 directive is legally binding to the EU member states, it applies to each member states to meet the target for renewable energy and affects other states mainly the EU’s trading partners on vegetable oil and biodiesel such as Indonesia, Malaysia, and Brazil.
The Impact of EU Renewable Energy Policy
Even though the 2009/28 was legally binding, the EU faced several problems to expand biofuel production such as the following. First, high cost production related with the high price of internal feedstock mainly rapeseed oil which was highly demanding for biofuel production process within Europe. Second, the EU through the Common Agricultural Policy (CAP) gave a limitation to the farmers to fully develop their land by giving 10 percent of their productivity for CAP benefit. Third, the fact is palm oil as source of bio-diesel grows best in the tropical-based countries, therefore the EU has targeted several countries such as Brazil, Malaysia, and Indonesia, as potential suppliers for biofuel.
In the case of Indonesia, in term of economic, the EU plan to develop biofuels to be a special market regarding the fuel demand. Currently, Indonesia has used 7.9 million hectares land to produce biofuel and bioethanol which were extracted from cassava, sugar cane, and sweet sorghum, as well as biodiesel made from castor, crude palm oil, and jathropha. In 2015, the biofuel industry will be developed by increasing 10 million hectares for crude palm oil (Jakarta Post, 04/09/2010). Indonesia is the largest palm oil producer in the world by producing 17,37 million tonnes CPO from 6,78 hectares land. Palm oil has been an export commodity for national economy and up to 2007, the export of CPO reached up to $ 7,8 billion and able to absorb 3,3 million labour (Portal Nasional RI).
However, the developing of biofuel has negative feedback in the realm of land transformation and monoculture plantation technique. Land transformation problem lies on deforestation because forest is the most prominent land in the wide area that was highly demanded for particular farm. Deforestation will also increase CO2 emission because of forest burning. Furthermore, the problem of monoculture plantation technique lies on its high potential to disturb sustainability of the existing ecosystem.
As a second largest palm oil exporter to the EU, the Renewable Energy Policy will have impacts to Indonesia. Furthermore, the EU Renewable Energy Policy will have negative impacts toward Indonesian forestry as if it is not responded wisely by the Indonesian stakeholders. The growing of palm oil plantation to fulfil the EU’s demand for biofuel will increase forest conversion into palm plantation massively that lead to deforestation. As a consequence, there were approximately 200 thousand hectares per year or 44 percent of total Indonesian forest were cleared for palm oil plantation. Therefore, one of the causes of ecosystem damage and deforestation in Indonesia could not be avoided. (Rosita Dewi)