• With the Indonesian government refusing to renew a three-year ban on issuing licenses for new oil palm plantations, experts are warning of a deforestation free-for-all.
• The end of the moratorium means companies can once again apply to develop new plantations, including clearing forests to do.
• This coincides with a rally in the crude palm oil price due to tightening supply, which activists say portends a possible surge in deforestation.
• According to one analysis, rainforests spanning an area half the size of California, or 21 million hectares (52 million acres), are at risk of being cleared now that the moratorium is no longer in place.

BALI, Indonesia — Palm oil industry watchdogs are warning of a possible surge in deforestation across Indonesia, after the government ended a three-year freeze on issuing permits for new plantations.

The moratorium had been imposed in 2018, ostensibly to allow the industry to address the problems of deforestation, land conflicts and labor abuses long associated with palm oil. It expired at the end of September, and although the government had the option of renewing it, it chose not to do so.

This means palm oil companies can now apply for licenses for new plantations. And with the price of crude palm oil (CPO) hitting a record high in early October due to tightening supply, the pent-up demand to establish new plantations could pose a serious threat to Indonesia’s forests, said Bony, a researcher at the NGO Sawit Watch.

“They were just waiting for the tap to be turned back on,” he said as quoted by local media. “They’ve been waiting a long time, so now that the opportunity is here, it’s going to be speeded up.”

Without the moratorium in place, Indonesia could potentially lose an area half the size of California to make way for new plantations. That’s according to calculations by the NGO Forest Watch Indonesia (FWI), which carried out an analysis of government maps showing lands that are deemed suitable for conversion into plantations.

The total area identified by the government covers 47.3 million hectares (117. million acres), of which intact forests account for 21 million hectares (52 million acres), said FWI researcher Mufti Fathul Barri.

“If these forests are granted permits [by the government], more than 21 million hectares of forests will disappear,” Mufti said.

He added that a tenth of this forest area consists of customary lands that are home to Indigenous peoples, who now face the prospect of losing their home to oil palm plantations.

“So social conflicts will keep arising because the previous ones haven’t been resolved either,” Mufti said. “And when this [palm oil expansion] is executed, of course [land conflicts] will increase.”

‘Very harmful to our forests’

At the end of 2020, Indonesia had 95.6 million hectares (236 million acres) of forest cover remaining, or 50.9% of the country’s total land area. If all 21 million hectares of forests that the government deems suitable for conversion into oil palm plantations are cleared, the country’s total forest cover will drop to just a third of its total area.

It will also kill any chance of Indonesia achieving its stated target for reducing greenhouse gas emissions. Deforestation and land use change account for the bulk of the country’s emissions, and its reduction target acknowledges this, calling for limiting the deforestation rate to 325,000 hectares (803,000 acres) per year, or a total of 3.25 million hectares (8 million acres) by the 2030 deadline for the Paris Agreement.

Mufti said this would make a major expansion of oil palm plantations “very harmful to our forests.”

Reason to renew the moratorium

For now, Indonesia is home to the world’s third-largest expanse of tropical rainforest, after Brazil and the Democratic Republic of Congo. But for decades it has been losing this forest to commercial development, including mining and agriculture — primarily oil palm.

An average of 450,000 hectares (1.1 million acres) of new oil palm plantations were established every year in Indonesia from 1995 to 2015, according to a 2017 study. And while most plantations are developed outside forest areas, this expansion still contributed an average of 117,000 hectares (289,100 acres) of deforestation each year.

In the past five years, the deforestation rate has declined by 90%, from more than 1 million hectares (2.5 million acres) year in 2016, to a historic low of 115,459 hectares (285,305 acres) in 2020.

The government has attributed the achievement to various policies, including the palm oil moratorium.

This is all the more reason, experts say, why the moratorium should have been renewed: so that the country’s remaining forests could be protected and the huge amount of carbon stored in them could be prevented from being released into the atmosphere.

“Even though the deforestation rate is declining, some regions with lots of forests remaining, such as in Papua, still record high rates of forest loss,” said Mouna Wasef, a researcher at the environmental NGO Auriga. “If the moratorium is stopped, they [companies] will be eyeing regions which still have large forest cover.”

Bayu Eka Yulian, head of politics and policy at the Bogor Institute of Agriculture’s (IPB) land studies center, said the end of the moratorium marks a victory for plantation companies as they can now resume expanding at the expense of forests.

“Our forests will disappear once again,” he said.

Eddy Martono, the head of GAPKI, the national association of palm oil companies, said the end of the moratorium doesn’t necessarily mean a rush to develop new plantations. He said GAPKI member companies are instead focused on increasing productivity in their existing concessions rather than expanding.

However, Maruli Gultom, an adviser to GAPKI and chairman of the board at palm oil company PT Provident Agro, said he welcomed the end of the moratorium, calling the policy “a historical mistake” imposed as a result of pressure from outside the country.

“So it’s clear that we don’t want the moratorium to be continued,” he said as quoted by local media.

Holding out … to an extent

For now, however, there won’t be a free-for-all expansion of oil palm plantations into forests, according to the Ministry of Environment and Forestry, which is responsible for delisting forest areas so that they can be turned into plantations.

With the moratorium expired, said Ruandha Agung Sugardiman, the ministry’s director-general of planning, “the minister has determined that there will be no issuance of new permits to release forest areas for palm oil plantations.”

Speaking during an online press conference, he said converting forests into new plantations isn’t necessary as long as producers can focus on boosting the yields of their current estates instead.

“We already have 16 million hectares [40 million acres] of oil palm plantations, 3.4 million hectares [8.4 million acres] of which are in forest areas,” Ruandha said. “That’s what we have to improve [the productivity of]. Don’t open up forest areas [for plantations] anymore, especially areas that still have good [forest cover].”

But unlike the moratorium, this stance by the environment ministry isn’t enshrined in any regulations, and neither the current government nor future administrations are legally obligated to deny new permits for forest conversion.

That means there’s nothing stopping companies from applying for new licenses and expanding into the country’s forests, according to Grita Anindarini, program director at the Indonesian Center for Environmental Law (ICEL).

“The commitment of the environment ministry to continue not issuing new forest conversion permits even though the moratorium has ended should be appreciated,” she told Mongabay. “But it would be better if this good commitment is accompanied by legal instruments like a presidential instruction, which will strengthen its position.”

The government has argued that even with the moratorium now expired, there’s already a new law in place to serve as a legal basis for improving the management and sustainability of the palm oil industry.

The law in question is the so-called omnibus law on job creation, which ushered in a wave of deregulation across a range of industries, including rolling back environmental protections and incentivizing extractive industries such as mining and plantations, in an attempt to cut red tape and spur investment.

While the omnibus law caps the size of new oil palm plantations at 100,000 hectares (247,000 acres), it doesn’t include a freeze on new plantation licenses and it doesn’t place a limit on how many new plantations are allowed per year.

Teguh Surya, founder of environmental NGO Madani, said the omnibus law doesn’t explicitly prohibit the palm oil industry’s expansion into areas designated as forests. As such, he said, the government can rezone these areas as non-forest areas so that they can be cleared for plantations.

Data from Madani show there are 5.7 million hectares (14.1 million acres) of natural forests earmarked for industrial activities, which means they’re eligible to be licensed out for plantations in the future if the environment ministry approves a forest conversion permit. There are an additional 6.9 million hectares (17 million acres) of standing rainforest on land that’s zoned as non-forest area, for which companies do not require a conversion permit to start exploiting.

Local governments taking the lead

Even if the environment ministry sticks to its promise not to issue new forest conversion permits, other government agencies can still issue oil palm licenses for non-forest areas, Grita said.

But at the local level, some district governments have gone a step further than the national government and enshrined the terms of the moratorium in their bylaws. The districts of Sanggau and Gorontalo, on the islands of Borneo and Sulawesi, respectively, have done just that. Both districts are members of the Sustainable Districts Platform (LTKL), a group of nine district governments taking collective action toward greater sustainability.

The government of Sorong district in West Papua province, which is not a member of the LTKL, is another that’s committed to not issuing new plantation permits. Salmon Samori, the head of the Sorong investment board, said he hadn’t noticed any companies applying for new palm oil licenses, nor signs of companies preparing to do so now that the moratorium has ended.

Gita Syahrani, executive director of the LTKL secretariat, said that while these individual commitments are welcome news, they don’t detract from the fact that the end of the moratorium is still a major setback.

“It’s still a loss because there’s no instruction from the president [to not issue new permits],” she told Mongabay.

That said, there are still some policies that could support sustainability efforts in the palm oil industry, such as the central government’s national action plan on sustainable palm oil and its guidance for sustainable plantations, Gita added.

“So even though the moratorium has ended, let’s monitor these two other instruments so that they’re implemented,” she said.

Commitment to ending deforestation under question

The end of the moratorium came two weeks after Indonesia terminated a long-standing agreement with Norway, in which the latter had agreed to pay $1 billion to Indonesia to reduce its emissions from deforestation.

In 2019, the Norwegian government agreed to pay 530 million krone ($56 million) for Indonesia preventing the emission of 11.23 million tons of carbon dioxide equivalent (CO2e) by reducing its deforestation rate in 2017.

When the announcement was made, environmentalists lauded it, saying that the funding serves as both an acknowledgement of the years of efforts to reach this stage of protecting the country’s forests, and an incentive to boost measures to combat deforestation.

However, Norway didn’t made the payment as it had set additional requirements that had not been established in the agreement, including requests for Indonesia to show documentation on how the money would be spent and other operational details.

The termination of the deal took many green groups by surprise as they had high hopes that the cooperation between Indonesia and Norway could help the former in combating deforestation.

FWI’s Mufti said the timing of the events — the end of the moratorium and the scrapping of the $1 billion deal with Norway — indicated that the two might be connected, with both opening up more opportunities for companies to expand into Indonesia’s forests.

“This is still based on assumption, but if we’re looking at the trends that have been happening so far, it’s very likely that all these are connected,” Mufti said.

Hariadi Kartodihardjo, a forestry policy lecturer at the Bogor Institute of Agriculture, agreed that both developments cast doubts over Indonesia’s commitment to curb deforestation and combat climate change.

“If [the agreement with] Norway is terminated, and then the moratorium is also stopped, there’s a negative image in that context,” he said. “When the cooperation with the international [community] ends, the commitment turns out to be weak.”

Mufti pointed to a third development: the omnibus law on job creation, which he said was in parallel paving the way for the plantation industry to expand by rolling back environmental protections and incentivizing the extractive industries.

For instance, the omnibus law gives plantation companies operating illegally in forest areas a grace period of three years to obtain the proper permits to legitimize their operations. The same lawmakers that passed the omnibus bill into law have called this provision “a whitewashing” of criminal activity.

“We’ve already lost ever since the omnibus law was passed,” Mufti said. “So now we’re only waiting for surprises that are related to natural resources. First is the cancellation of the agreement with Norway. Next is the end of the palm oil moratorium. We don’t know what surprises will be next.”

Hariadi said it’s now up to the government to prove that it’s committed to tackling deforestation and mitigating climate change.

“After we broke up with Norway, we have to commit [to ourselves],” he said. “Our independence is proven by making sure that the management of the palm oil industry remains a concern. And we’re waiting for affirmative policies and those don’t have to be dictated by anyone else in order for them to be carried out.”

Banner image: Oil palm plantation in Riau, Sumatra, Indonesia. Image by Rhett A. Butler/Mongabay.