What do we do about palm oil?

April 17, 2016 | Jim Lane

BD-TS-041816-palm-sm These days, palm oil plantations are about as popular, and popularly criticized for immorality, as a red light district.

Just about everyone who is anyone criticizes the trade in palm oil because of the sustainability trade-offs, yet as Cher once observed in her anthemic Gypsies, Tramps and Thieves, “every night night all the men would come around, and lay their money down.”

Perhaps the nadir for palm was a report in the Wall Street Journal that fingered Malaysian grower Felda for a series of migrant worker abuses on Malaysian plantations — with explosive charges from workers of human trafficking. “They buy and sell us like cattle,” a Bangladeshi worker was quoted in the report.

In the world of fuels, Neste Oil has backed away from palm oil in order to expand in the US market on more favorable terms, with palm’s lowly status after indirect land use change modeling factors are added to its greenhouse gas emission profile.

But we reported last year that Pertamina plans to invest $200 million with state-owned plantations company PTPN to develop palm oil plantations for biodiesel production. As the oil major has no agricultural experience, it will utilize mergers and acquisitions to gain experience and then will jointly manage the plantations further down the road.

Digest reader Jim Cogan points us to a report from the EU on the lan use impacts of biofuels consumption in Europe, released by the European Commission last month after a long delay. Cogan writes:

On March 10 2016 the European Commissioned was obliged to release an essential report on the land use impacts of biofuels consumption in Europe as determined by the Commission’s own policy on the matter. The Commission has had the report since the Summer of 2015. The report goes a long way to answering the question of how much better are biofuels for the environment than continued use of fossil fuels. In recent years the Commission has been sharply critical of conventional biofuels yet unable to produce evidence as to why. Reaching a fact based consensus on the matter is essential for transport decarbonisation for 2030.

So what are the implications of the report findings for EU and member state transport energy planners who require robust and practical guidance?

The target for 1st generation ethanol (for petrol blends) should be increased greatly over the current 7% as these fuels offer huge GHG savings over fossil fuels even after ILUC (land use change) is factored in…Bioethanol and biodiesel should not be lumped together as ethanol is much better than biodiesel…Palm oil must be banned (and not just in biodiesel, but in food and cosmetics too).”

The EU writes:

The total land use change caused by the EU 2020 biofuel mandate is 8.8 Mha (million hectares), of which 8 Mha is new cropland and the remaining 0.8Mha consists of short rotation plantations on existing cropland. From the 8.8 Mha, 2.9 Mha of conversion takes place in Europe by less land abandonment and 2.1 Mha of land is converted in Southeast Asia under pressure from oil palm plantation expansion, half of which occurs at the expense of tropical forest and peatland. The abovementioned 8.8 Mha is 0.6% of the total global crop area in 2012 of 1,395 Mha (FAO). This is around 4% of the total land area of Indonesia, or equal to the total land area of Austria.

On palm, the EU writes:

Conventional biodiesel feedstocks have high LUC effects compared to the direct emissions resulting from the biofuel production process, with very high emissions for palm oil (231 grams of CO2e per megajoule of biofuel consumed – gCO2e/MJ), high emissions for soybean oil (150 gCO2e/MJ) and 63 and 65 gCO2e/MJ for sunflower and rapeseed respectively; 69% of gross LUC emissions for palm oil is caused by such peatland oxidation after land conversion;

If peatland drainage in Indonesia and Malaysia were stopped, the negative greenhouse gas impact of land use change would reduce dramatically. This requires an effort either from the Indonesian and Malaysian governments, all palm oil using sectors (food, personal care products, biofuel) or, best of all, a combination of both. Whether by global action to stop unsustainable land conversion, or by local action to stop peatland drainage, our study shows that LUC values can be reduced by effective policies.

Strong thoughts indeed. The complete report can be downloaded here.

What’s being done about alternatives?

In Indonesia, not much at the palm producer and governmental level. In January, we reported that despite assurances from the palm oil fund that the B20 blending mandate would be met, the palm oil producers association is asking for the mandate to be lowered in fear of oil companies’ failure to pay due to low oil prices and margins. Though the fund expects to earn $1.15 billion in levies this year to pay for biodiesel subsidies, it’s still likely to be $143 million short. The association is also calling on the government to follow through with the fund’s original intention to help pay for planting new trees and farmer training rather than just pay for subsidies.

A new project for Indonesia

Digest reader Bill Wason writes of his proposed project for Southeast Asia:

There is a lack of diesel storage in Indonesia, high level of diesel imports, and a high price paid for fuel relative to market and growing demand. They have a mandatory biodiesel blend requirement of 20% and a financial incentive for biodiesel production of about $294 per MT (about $1 per gallon) that is obtained from a tax on exports of crude palm oil

There is also a second phase to the project involving a renewable jet fuel plant that will be done in conjunction with storing petroleum jet fuel and building a renewable jet fuel plant. This will involve UOP technology and will involve sale of renewable jet fuel and distribution of jet fuel in conjunction with a 3% renewable jet fuel requirement in 2018. Prices in the internal domestic market in Indonesia for jet fuel are a serious premium to global prices.

Sustainability will be achieved by concentrating on reforesting areas burned in Kalimantan (Borneo Island) in Indonesia with high yield palm trees while proposing a zero burn policy for land clearing. Also key will be to buy forestry concessions already sold to developers and retiring them into biodiversity forest reserves where no logging will be allowed and the land will be a carbon trust. We are planning to buy and retire at least 2 million and hopefully 4 million hectares of land and create a huge virgin jungle carbon trust. Carbon neutral airline flights will be the primary driver for use of carbon credits in conjunction with introduction of sustainable renewable jet fuel.

The combination of economic development from tree planting and biofuel production coupled with biodiversity through large-scale jungle preservation provides a new approach to achieving sustainability. We will also encourage small farmers to co-plant calliandra trees near palm hectares to provide feed for animals and wood chips to replace lost trees from biodiversity reserves. This can allow for carbon sequestration of up to 40 tons per hectare, offsetting all carbon impacts from land clearing in 3 years.

there will also be a parallel effort in Brazil to plant macauba trees on grazing land that may also involve jungle land trusts. Macauba is a native oil palm tree that has foliage that allows grass to grow underneath and can allow tripling of cows per hectare and higher yield of meat while provide 10 tons of oil per hectare for oil for biofuel and edible markets.

What about Pongamia?

TerViva — which must be smarting on a brand recognition basis after Solazyme changed its name to TerraVia — has been hard at work developing pongamia as an oilseed alternative to palm.

We reported back in 2012 that TerViva and Mason & Morse Farmland were partnering to develop pongamia tree projects. The pongamia tree is native to Australia and India, and yields a nut crop harvestable with conventional shakers. The seed produced by the tree has a 40% oil content that can be easily refined into a very high-grade biodiesel, bio-jet fuel, or even other high-demand bio-chemicals like oleic acid.

The remaining seedcake can then be used as a high-protein animal feed or a high-nitrogen fertilizer. TerViva is eyeing Florida’s thousands of acres of abandoned Florida citrus land as potential areas for their turnkey program in which they supply the trees and secure the off-take at harvest, with two citrus growers in Florida who are available to act as to project operators for planting, maintenance, and harvesting. Mason & Morse Farmland Group will source the Florida land for investors interested in a diversification like this.

More recently, TerViva raised $2M in a Series B venture round, and was chosen by The Yield Lab, an ag-tech business accelerator, to be in its first class of companies. TerViva has also received a grant from the Energy Excelerator, a business incubator focusing on energy innovation startups, to plant a commercial-scale pongamia orchard on the island of Oahu.

Also, Digest reader Sreenivas Gatty writes:

I have successfully developed and demonstrated alternate farming system based on Pongamia to minimise risks and losses and maximise returns under adverse agro-climatic conditions. The model ensures that all the resources are used in an ecologically balanced way to produce energy, benefit environment, improve wealth and livelihoods. I request you to promote integrated Pongamia plantations.

Pongamia based farming system reduces cost of inputs, improves crop yields and increases farmer’s income and improve rural livelihoods, with minimum water, under rainfed conditions. Pongamia is native to Asia and has been naturalised in Africa, Australia and America. It survives in temperatures from 5 to 50 °C and is tolerant for drought. It is found in areas with rainfall from 200 to 2500 mm a year and in most soil types. Pongamia offers a comprehensive solution for utilisation of fallow lands and mitigating climate change. Pongamia plantations generate economic activity in rural and remote areas, apart from improving agriculture, producing biofuels, providing green cover, employment opportunities, carbon sequestration and reduced carbon emissions.

Gatty lines up some advantages and uses:

Advantages

Fast growing, evergreen, leguminous tree which can grow under adverse climatic conditions.
Tap roots mine water from 10 meters depth without competing other crops. Dense network of lateral roots control soil erosion.
Enhances soil fertility (a provider of soil nitrogen, green manure and mulch) and do not deplete soil nutrients like many other tree species.
Has a long economic life of 80-100years and produce biomass, biofuel, biofertiliser and biopesticide.

Uses

Pod shells can be used as biomass.
De-oiled cake is a good organic fertilizer (N 4%: P 1%: K 1%) and animal feed (Protein 30%).
Oil for lamps, generators, lubricants, paint and ink manufacture.
Karanjin, extracted from oil is used as an insecticide and also in pharmaceuticals.
Biodiesel for transport and by-product Glycerine is used in soap and pharma industries.

What about palm kernel oil?

Empty fruit bunches and palm kernels have been pointed to for some time as a source for more fuels with less impact, by getting more out of the one crop. As the IEA Task 39 group reported in 2014:

The chain length of the fatty acids in the TAG feedstock determines the products of a HEFA facility. Most of the feedstocks available today are derived from vegetable oils. These typically contain long fatty acid “The potential and challenges of drop-in biofuels” IEA Bioenergy Task 39 ISBN: 978-1-910154-07-6 (electronic version) July 2014 62 chains corresponding to the carbon chain length of diesel i.e. C16-C22. These molecules can be cracked to shorter chains to fit the “lighter” jet fuel and gasoline range. However, the cracking step is not sufficiently selective and creates by-products and reduces the overall fuel yield. For example, when a long alkyl chain is cracked, only some of the chains are of the desirable length while a number of undesirable short chains are also produced.

These “too-short-waste” chains form a light naphtha-like byproduct and the overall fuel yield is reduced. Although the oils from camelina, palm kernels and most cyanophyta contain TAGs with shorter chain fatty acids (which are in the jet fuel range) (Bauen, Howes, Bertuccioli, & Chudziak, 2009; Pearlson, 2011) these feedstock’s are currently only available in relatively small volumes. Camelina and cyanophyta oils are only produced in small volumes while only about 13 million litres of kernel oil (not to be confused with Palm Oil) are produced annually of the global 350 million liters of oilseeds production (USDA, 2012).

One of the problems: palm’s high yields

As the 2015 SCOPE study pointed out:

Oil palm is the most productive source of oil for biodiesel. The high yield of oil palm means that the current global output of 65 Mt palm oil requires cultivation of only 15 Mha, which contrasts dramatically with the 194 Mha needed to produce just 87 Mt oil from temperate annual oilseed crops such as soybean, rapeseed and canola. Therefore, in terms of total oil yield (kernel + mesocarp oil) per hectare, oil palm is already more than 6.5-fold more efficient than the average combined yields of the temperate oilseed crops such as soybean, rapeseed and canola. Despite this high productivity level only

1 Gl of biodiesel was produced from oil palm (Indonesia and Malaysia) in 2010. Current average oil palm yield in Malaysia is 18.4 ton/ha.

In the case of palm oil biodiesel, the Roundtable on Sustainable Palm Oil enabled process and system improvements with anaerobic digestion of mill effluent wastewater to generate power and also pelletized empty fruit bunches for power generation in combustion boilers for process and for nearby communities, with improvements in GHG emissions and environmental indicators.

The SCOPE study went on to observe:

But oil-producing plants like oil palm produce one order of magnitude more lignocellulosic residues – for instance in the case of oil palm, these are the fronds (leaves), trunks, empty fruit bunches, and the liquid wastewater effluent of the oil mill, that are today mostly wasted. This excess biomass could provide a substantial feedstock for renewable biobased chemicals, fuels and energy. Using them also considerably reduces the emissions of the sector. To use excess biomass, technologies such as fermentation, Fischer-Tropsch and other may be employed.

The Bottom line

We’re far from getting ourselves off the palm oil dope — if dope indeed it is.

As Dovre Group’s Dr. Ronald Zwart observed in The Digest:

If palm oil has been key to the Malaysian economy, palm oil biomass may be key to the next steps.”

Oil palm plantations in Malaysia cover close to 5 million hectares, out of 16 million worldwide. The plantations yield crude palm oil, palm kernel oil and palm kernel cake — traditional ingredients for a wide variety of food, feed and nonfood products.

While production has focused on CPO and PKO as commercially the most important products, the other biomass fractions mentioned also do have many different applications. This ranges from fuel for the local palm mill boiler (PKS, EFB) to mulching and fertilizer agent (EFB, OPF, OPT) to the production of packaging and building materials (OPT, EFB and others), and for soil enhancement and as a fuel for local and remote palm mills. Still, significant amounts of biomass have been left idle or can be mobilized by improving the efficiency of its current uses.

Zwart concludes that:

The newly emerging biomass markets present significant economic opportunities for the oil palm industry.

These challenges can best be addressed by initiatives that bring together the necessary counterparts. RSPO and OPBC are two successful examples. Recently, the Malaysian biomass industry inaugurated the Malaysian Biomass Industries Confederation (MBIC) to promote the commercialization, marketing and utilization of high value biomass products applications.

A second opportunity lies in creating collection centers and biomass industry hubs (like POIC, BioXCell) to overcome logistic and technology challenges and costs and to benefit from the co-siting of related and complementing businesses.

A third opportunity resides in the creation of facilitative tools that help the oil palm biomass industry in Malaysia to grow. The development of technical product standards are extremely useful tools to provide guidance for producers and end-users of biomass products to design their facilities and operations.

For now, alternatives have been slow in coming, but alternatives there are of great promise.