RSPO RT12: New GHG emission reduction scenarios for new plantings - Bumitama and Musim Mas case studies (update 1a)

RSPO’s Melissa Chin reported on how RSPO growers need to predict emissions from different development scenarios for their new plantings. In 2013, the Emission Reduction Working Group (ERWG) was set up to help companies on this new reporting requirement. The policy to assess and predict GHG emissions reductions is in RSPO Principles & Criteria 7.8. Previously required from 1 Aug 2014 it was shifted to mandatory on 1 Jan 2015. This needs to be submitted alongside New Planting Procedure but it is not required to be made public until 1 Jan 2017. Soil carbon, above and below ground carbon estimates are needed.....

Bumitama case study. GAR and Wilmar are key buyers requiring high carbon stock (HCS) policies. A mid-year discussion led to a pilot HCS assessment using their approach. Bumitama then committed on 12 September 2014 to use this on four target concessions. Concession KML had a base case plantable area of about 12,500 but was reduced to about 6,600 hectares on the planting scenario chosen. There was no planting on any peat (base case was plant on shallow peat). Significant areas of rubber agro-forest areas could not be replanted due to social or adat issues. Local people expect economic projects. They lodged a complaint with the regional government or Bupati on why Bumitama stopped development. Aidenvironment was hired to work on participatory mapping. Locals wanted to stop access to this NGO until it was shown that it worked with company to develop the land. The halt in development it also gave third parties the opportunity to approach the masyarakat to suggest a takeover so that the concession could return to faster development and some 1,000 hectares was “lost.” Planting less than the 12,500 hectares originally envisaged also means that the 20 percent area for plasma smallholder development is so much smaller under the new planting scenario. Bumitama has also engaged a lawyer to check if it has the right to conserve area to reforest. Can this really be done. However, a company still has to be run economically.....

 

 

Musim Mas case study. Using the RSPO carbon assessment procedure, Musim Mas presented two case studies, one already in new planting status and one before planting. The result was a GHG balance of -5 and -14 respectively; which means there was carbon sequestration from the two new estates. The company notes that the current default value for conservation areas is nil, but this is being reviewed and this will likely add on to the positive carbon balance of planting oil palm. Musim Mas is also doing mill POME biogas capture for all its facilties. These efforts will minimise its net GHG emissions........

 

Note: inherent in the RSPO carbon assessment are default values that will steer new plantings to minimize planting in high carbon stock areas. Under RSPO's Palm GHG calculator for carbon assessment, the default value for the oil palm is not bad ie. well above the earlier much bandied 35tC/ha measure. It is 55-65tC/ha of above and below ground carbon over a 25 year cycle.

 

Indonesia haze (update 4): KPK questions former Forestry Minister in Riau-Annas case

17 November 2014: KPK questions former Forestry Minister in Riau-Anas case

MPR speaker faces more questions from KPK BY Indra Budiari, The Jakarta Post, Jakarta | Headlines | Thu, November 13 2014, 9:23 AM; "For the second day in a row, the Corruption Eradication Commission (KPK) grilled People’s Consultative Assembly (MPR) Speaker Zulkifli Hasan, this time as a witness in a graft case involving Riau Governor Annas Maamun.... The KPK on Wednesday questioned Zulkifli, a former forestry minister, for his alleged role in the land-conversion permit abuse case implicating Annas.... On Tuesday, Zulkifli was grilled for 10 hours for his alleged role in issuing permits for a luxury housing project in Bogor, West Java.... “Their questions were very technical. I also explained spatial planning — I told them that spatial planning in Riau was an achievement because the project was incomplete for a very long time,” Zulkifli told reporters.... Zulkifli, a member of the National Mandate Party (PAN), expressed his disappointment at being dragged into a corruption case so soon after leaving office.... He also denied approving the land-conversion proposal filed by Annas.... “It’s true that the governor submitted a request for a land-conversion permit to me, which I then gave to my inspector general for consideration, but he never gave me his opinion of the permit, so it did not have my approval,” Zulkifli said.... The antigraft body arrested Annas and palm-oil businessman Gulat Manurung, who was also chairman of the Indonesian Oil Palm Farmers Association’s (Apkasindo) Riau chapter, in a raid on Sept. 27...." http://www.thejakartapost.com/news/2014/11/13/mpr-speaker-faces-more-questions-kpk.html


13 October 2014: Third Riau governor implicated in graft

KPK charges Riau governor in land conversion case by Rizal Harahap, The Jakarta Post, JAKARTA/Pekanbaru | Headlines | Sat, September 27 2014, 9:38 AM;
http://www.thejakartapost.com/news/2014/09/27/kpk-charges-riau-governor-land-conversion-case.html; "After hours of questioning, the Corruption Eradication Commission (KPK) has named Riau Governor Annas Maamun and palm-oil businessman Gulat Manurung graft suspects... during the operation, the KPK had also confiscated S$156,000 (US$122,450) and Rp 500 million (US$41,500), which allegedly was to be given by Gulat, who was also chairman of the Indonesian Oil Palm Farmers Association (Apkasindo) Riau chapter, to Annas. The money was allegedly given to the governor so he would issue a land-conversion permit for Gulat’s oil palm plantation business.
Meanwhile, KPK deputy chairman Bambang Widjajanto explained that Gulat had a 140-hectare oil palm plantation in Kuantan Singingi regency in Riau, which had been planted in an industrial forest area (HTI). Gulat then asked for the governor’s help to convert the area into a non-forest area, or area for other use (APL).... “As well as for the land-conversion permit, we suspect money was also given to the governor to facilitate Gulat’s future projects in Riau, but we will check that,” Bambang said.
Annas is the third consecutive Riau governor implicated in a graft case. The previous two governors, Rusli Zainal and Saleh Djasit, have already been sentenced in separate graft cases. Rusli was sentenced to 10 years’ imprisonment for his role in the Pelalawan forestry permit and Riau National Games graft cases, while Saleh got four years for his involvement in the procurement of fire-fighting
vehicles...."
29 September 2014: landmark peat fire fines

Indonesian government files lawsuits against companies that set forest fires by Hans Nicholas JongThe Jakarta Post/Asia News NetworkSaturday, Sep 27, 2014; The Environment Ministry has filed lawsuits against several agroforestry companies suspected of starting forest fires in Sumatra.
The ministry is taking legal action against seven agroforestry companies that allegedly set fire to forest areas in Riau in 2013. The ministry's law enforcement deputy, Himsar Sirait, said on Friday that the dossiers had been submitted to the Attorney General's Office (AGO). "We are currently completing the support documentation required by the AGO," Himsar told The Jakarta Post.
The seven companies, which are only referred to by their initials, are palm oil companies PT BHS, PT JJP and PT LIH, and industrial forest companies PT RUJ, PT SRL, PT SPM and PT BBH.
The ministry is also investigating allegations that two palm oil companies, PT TFDI and PT TKWL, and an industrial forest company, PT SGP, started forest fires earlier this year.... Between 2012 and now, the ministry has investigated and filed lawsuits against a number of Sumtra-based plantation companies. In 2012, the ministry filed lawsuits against PT Kallista Alam and PT Surya Panen Subur (SPS). Meulaboh District Court found Kallista Alam guilty of burning peatland in the Leuser conservation area in Nagan Raya regency, Aceh, and ordered the firm to pay a fine of US$30.5 million (S$38.8 million). The ministry, however, lost on Thursday the lawsuit it had brought against PT SPS - for allegedly burning peatland in Tripa Swamp, also in Aceh - which was heard at the South Jakarta District Court..." http://news.asiaone.com/news/asia/indonesian-government-files-lawsuits-against-companies-set-forest-fires#sthash.Ih8sCBsN.dpuf

Indonesia, Malaysia drawing up haze agreement by Zubaidah Nazeer, The Straits Times/ANN, Jakarta | World | Fri, September 26 2014, 11:42 AM; http://www.thejakartapost.com/news/2014/09/26/indonesia-malaysia-drawing-haze-agreement.html;
Indonesia and Malaysia are working on a bilateral pact to better tackle the annual transboundary haze, according to officials from both countries who said the tie-up would focus on better fire prevention and tougher penalties for open burning on peatland. Discussions for the memorandum of understanding (MoU) began a month ago on the sidelines of an Asean inter-ministerial meeting, and picked up pace after Indonesia's Parliament finally agreed last week to ratify an Asean haze pact....An aide to Malaysian environment minister Palanivel Govindasamay said both countries had "basically agreed on" the pact. But both sides declined to say when they might sign off on it.'"We are looking at exchange of information and experiences but, importantly, establishing joint research focusing on fire prevention, not just combating a blaze," Arief Yuwono, Indonesia's deputy minister for Environmental Degradation Control and Climate Change, told The Straits Times yesterday... The aide to Palanivel added that the information being exchanged would include details on many Malaysian companies operating in Indonesia, especially those in the palm oil industry.... The pact would also raise the fines for those caught carrying out open burning on peatland, the root cause of forest fires that spark off the annual haze. Officials declined to give specific figures for the new penalties...."


23 September 2014:

Khor Reports: Are there are any good investigations of possibility and cost of raising the water table in the peatsmog haze prone areas. We met the folk at Singapore Institute of International Affairs yesterday, and had a good chat on this as well as the efforts to use remote sensing to track fires and identify its culprits (you will recall that the Indonesian courts have started to take a "negligence" approach to this matter). Since the problem has been going on so many years, might a multi-prong, approach help? While NGO action has helped to publicize the problem and they have helped to get large plantations to agree to halt any development on peat (and stop buying from those still developing on peat), the next stage seems tougher and more scientifically technical. Thanks in advance to readers for any information on the question - how can we really stop / reduce the haze problem?

This ratification comes hot on the heels of a landmark ruling on peat fire where a charge of negligence results in a fine of almost S$2 million being handed down. I posted on this earlier, but repeat it here: http://news.asiaone.com/news/asia/malaysian-firm-fined-executives-get-prison-role-forest-fires; "...The Pelalawan District Court in Riau sentenced ADEI general manager Danesuvaran KR Singam to a year in prison and the option of paying Rp 2 billion (S$210,000) or serving an additional two months in jail for violating Article 99 (1) of the 2009 Environmental Protection and Management Law. "The defendant was negligent in his supervisory role of the estate. He should have actively prevented irresponsible parties from slipping into the estate and setting the fires," presiding judge Donovan Pendapotan said. Danesuvaran, however, was not sent directly to prison after the hearing. "We need to wait for a final and binding verdict from the Supreme Court before sending the defendant to prison," said prosecutor Banu Laksmana, adding that the prosecutors would appeal the sentence. The court found ADEI guilty of violating the same article in the 2009 law and handed down a Rp 1.5 billion fine or see its director, Tan Kei Yoong, serve five months in jail. The court also ordered ADEI to pay an additional Rp 15.1 billion to repair the environmental damage caused by the forest fires...." **Total fines and repair charges for the fire = Rp 2 + 1.5 + 15.1 billion = Rp 18.6 billion or about SG$1.95 million?


Editorial: Overdue haze treaty; The Jakarta Post | Editorial | Thu, September 18 2014, 8:16 AM
"The House of Representatives untypically changed its role from villain to hero on Tuesday when it ratified the ASEAN Agreement on Transboundary Haze Pollution. The belated move has saved Indonesia from international mockery, if not condemnation, for its failure to rein in the seasonal forest fires that have endangered the lives of its own people and those in neighboring countries.
For a decade the lawmakers, without any sense of culpability, refused to endorse the government’s acceptance of the pact for fear of possible infringement on Indonesia’s sovereignty, given the involvement of foreign, parties to the treaty in a joint task force that would fight fires inside Indonesia. Such a nationalist, if not xenophobic, mindset has led to a protracted, choking haze in the provinces of Sumatra and Kalimantan, home to oil palm plantations and logging activities. The disaster was recurring, which simply proved that Indonesia could not address the forest fires alone.
Tuesday’s unanimous approval by the House therefore marked an end to the politicians’ insensitivity to the suffering of many people..." http://www.thejakartapost.com/news/2014/09/18/editorial-overdue-haze-treaty.html

RI ratifies haze treaty by Margareth S. Aritonang, The Jakarta Post, Jakarta | Headlines | Wed, September 17 2014, 9:17 AM; "Indonesia has officially adopted a decade-old regional haze treaty following pressure from neighboring countries over forest fires on the islands of Sumatra and Kalimantan. A House of ReI presentatives’ plenary meeting on Tuesday endorsed the ratification of the ASEAN Agreement on Transboundary Haze Pollution, which obliges Indonesia, as one of the member states, to actively involve itself in efforts to mitigate air pollution, both nationally and through intensified regional and international cooperation. “Ratifying the [regional haze] agreement is the appropriate measure for Indonesia to prove its integrity as well as step up its role in solving problems in the region,” Environment Minister Balthasar Kambuaya told the meeting.
“As a country with one of the largest areas of forest, this will help Indonesia deal with pollution in the future,” he added. Indonesia was the only ASEAN country left to ratify the agreement, having signed the pact in 2002 along with the other member states. The agreement was formulated as a response to an environmental crisis that hit Southeast Asia in the late 1990s, which was mainly caused by slash-and-burn clearance for agricultural purposes in Sumatra and Kalimantan...."
http://www.thejakartapost.com/news/2014/09/17/ri-ratifies-haze-treaty.html

Text your say: Addressing the haze  | Readers Forum | Mon, September 22 2014, 9:33 AM
Your comments on the ratification of a decade-old regional haze treaty by the House of Representatives, following pressure from neighboring countries over forest fires on the islands of Sumatra and Kalimantan: This is only one of many steps to protect our forests and the people of neighboring countries... http://www.thejakartapost.com/news/2014/09/22/text-your-say-addressing-haze.html.

China market (update 2): To cap emissions and have 20% energy from zero-emission sources by 2030

12 November 2014: China to cap emissions and have 20% energy from zero-emission sources by 2030

China and US strike deal on carbon cuts in push for global climate pact by Lenore Taylor, Guardian Australia political editor, Tania Branigan in Beijing and agencies, theguardian.com, Wednesday 12 November 2014 06.54 GMT; "Barack Obama aims for reduction of a quarter or more by 2025, while Xi Jinping sets goal for emissions to fall after 2030...The United States and China have unveiled a secretly negotiated deal to reduce their greenhouse gas output, with China agreeing to cap emissions for the first time and the US committing to deep reductions by 2025... The pledges in an agreement struck between President Barack Obama and his Chinese counterpart, Xi Jingping, provide an important boost to international efforts to reach a global deal on reducing emissions beyond 2020 at a United Nations meeting in Paris next year.... China, the biggest emitter of greenhouse gases in the world, has agreed to cap its output by 2030 or earlier if possible. Previously China had only ever pledged to reduce the rapid rate of growth in its emissions. Now it has also promised to increase its use of energy from zero-emission sources to 20% by 2030...." http://www.theguardian.com/environment/2014/nov/12/china-and-us-make-carbon-pledge

4 November: Macau Casino Revenue Drops Record 23% as Austerity Bites  By Billy Chan  Nov 4, 2014 1:29 PM GMT+0800; "Macau’s casino revenue plunged by the most since the city started monthly records in 2005, as China’s crusade against corruption prompted gamblers to cut back on lavish spending...."
http://www.bloomberg.com/news/2014-11-04/macau-casino-revenue-plunge-record-23-as-austerity-bites.html

1 November: anti-corruption hits demand?

Khor Reports: We recently spoke to China market specialists. The problem there is not just the shadow financing / LC problem (the big players still have financing access). There is also significant concern of constrained demand growth as the China anti-corruption drive hits gifting in the food sector including restaurant meals and mooncakes. For example, it is noted that it was the first time in many years that "hairy crab" prices fell. China watchers point out that the country's oil & fats annual increase was in a higher range of 1.5-2 million tonnes but it is now down to a 1 million tonnes increase. Do view Desmond Ng's presentation from the recent MPOC POTS KL conference which forecasts China palm oil demand for 2014 at 5.62 million tonnes, down from 2013 and the slowest since 2008, and from which the chart below is extracted. The recent peak of over 60% of palm oil imported by "traders" is also consistent with information from our chats with China-based traders in the middle of the year - they also mentioned the increased size of shipments by traders up to that point.

 

source: Latest development, challenges and outlook of palm oil market in China by Desmond Ng, MPOC Shanghai, POTS KL 2014, October 2014

  

Newslinks:

 Chinese govt officials told to shun mahjong Published on Oct 29, 2014; The commentary was the latest in a series of state-issued broadsides against official extravagance, as Chinese President Xi Jinping attempts to improve the Communist Party's image in response to widespread anger over endemic corruption. Chinese officials have held secret sauna parties and have been hiding alcohol in plastic water bottles as they seek to get around a crackdown on extravagance, according to the People's Daily last year. "Constant reports of saunas held at farm houses" were evidence of a growing culture of "low-key extravagance" that was damaging the new President's anti-corruption drive, it reported. The Chinese government on Monday issued a ban on private clubs in historical buildings and parks, which are often frequented by officials, state-run media reported. The campaign against graft has been blamed for falling sales of luxury items, and has hit business at expensive hotels and restaurants. - See more at: http://www.straitstimes.com/the-big-story/asia-report/china/story/chinese-govt-officials-told-shun-mahjong-20141029#sthash.xtRmSRYR.dpuf

Decrease in mooncake bribery: survey(Xinhua) 13:20, September 11, 2014; BEIJING, Sept. 11 -- More than half of respondents to a survey on subtle corruption during China's Mid-Autumn festival believe there has been less use of public funds to buy traditional snacks this year, according to results published on Thursday. Some 54.6 percent of those polled by the China Youth Daily felt that there had been a marked drop in spending of public funds on mooncakes, while 76.7 percent said they have noticed the top anti-graft body's ban on this practice. Where respondents have received mooncakes, 49.4 percent said they bought them themselves, 32 percent got them from relatives or friends, 27.4 percent from employers, 6.7 percent from clients, and 4.5 percent from their subordinates. http://english.peopledaily.com.cn/n/2014/0911/c90882-8781306.html  

Xinhua Insight: Who are the winners of China's anti-corruption drive? English.news.cn | 2014-10-14 21:56:01 | Editor: Fu Peng; Now after more than 22 months since late 2012, the campaign is still going strong and likely to continue. Tens of "tigers" above the ministerial level have fallen, including a former member of the Standing Committee of the Political Bureau of the Communist Party of China (CPC)Central Committee. Xinhua reported earlier this month that restaurant owners in several places have demanded local governments pay their debts, which accumulated in the form of IOUs and at the cost of taxpayers. Even the hairy crab, a high-end delicacy mainly enjoyed by government officials, saw its first price cut in 12 years in September and can now be easily bought by ordinary people. http://news.xinhuanet.com/english/china/2014-10/14/c_133716535.htm

The importance of logistics hubs?

Interesting news in metals commodity news is Malaysia new role as Brazil Vale's logistics hub in Asia. Vale spends US$1.4 billion in Lumut to build its new Asia port terminal at Teluk Rubiah, Perak in the Straights of Malacca. Valemax 400,000 tonne vessels are just huge! We had neighbours who are engineers from Brazil to help implement this project. Progesys notes that "the stockyard is designed to be able to handle 30m tons of iron ore annually and can be expanded to take a maximum capacity of 60m tons per annum." The purpose: the Brazilian giant seeks to erode its geographic disadvantage in supplying Australian customers as falling iron ore prices hurt producers' margins. Thus, the terminal is a competitive strategic move. Read more here:  http://khoryuleng.blogspot.com/2014/11/malaysia-as-brazil-vales-logistics-hub.html

Is this akin to what's happening in palm oil merchandising? The likes of Wilmar and Musim Mas have taken strategies to have terminals / bulking / capacity / logistics in key end use regions such as Africa (Wilmar noted to have bought / built / booked up capacities to better serve Africa buyers) and Europe (Musim's notable biodiesel acquisitions).

From key industry sources, it is notable to hear Malaysia earlier had an allocated multi-billion Ringgit budget to help build up joint terminal / bulking facilities in strategic locations. This didn't get off the ground on apparent commercial disinterest by private companies.

Malaysia palm oil is facing stiff competition from Indonesia palm oil for markets. On the latter's upstream expansion, it is inevitable that it gains market share. Key plantation groups and trader-processors are transnational businesses.

Research highlights by MOSTA for OFIC KL 2014

Tan Sri Augustine Ong of MOSTA highlights the following new research featured at OFIC KL 2014:

• Palm oil mill with zero effluent. Think of palm oil fruit as pulp processing.
• Obesity and the impact chain length and fatty acid position on health outcomes which places palm oil in good status akin to olive oil.
• Genome guided breeding.
• A Melbourne expert presents on mega sonics in palm oil milling.
• Biodiesel substitute, B100. A two year field trial with engine dissection shows better state than petrodiesel use.