One way to maintain or even increase the productivity of palm oil plantations is through replanting , which is absolutely necessary. Old palm oil trees will decline in productivity, becoming uneconomical. Just as palm oil planting is carried out in stages, replanting oil palm plantations is also carried out in stages and periodically.
Most palm oil companies affiliated with GAPKI have been replanting regularly, or annually, on an area of 4-5%. GAPKI currently has 731 members, while according to Statistics Indonesia (BPS) in 2023, the number of palm oil companies in Indonesia reached 2,446, spread across 26 provinces.
Of Indonesia's approximately 16.8 million hectares of oil palm plantations, 9 million hectares are managed by private companies, 550,000 hectares are owned by state-owned companies (PTPN), 6.1 million hectares are owned by smallholders, and the remainder has not been verified. Specifically for replanting, the government is targeting 180,000 hectares per year for smallholders, but by 2024, only 38,244 hectares had been realized, far short of the target.
With an average hectare of palm oil plantation containing 125 trees, each tree having an average dry weight of 0.4 tons, per hectare yields 50 tons of dry biomass. For an area of 10,000 hectares, this translates to 0.5 million tons of dry biomass, and for an area of 100,000 hectares, this translates to 5 million tons of dry biomass. Optimistically, Indonesia could achieve 5% replanting, or 820,000 hectares, which would yield 41 million tons of dry biomass per year. Malaysia, with 5% replanting, or 285,000 hectares, would produce 14.25 million tons of dry biomass per year.
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As a tropical region known for biomass heaven, there are numerous sources that can be utilized for biomass pellet production, particularly OPT pellets or oil palm trunk pellets. This potential is certainly in line with global decarbonization efforts to save the earth from climate change and global warming. Indonesia is currently the world's largest palm oil producer, with approximately 17 million hectares of palm oil plantations. Of this area, 9 million hectares are managed by private companies, 550,000 hectares are owned by state-owned companies (PTPN), 6.1 million hectares are owned by smallholders, and the remainder remains unverified. Crude palm oil or CPO productivity has stagnated over the past five years due to the slow pace of replanting, which is around 45 million tons per year. Therefore, replanting, especially for smallholders, must be encouraged.
Most palm oil companies affiliated with GAPKI have conducted replanting periodically or once a year with an area of 4-5%. The palm oil companies that are members of GAPKI are 731, while according to BPS 2023 the number of palm oil companies in Indonesia reached 2,446 companies, spread across 26 provinces. Meanwhile, in smallholder palm oil plantations, replanting is very small, namely in 2024 alone with a target of 180,000 hectares (around 3% of smallholder palm oil plantations) but the realization is less than 40,000 hectares (0.7% of smallholder palm oil plantations) and even because it is so far from the target set in 2025 the government's target for replanting smallholder palm oil plantations was reduced to only 120,000 hectares (around 2% of smallholder palm oil plantations).
With an average of 125 trees per hectare of palm oil plantation, each tree yielding an average dry weight of 0.4 tons, this yields 50 tons of dry biomass per hectare. For an area of 10,000 hectares, this translates to 0.5 million tons of dry biomass, and for an area of 100,000 hectares, this translates to 5 million tons of dry biomass. Optimistically, Indonesia could achieve 5% replanting, or 820,000 hectares, which would yield 41 million tons of dry biomass per year. Malaysia, with 5% replanting, or 285,000 hectares, would produce 14.25 million tons of dry biomass per year.
For a more practical calculation, let's consider the average palm oil company group in Indonesia with five palm oil mills and 50,000 hectares of palm oil plantations. With annual replanting of 5% of the total plantations, 2,500 hectares are replanted annually. This replanting will produce 125,000 tons of dried oil palm trunks. This volume will then be used to produce oil palm trunk pellets, or OPT pellets, assuming 3% loss during the production process. This yields 121,250 tons of OPT pellets per year.
Using a Handymax vessel with a capacity of 25,000 tons per shipment, five shipments are required, or using a Panamax vessel with a capacity of 50,000 tons per shipment requires two shipments plus one Handymax vessel. Alternatively, using a vessel with a capacity of 10,000 tons per shipment requires approximately 12 shipments per year. Shipments with large capacity handymax and panamax vessels are suitable for the European market, while smaller vessels, namely 10,000 tons/shipment, are suitable for the Japanese market.
Japan, with around 290 biomass power plants, should technically be able to move towards BECCS more quickly, but it's just a matter of policy and regulation. Installing CCS (Carbon Capture and Storage) units in biomass power plants makes the plant's operation carbon negative, or carbon (dioxide) removal (CDR) or Greenhouse Gas Removals (GGR). Furthermore, Europe has a successful example of BECCS implementation, namely the Stockholm Exergi BECCS project. This Stockholm project, based on sustainable biomass fuel, has secured one of the world's largest carbon sequestration agreements with Microsoft.
Furthermore, policy support for biomass power plants with CCS/BECCS or those capable of CDR/GGR is also increasing, as in the UK. This includes the indefinite extension of support for biomass power plants to allow time for plants to transition to BECCS. Modifications and retrofitting of existing power plants will eliminate millions of tons of CO2 annually while still generating electricity from renewable sources. This potential can only be maximized with government support for the transition to BECCS.
In Japan, with approximately 290 biomass power plants, the transition to BECCS should be faster, but it's just a matter of policy and regulation. Installing CCS (Carbon Capture and Storage) units at biomass power plants makes the plant's operation carbon-negative, or carbon dioxide removal (CDR) mode. The amount of carbon captured and stored, separating it from the atmosphere, can earn carbon credits that can be used for CCS operations at biomass power plants. Decarbonization to achieve the 2050 Net Zero Emissions (NZE) climate targets and the Paris Agreement are the driving force.
And because biomass power plants always require biomass fuel for their operations, this presents an opportunity for Indonesia to supply wood pellets and palm kernel shells (PKS). Power plants in Japan, most or the majority of biomass fuel comes from imports, such as the Kanda Biomass Power Plant (Kanda Biomass Energy) in Kanda City, northeast of Chiyoda, Tokyo. Kanda Biomass Energy uses three types of biomass: wood pellets (60 percent), palm kernel shells (PKS) (30 percent), and wood chips (10 percent). Wood pellets are imported from British Columbia, Canada and Vietnam, palm kernel shells (PKS) from Indonesia, and wood chips are imported locally from northern Kyushu. This facility consumes approximately 170,000 tons of wood pellets, then 120,000 tons of palm kernel shells (PKS), and 60,000 tons of wood chips per year.
Biomass power plants in Japan generally use fluidized bed combustion (FBC) technology in their boilers. The reasons for using this technology are higher fuel flexibility, high efficiency due to good mixing, relatively low combustion temperatures, which minimize the problem of ash deposits due to melting and the use of excess air. It also further increases efficiency and reduces flue gas production. FBC technology is suitable for large capacities above 20 MW. Over time, this technology has been divided into two types: bubbling fluidized bed (BFB) and circulating fluidized bed (CFB). Generally, the differences between the two are not significant, such as fuel size, unit construction, and air-fuel ratio. Palm kernel shells (PKS) are more suitable for CFB power plants because they are less than 4 cm in size. Power plants in Japan, in particular, that use PKS or palm kernel shells as fuel because they use CFB technology.
With relatively low operating temperatures of 650-900°C, ash problems can be minimized. Certain biomass fuels sometimes have high ash content and ash chemistry that can potentially damage the generating unit. Furthermore, fuel cleanliness is also very important, this is because technically certain impurities such as metals can block the air pores in the perforated plate of the FBC unit, even though air, especially oxygen, is absolutely necessary for the combustion process and also maintains the fluidized fuel bed condition. These fuel cleanliness requirements must be met by the supplier or seller of the biomass fuel. Therefore, the buyer requires the amount of impurities (impurities/contaminants) that can be accepted is very small, namely around less than 1%. PKS cleaning is done by sieving either manually or mechanically. For more details on biomass fuel cleanliness issues can be read here.
The demand for biomass fuel is predicted to continue to increase. And biomass power plants continue to expand, with an estimated 6 GW of additional power plants projected to be installed in Japan by 2030, with an installed capacity of 7.3 GW by 2024. In fact, 11 new power plants are scheduled to come online by 2025, increasing annual biomass fuel demand by approximately 1.1 million tons. If Indonesia could also supply wood pellets to Japan by maximizing forest residue, sawmill waste, or other wood processing industry waste, that would be extraordinary.
As an estimate of forest waste utilization, for example, a production forest with an area of 200,000 hectares (approximately 2,000 km2) and because it is located in a tropical area with an average woody biomass growth rate of 20 tons/hectare/year, then the forest will produce 4,000,000 tons/year of wood every year from new growth. An area of 200,000 hectares may seem very large, but with Indonesia having almost 70 million hectares of production forest, an area of 200,000 hectares is only 0.29%.
For example, we set the default setting for wood utilization from production forests: 35% for building materials, furniture, flooring, etc., 30% for paper, tissue, and packaging, with 5% of the harvested wood remaining in the forest. Furthermore, 15% of sawmill waste (sawdust, chips, etc.) is used for wood pellet production, and the remaining sawmill waste is sent to pulp and paper mills and engineered wood industries.
And it is estimated that 35.3% of the 3.8 million tons/year of wood waste annually goes to wood pellet factories (approximately 1.34 million tons annually). In some locations the actual percentage is much lower because paper mills and engineered wood industries use more raw materials with the same raw materials as wood pellet factories. Therefore, in general, wood pellet factories are not located in locations that already have demand or existing use for pulp and paper and engineered wood industries. With the high water content, drying is necessary for wood pellet production, so the estimated wood pellet production is 650,000 tons/year. With the size of a handymax vessel that can carry 25,000 tons/shipment, this means 26 shipments are needed to Japan each year, or with a panamax vessel that can carry 50,000 tons/shipment, this means 13 shipments to Japan each year.
The decarbonization trend continues to grow across all sectors of life as part of a global consensus to save the earth. Biomass plays a strategic role through biotransition, where biomass acts as a carbon-neutral fuel, thus preventing it from contributing to increased CO2 emissions in the atmosphere, and through carbon-negative programs with carbon sequestration. Substantively, decarbonization through carbon-negative programs (CDR/carbon dioxide removal) will be effective if biomass fuel, as a carbon-neutral fuel, or the use of other renewable energy sources, is also increased. In other words, efforts to reduce atmospheric CO2 concentrations cannot simply involve absorbing CO2 from the atmosphere (carbon capture and storage). In the context of biomass-based renewable energy, the practical application of wood chip and wood pellet production as carbon-neutral renewable fuels will complement biochar (carbon-negative). Read more details here.
Biochar, a product of biomass pyrolysis, or biocarbon products used as a medium for climate change mitigation through carbon sequestration/carbon sinks, is not yet as popular as the use of biomass as a renewable energy source, such as wood chips, wood pellets, or palm kernel shells (PKS). For comparison, global biochar production in 2023 was 350,000 tons, while wood pellet production was 47 million tons. With a conversion of biomass to biochar of approximately 30%, the amount of dry biomass processed into biochar in 2023 was 1.2 million tons, compared to 47 million tons of wood pellets in the same year, or only about 2.6% of the biomass used for wood pellets—a significant gap. However, biochar is predicted to gain momentum and be produced on a large scale globally. The application of biochar as part of carbon capture and storage (CCS) is currently experiencing the fastest growth compared to other CO2 reduction (CDR) efforts. Biochar leads in CDR credits in the voluntary carbon market (VCM), with over 90% globally by 2023 as per the cdr.fyi database.
Furthermore, carbon capture and storage (CCS) applications using absorber-stripper columns, where the captured carbon dioxide is stored in the Earth's crust, remain expensive. Pyrolysis technology for biochar production, meanwhile, is increasingly developing, making it easy to operate, efficient, and environmentally friendly, with the potential to produce various by-products that offer additional benefits. These pyrolysis units can even be integrated with processing plants, such as palm oil mills. For more details, read here.
Including the BECCS (Bioenergy with Carbon Capture and Storage) application which is overall a carbon negative program or CO2 removal from the atmosphere (CDR / Carbon Dioxide Removal) but building a bioenergy unit such as a biomass power plant itself is also not cheap, especially with the addition of carbon capture and storage (CCS) equipment. A number of countries that already have many biomass power plants, for example Japan with around 300 biomass power plants, to become carbon negative operations or part of CO2 removal from the atmosphere (CDR / Carbon Dioxide Removal) will be easier by upgrading them with the installation of carbon capture and storage (CCS) equipments. But in general, to absorb CO2 in the atmosphere and achieve climate targets, the application of biochar produced with pyrolysis units is easier, cheaper and strategic.
To anticipate and prepare for the growing era of CO2 removal from the atmosphere (CDR), biochar research must also be enhanced. Pyrolysis equipment that can cover or carry out comprehensive biochar production trials under all measurable production process operating conditions is crucial. Biochar product quality parameters are determined by three factors: the raw material or type of biomass, the production process, and the biomass pretreatment. For more details, read here. Important variables in the biochar production process in the pyrolysis unit, such as duration/residence time, temperature, and heating rate, must also be able to be handled with this equipment.
Furthermore, the issue of exhaust emissions is also crucial. This is because carbon standards organizations like Puro, Verra, and CSI require exhaust emissions to meet certain thresholds. Furthermore, excess heat from pyrolysis and/or liquid and gaseous products must be utilized. This means that laboratory-scale pyrolysis equipment must be sophisticated enough to meet these requirements. Following the methodologies developed by these standards organizations is essential for producing certified biochar to earn carbon credits. With each ton of CO2 equivalent removed from the atmosphere, or CO2 Removal Certificates (CORCs), worth over $150, this is certainly very attractive.
The diverse uses of biochar, such as in agriculture, animal husbandry, and even for concrete construction, further encourage its implementation in the future. Even if there is a question, for example, about the use of biochar in the agricultural sector: should biochar be prioritized for soil fertility or climate solutions first? This is certainly not a dichotomous question, but rather a driving force for its application, which is strongly influenced by factors that are problematic in the region or area. For more details, read here. To achieve the best performance while minimizing the risks of biochar production, increasing biochar production capacity is necessary, starting from the laboratory scale, pilot scale, demo scale, and finally commercial plants. By understanding the characteristics of the production process gradually and in depth, the hope is that the success rate of large-scale or commercial production will also be high.
The demand to lower the earth's temperature by reducing greenhouse gas concentrations through various global agreements such as the Paris Agreement and Net Zero Emissions (NZE) 2050, followed by technical follow-up through decarbonization for various sectors and industries, continues. This is the driving force for increasing renewable fuels, especially those based on biomass or bioenergy products, which have been implemented, but are experiencing dynamics in the form of fluctuations in demand and prices. Bioenergy, with its numerous advantages and uniqueness as a renewable energy, cannot be replaced in this era of global decarbonization, even though in the near future some subsidies for biomass fuels or bioenergy will be eliminated.
This is closely related to a government's decarbonization priorities, particularly among the various emerging options. Bioenergy products can vary in quality, but all have their own market segments within specific industries. Furthermore, the sustainability of biomass sources is also a crucial aspect in the business and use of bioenergy, and is strictly enforced by standards such as GGL, FSC, SBP, RED III, and SURE. Industrial groups such as cement, iron and steel, chemicals, and even the aviation sector, which previously relied 100% on fossil fuels or energy sources, are gradually shifting to renewable energy sources.
Bioenergy products such as industrial wood pellets and industrial wood briquettes are primarily marketed in the power generation industry and as fuel for industrial boilers. Industrial wood pellets are very popular and are produced in larger quantities than industrial wood briquettes. Due to the elimination of subsidies and the implementation of sustainability certification, biomass fuel producers are required to produce better quality products using environmentally friendly and accountable raw materials. This also applies to bioenergy derived from agricultural waste, which generally lacks sustainability certification at large production capacities.
Biomass power plants operating near carbon neutrality can then be upgraded to carbon-negative operation, or atmospheric carbon dioxide removal (CDR) by adding carbon dioxide capture and storage (CCS) equipment. Biomass power plants equipped with CCS devices are popularly called BECCS (Bio-Energy Carbon Capture and Storage). It is predicted that the BECCS era will not be far off, and countries with biomass power plants can easily upgrade to BECCS. Expensive CCS equipment and low carbon credit revenue from CDR remain current obstacles. Japan, with around 300 biomass power plants, has great potential to upgrade to BECCS. And as a biomass power plant, the need for fuel will always be needed, such as wood pellets and PKS (palm kernel shells). For more details, read here.
One successful example of BECCS is the Stockholm Exergi BECCS project. BECCS illustrates how existing biomass power generation infrastructure can be leveraged to generate sustainable carbon dioxide sequestration. The Stockholm project, based on sustainably sourced biomass fuel, secured one of the world’s largest carbon sequestration deals with Microsoft, a significant contract worth SEK 500 million (~89 billion rupiah). Their model integrates carbon capture with a district heating system, maximizing energy efficiency while achieving permanent carbon dioxide sequestration.
Similarly, several other large industries, such as cement, aluminum, and chemicals, are also gradually decarbonizing. Biomass fuels, such as wood pellets and agricultural/plantation waste like palm kernel shells (PKS), are preferred in this sector. Besides their high energy content, these biomass fuels are more affordable than derivatives like torrefied biomass and charcoal/biochar. With the gradual transition or decarbonization of these industries, the demand for biomass fuels will also continue to increase.
Meanwhile, biocarbon products such as torrified biomass (biocoal) and carbonized biomass (biochar/charcoal) are starting to attract attention and are expected to reach mass production levels in the near future. Power plants typically favor biocoal due to its higher energy content, hydrophobicity, which allows it to be stored in open areas like coal, and ease of crushing (high grindability index). Meanwhile, biochar/charcoal, especially in the iron and steel industry, is highly suitable for producing low-carbon steel and even green steel. The reductant for blast furnaces, which previously used coke from coal, can be replaced by charcoal or biochar. Charcoal or biochar with high purity (fixed carbon >85%) and low impurities are required for blast furnace reductants. For more details on this, please read here and here.
Meanwhile, the use of biomass for sustainable aviation fuel or SAF (Sustainable Aviation Fuel) is also very possible. This is because currently there are three leading production processes for SAF production: HEFA (Hydro-processed Esters and Fatty Acids), FT (Fischer-Tropsch), and ATJ (Alcohol to Jet Fuel). Biomass through thermochemical processes, namely in FT (Fischer-Tropsch) and biochemical processes, namely in ATJ (Alcohol to Jet Fuel), can be used as raw material or feedstock. Meanwhile, the raw material or feedstock for the HEFA process is not solid biomass but vegetable oil, used cooking oil, animal fats, and so on. So the broad application of biomass as various important energy sources in the era of global decarbonization is a driving force for biomass production both through the forestry sector and sustainable agriculture/plantations.
