Learning from the Success of Wood Pellet Industry in Asia (Vietnam) and Europe (Latvia)

The trend of using wood pellets globally has not been long, it only started around the early 2010s and a number of countries responded quickly so that their wood pellet industry grew rapidly as part of their economic engine in line with the global trend for decarbonization and green economy or bioeconomy. The readiness of a number of countries to respond to this opportunity is also not without reason but indeed their insight and knowledge have supported them to do so. Indonesia as a tropical country with vast land and abundant human resources should also be able to boost the opportunities of this wood pellet industry so that it becomes one of the world's main players.

Vietnam and Latvia are two countries in the world that are currently leading the wood pellet industry, there is even the largest wood pellet factory in the world there, for more details read here. Initially, both countries also started this industry from a small capacity. For Vietnam, Vietnam's wood pellet production began in 2012 with a very small capacity of around 175 tons/year and currently in 2021 or around 9 years later, production has reached around 4.5 million tons/year, placing Vietnam in second place as a world wood pellet producer, after the United States. The total production of 4.5 million tons/year is supplied from 74 wood pellet factories in Vietnam. In 2020, 3.2 million tons of wood pellets were exported to Japan and Korea for power plants with an export value of nearly USD 351 million. In addition to Korea and Japan, Vietnam's wood pellet production is also exported to Europe.

Initially, Vietnam's wood pellet production used waste from the furniture industry. Furniture waste in the form of sawdust from the industry was dry and its particle size was suitable for wood pellet production, so equipments such as hammer mills and dryers were not needed. Many Vietnamese wood pellet factories at that time did not have hammer mills or dryers. With raw materials ready to be pelletized, the cost of producing wood pellets was very cheap, plus the cost of labor was also cheap. However, as the demand for furniture industry waste for wood pellet production increased, the availability of these raw materials became increasingly scarce, so that new wood pellet factories could no longer use these wastes. Waste from other wood processing industries such as sawmills and veneer factories also became raw materials. Furthermore, with the increasing production of wood pellets, forest wood waste and other round wood became the next source of raw materials. This also increased production costs because tools such as hammer mills and dryers were needed so that the raw materials were ready to be pelletized.

Meanwhile, Latvia, as a small country in northern Europe, saw an opportunity to lead in this growing industry. With almost half of its territory covered by forest, Latvia had the natural resources to produce wood pellets. In the early 2000s, with government support for responsible forest management, sustainable wood production was introduced, including support for entrepreneurs who wanted to start producing wood pellets. It wasn’t long before the world caught on. Countries across Europe, including the UK, Denmark and Italy, began relying on Latvian wood pellets for their heating and power plants.

Despite being a small country, Latvia has become a major player in the wood pellet industry, competing with larger countries such as Germany and Sweden. Latvia is now one of the largest exporters of wood pellets in the world. Latvia's success story teaches us that even a small country with strong will, focus on quality, innovation and sustainability, natural resources can lead to global success. Latvia's success shows that when there is government support, technology investment and dedicated people, even a small country can lead in a competitive global market. And as the world increasingly looks for clean and sustainable energy solutions, the success of Latvia's wood pellet industry is an inspiring example of what can be achieved with vision, hard work and a commitment to sustainability.

Tropical countries like Indonesia are a "heaven" for biomass energy, this biomass energy is like a green battery that must be developed, for more details read here. When small countries like Vietnam and Latvia can boost their wood pellet industry, then Indonesia should not want to be left behind. When great potential is wasted, then besides being an ungrateful attitude that will have an impact on poverty and environmental damage, it is also stupidity. The large amount of land available, even millions of hectares becoming critical land and multi-benefit from energy plantations should motivate the wood pellet industry. When Vietnam and Latvia can do it, Indonesia should do the same.

EUDR and Is It Time for the Palm Oil Industry to Consider Biochar ?

Malaysian smallholders cultivate around 27% of the total oil palm plantations or equivalent to 1.54 million hectares, while in Indonesia it reaches 41% or equivalent to 6.72 million hectares. Malaysia chose to increase the yield or productivity of FFB as an effort to increase CPO production, namely by being fostered by large companies with a target increase of 600,000 tons/year without increasing the land area. For Malaysia, opening new plantations is something that is very difficult, even impossible, especially with the implementation of the EUDR on December 30, 2024. Consolidation between palm oil farmers is expected to increase efficiency so that it ultimately increases yield and income. The area of ​​Malaysian palm oil plantations is around 5.7 million hectares or around 1/3 of the area of ​​Indonesian palm oil plantations (currently reaching around 17 million hectares). This is also the main reason why Malaysia chose to intensify its palm oil plantations while Indonesia tends to expand palm oil land, even though both countries face two main issues, namely increasing production and climate resilience.

Biochar application is a solution to overcome the two important issues above. Related to the increasing pressure of environmental issues, climate and sustainability, even renewable energy, it seems that biochar will receive more attention. There are many aspects of land and the environment that can be improved with biochar application which ultimately is a solution to the two main issues. For small plantations, biochar application can be easier to do, but for large plantations managed by various palm oil companies, biochar application requires more complex considerations, especially because of the risk factor of the vast area of ​​palm oil plantations, but this biochar option is still attractive. The use of IoT (Internet of Things) can be used to monitor biochar performance on the land, for more details, read here.

The operational efforts of the palm oil industry to be more environmentally friendly and efficient are a driving force and a challenge in themselves. With the large profits from the palm oil industry business, of course the palm oil industry will not simply ignore demands related to the environment and sustainability, especially the EUDR. Palm oil producers, especially Indonesia and Malaysia, are faced with a standard guideline that applies to countries producing 'edible oil', namely that palm oil to be exported must come from land that has been reforested before 2020. Otherwise, the producing country will be considered a country that does not pay attention to the issue of deforestation and hinders the export of palm oil abroad. Various lobbying and negotiation efforts by Indonesia and Malaysia as the two largest palm oil producing countries in the world to the European Union to be more relaxed in implementing the EUDR include great suspicion as to why rapeseed oil is not treated the same as palm oil. The production of rapeseed oil as a raw material for biofuel in Europe is protected and ignores its environmental impact.

Indonesia as a coconut island seduction country has an experience of coconut oil commodities in the past that can also be a reference for this. The era of the glory of copra or coconut oil was around the transitional decade of the 19th century to the 20th century or more precisely between the 1870s and 1950s and its peak in the 1920s. Why are copra and coconut oil in particular currently slumping and losing out to other vegetable oils? The long history of trade competition is the answer. Several parties, especially the American Soybean Association (ASA) accused coconut oil of being an evil oil containing cholesterol and saturated fat that clogs coronary arteries. The accusation was never proven true, in fact it was proven otherwise, but it became one of the main causes of the destruction of the global copra and coconut trade. The tropical oil campaign and war took about 30 years or in the 1950s to the late 1980s in the United States and so finally the Indonesian coconut industry slumped.

Climate factors in the form of efforts to reject deforestation with its EUDR and economic factors in the form of palm oil production will be a fierce feud but sooner or later it will definitely reach a meeting point that can be accepted by both parties because they need each other. Diverting CPO products to markets that do not require environmental requirements such as the EUDR also seems to be untimely. Furthermore, in the form of addressing two important issues in the palm oil industry, namely increasing production and climate resilience and in line with the EUDR, biochar is the right solution. The question is, will this biochar be an important consideration and even find its momentum to be applied in oil palm plantations, especially for Indonesia and Malaysia? And the implementation of the EUDR as its driving force. Let’s see.

Energy Plantations: Why Calliandra (Calliandra Calothyrsus) or Gliricidia (Gliricidia Sepium)?

Since 1937, calliandra has been planted in Perhutani and wider areas along with reforestation programs and supporting firewood and animal feed. And also since 1974, Perhutani has distributed calliandra seedlings to forest farmers and used them as boundary plants between forest areas and rural areas or agricultural land. Calliandra cultivation at that time was mainly aimed at providing firewood and animal feed for people living in the forest, and reducing dependence on kerosene for cooking. Calliandra is used as a terrace plant (erosion control) with high slopes to strengthen the main plantation, for example with teak plantations, and also for soil protection purposes, because it can increase soil fertility through the ability of its roots to absorb nitrogen in the form of root nodules.

While the type of gliricidia plant is widely used as an edge plant or hedge plant to prevent large livestock from entering the forest. The wood is used as firewood and the leaves are used as animal feed. The wood can be harvested quickly, and pruning is also done with a fast process. So it can be said that, it is not recommended to plant new species that have unknown characteristics until there is adequate research activity on the species.

For example, acacia species are relatively fast-growing species but it is not widely known whether they can be used and managed with a sustainable coppice system. And also these types are not like calliandra and gliricidia plants, although easy to cultivate and harvest, but have not proven to be suitable for the application of short rotation coppice systems, and are also rarely planted on a larger scale.

Although calliandra and gliricidia are not native tree species in Indonesia, they have long been introduced, and can be found almost throughout the island of Java. Calliandra and Gliricidia are very popular in agricultural areas in most parts of Java. In addition, there have not been many reports describing the presence of pests and / or diseases associated with either species. Wood produced from calliandra and gliricidia plants has relatively good physical and chemical characteristics to be used as firewood or as raw material for wood pellets. Its calorific value is high and its ash content is low.

Indonesia as a tropical country even with the largest land area in Southeast Asia will have great potential to develop the energy plantation. Energy plantations are essentially energy sources or likened to batteries, which store solar energy in plants, the energy plantation, for more details can be read here. Although the development of various types of renewable energy continues to be accelerated, to store energy in large capacities will require a very large battery. The battery research is also estimated to take a long time and high costs, so that in the context of decarbonization, biomass energy can be used for cofiring and even fulfiring until the time the large battery can be applied.

Biochar as Deforestation Solution in Palm Oil Plantations and EUDR

The development of the palm oil industry and its plantations in Indonesia is very rapid, especially in the last 10 years and currently the area of ​​Indonesian palm oil plantations is estimated to reach 17 million hectares. As the largest vegetable oil producing plant in the world and the largest palm oil plantation area in the world, of course palm oil has a strategic value in the Indonesian economy. The average speed of Indonesian palm oil plantation area is 6.5% per year or equivalent to around 1 million hectares per year for the last 5 years, while the increase in palm oil fruit production or FFB (fresh fruit bunches) is only 11% on average.

Even the largest land expansion occurred in 2017, which increased by 2.8 million hectares. From 2015 to 2019, the total area of ​​palm oil plantations increased by 3.7 million hectares. The extensification or expansion of palm oil plantations has been widely "accused" and has become the focus of the world as a result of the conversion of forest land, resulting in a lot of deforestation to be converted into palm oil plantations.

Pressure from the European Union in particular, due to these conditions, has worsened the image of Indonesian palm oil, which in turn has affected the selling price of palm oil products, both CPO and its derivative products. Improving this image is also not easy. One effective effort is to stop the extensification efforts so that forest land remains forest land and does not turn into oil palm plantations. The European Union on Deforestation-free Regulation (EUDR), which will come into effect on December 30, 2024, as an effort to prevent deforestation, is also an important consideration. The regulation requires consumers and producers along the supply chain of certain commodities to conduct due diligence and risk assessments to ensure that their products do not contribute to deforestation. The EUDR also applies a tiered inspection and penalty system based on the level of risk perceived in the country of origin.

With the extensification of oil palm land of more than 1 million per hectare each year but the increase in oil palm fruit production is only 11%, it is certainly less attractive and must be avoided, especially with the world's spotlight on the increasingly rapid deforestation. This also increasingly indicates the low productivity of palm oil plantations. In fact, by improving soil quality, palm oil fruit productivity can be increased significantly and the opening of new land for the creation of palm oil plantations can be avoided. Biomass waste in palm oil plantations and in palm oil mills can be used for biochar production as a solution to this problem.

With the increase in productivity of fresh fruit bunches (FFB) with the use of biochar, new palm oil plantations do not need to be opened again. Assuming an average increase in productivity of 20%, CPO production will also increase by 20% or equivalent to 2 million tons. This increase will be equivalent to opening new land covering an area of ​​more than 2 million hectares. Of course, it is not a small area of ​​land. With a 20% increase in production, it is very likely that national needs for CPO in particular have been met and so too for the export market. Another advantage of using biochar is as a climate solution as carbon sequestration/carbon sink. So the two main problems in the palm oil industry in the form of increasing productivity and climate change resilience can be overcome at once with the application of biochar.    

The Urgency of IOT and Biochar Applications in Palm Oil Plantations

The sustainability trend in palm oil plantations is increasingly important and urgent, which is of course part of the global solution to environmental and climate problems. The vastness of palm oil plantations and the large production of palm oil are in the spotlight in the industry. Waste management and environmental pollution are important concerns. The large volume of biomass waste has the potential to be a source of environmental pollution and so is the excessive use of chemical fertilizers in palm oil plantations which will also cause environmental pollution. Inappropriate land use, for example deforestation and land conversion, are also other concerns.

Two important issues in the palm oil industry are increasing FFB productivity (yield improvement) and climate change resilience. And thank God, both of these things can be handled at once, namely by applying biochar. Palm oil mill biomass waste (especially palm oil empty fruit bunch) will be converted into biochar and then applied to plantation soil (sustainable soil amendment) with fertilizer so that it becomes a slow release fertilizer that will increase NUE (nutrient use efficiency) and minimize environmental pollution. With the increase in NUE, there will be yield improvement or an increase in FFB productivity. And the application of biochar which will remain in the soil or not decompose for thousands of years will become carbon sequestration / carbon sink which is in line with climate change resilience. A precise solution with one action, of course this should be very interesting and awaited by these palm oil companies.

To ensure that the biochar can work properly, an instrument is needed to measure performance and monitor it. That is why IoT (Internet of things) in this sector is needed. How slow can it goes fertilizer nutrients can be measured and monitored accurately, quickly and precisely. In this way, palm oil productivity can also be predicted. The area of ​​land on palm oil plantations that reaches thousands or tens of thousands of hectares is also not an obstacle. The area of ​​palm oil plantations in Indonesia is currently estimated to reach 17 million hectares and in Malaysia it reaches 5 million hectares, of course these palm oil companies are also trying to achieve their best level of sustainability according to the demands of the times. This is so that the application of biochar on palm oil plantations will become a trend and even its operational standards. The entry point by ensuring biochar performance with IoT is an important consideration.

This biochar application also follows the 4Rs rule, namely the right source (appropriate biochar raw material), right place (appropriate application area), right rate (appropriate dosage) and right timing. The physical and chemical properties of biochar differ depending on the raw material and production process. By following the 4R rule, biochar performance can be maximized. On the other hand, modernization in the palm oil industry also continues to be improved. The public perception of work in oil palm plantations, abbreviated as 3D (dangerous, difficult, dirty), will be gradually changed with mechanization, automation and digitalization. The ratio of workers to plantation land currently around 1: 8 ha will be increased to more than double to 1: 17.5 ha with the above modernization so that workers' wages can also be increased. This modernization is expected to help overcome the two important issues above with the biochar application.   

Large Capacity and Sustainable Wood Pellet Production in Java Island

Biomass for energy production can be cultivated on critical land, or so-called 'unproductive' land. The Ministry of Environment and Forestry estimates that critical land in Indonesia in 2016 was 24.3 million hectares (Times Indonesia, 2017). This is a very large area, and overall Indonesia's territory is large enough to provide biomass for renewable energy production.  

Globally, the need for wood pellets is predicted to continue to increase. This is because in the current power generation industry, more than a third of global electricity production still uses coal. This portion must drop to 4% by 2030 and 0% by 2040 if the world wants to limit global warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit) and prevent the severe impact of the climate crisis. The world has 6 years from now to reduce the use of coal in power plants to less than 4% by 2030, this is also what makes a number of coal companies develop renewable energy, especially wood pellets from energy plantations.

However, in Java Island, the availability of land for energy crop development is limited because it conflicts with the need for agricultural land. The greatest opportunity for energy plantation forest development is on land owned by Perhutani which is categorized as 'unproductive land'. In some cases, through social considerations, land can be directed to programs that are in line with the objectives of social forestry in accordance with the Decree of the Minister of Environment and Forestry number P.39 / 2017 and P.38 / 2016. However, as an effort to develop the business, Perhutani can utilize its land to specifically produce biomass for energy.

In accordance with Perhutani's long-term plan, and in line with the company's business development plan, Perhutani has allocated a forest area of ​​116,372 ha or around 4.7% of Perhutani's total area in Java (2,445,000 ha) as a potential area for biomass plant development spread across 13 KPH (Forest Management Units) in Central Java, East Java, West Java and Banten provinces.

Throughout the Perhutani area, there are potential areas that have unproductive forest stands (open land or reduce forest potential, or tend to be unproductive in the long term) covering an area of ​​308,000 hectares, spread across 57 KPHs. This area is divided into 15% in Central Java, 34% in East Java and, 51% in West Java and Banten. Based on the unproductive area, approximately in 27 KPHs it is calculated to be around 229,286 ha or 74% of the total potential area for Biomass Energy Plantations.

Hundreds of thousands of sawdust are currently used for PLN's cofiring program in Java, disrupting the supply of raw materials for wood pellet factories. This is why the production of wood pellets from sawdust taken from the sawmill industry or wood industry waste in Java for large-capacity wood pellet production will be at great risk of disrupting the supply of raw materials. So that the wood pellet factory in Java can run well if the availability of raw materials can be maintained and this can only be realized in two ways, namely first using its own raw materials, this can be done by sawmills and wood processing industries that utilize their own waste for wood pellet production, and second with raw material sources from energy plantations. The area of ​​land that can be used for energy plantations as described above is very potential for a source of raw material supply for large-capacity wood pellet production on Java Island and the availability of supporting facilities on Java Island which are more complete and better is an additional driving force.

Energy Plantations Energy Sources for All Time

 "Allah who makes fire for you from green wood, then you kindle (fire) from it." (QS. Yaasin (36): 80)

The sun was created by Allah SWT as the main source of energy for humans and living things on earth. It takes about 8 minutes for sunlight to reach the earth and is converted by plants into a food source so that it can be consumed by animals and humans. Humans also get food from animal sources. The more sunlight, the more can be converted by plants through the process of photosynthesis. Without the sun, plants die, animals die, humans die so that there will be no life on earth. Fossil fuels are essentially a source of energy from plants and animals in the past. Mining and use of fossil fuels will release a number of greenhouse gases (GHG) which increase the earth's temperature which at a certain level is dangerous for the earth's population itself. Efforts to overcome this are by using non-fossil energy and renewable energy so as not to contribute to increasing the concentration of GHG in the atmosphere which increases the earth's temperature.

From plants or trees can be directly used as a source of energy or fuel, namely firewood. Derivatives or energy products from plants are also very diverse and can meet all human needs, both energy in the form of solid fuels, liquid fuels and gas fuels. The production of firewood, wood chips, wood briquettes, sawdust, torrified biomass to charcoal are a number of solid fuel products. While the production of biooil, bioethanol, biodiesel, renewable diesel / green diesel, and bioavtur / bio jet fuel are a number of liquid fuels. And biogas and bio-syngas are gas fuels that can be produced from the original material in the form of plants.

A number of conversion techniques based on physics, chemistry and biology are needed for the conversion. The use of appropriate plant species is also needed to facilitate the conversion, for example for the production of solid fuels, biomass sources such as wood are needed, while if the target is liquid fuel, then the type of oil-producing plants that need to be pursued. Conversion from solid fuels to liquid or gas fuels can also be done but in general the longer and more complicated the process, the more expensive the production costs will be. But still, energy plantations are the basis for all of that.

Popular and fairly easy biomass processing is to make wood chips with size reduction then wood pellets and wood briquettes through biomass densification. Furthermore, to convert sugary biomass into ethanol with fermentation and azeotropic distillation, convert lignin biomass (lignocellulosic biomass) into ethanol with enzymatic hydrolysis reactions followed by fermentation and azeotropic distillation. Converting woody biomass into fuel with a thermal process can be burned directly or if you want to make charcoal, concentrate the fixed carbon, namely by pyrolysis or carbonization, and if you want to maximize liquid products / bio-oil / pyro-oil, namely by fast pyrolysis and if you want to maximize gas products, namely by gasification. And so that the characteristics of the biomass are like hydrophobic coal, the torrefaction or mild-pyrolysis process can be carried out. Torrefaction and densification are usually carried out together to optimize the biomass fuel product.

With gas to liquid (GTL) namely the gasification process and followed by the Fisher - Tropsch process, bio-ethanol, biodiesel and bioavtur / bio jet fuel can be produced. While from groups of plants that produce oil such as palm oil, biodiesel can be made especially with the transesterification or estran (esterification plus transesterification) process. Even used oil or used cooking oil / used cooking oil and miko (minyak kotor) / dirty oil or PAO (palm acid oil) can also be used for biodiesel / green diesel or further processed into bio-jet fuel / bio-avtur with the HVO / HEFA - SPK (Hydro-processed Esters and Fatty Acids-Synthesized Paraffinic Kerosene) process.

So basically, biomass from trees can be processed into various forms of energy or fuel needed by humans. In addition to being used directly as a heat source, this energy can also be converted into mechanical energy or electrical energy, for example biofuel-fueled vehicles to biomass power plants. So the source of energy throughout the ages stored in plants is this biomass as stated by Allah SWT in the verse above and there is no doubt whatsoever about it. Indonesia as a tropical country is a "heaven" for the production of biomass because of the rays of sunlight throughout the year and adequate rainfall and extensive land. The storage of energy in plants from sunlight is also likened to a battery that can be used anytime and anywhere for more details read here.

Another important thing to note for the creation of energy plantations or biomass plantations is the status of the land used. The land must not be from deforestation or land conversion (land use change) that damages the environment. Industrial plantation forests (HTI) that are in accordance with their designation can be used as energy plantations. In addition, biomass for producing energy can also be cultivated on critical land, or referred to as 'unproductive' land. The Indonesia Ministry of Environment and Forestry (KLHK) estimates that critical land in Indonesia in 2016 was 24.3 million hectares (Times Indonesia, 2017). This is a very large area, and overall Indonesia's territory is large enough to provide biomass for renewable energy production.