Lombok Energy Initiative

15CIMG4536

Our Project

Since 2008, STC has been developing alternative biofuels and biomass energy options for agricultural curing kilns and other rural industries in Lombok island, Nusa Tenggara Barat province, Indonesia.

During 2010-2011, we organized pilot production trials of four leading alternative fuel feedstock candidates, including three solid fuels to replace coal and firewood and a liquid fuel to replace kerosene:

  1. Candlenut shells from Lombok and Nusa Tenggara Timor province (NTT),
  2. Locally-produced shredded castor bean stalks,
  3. Palm Oil Kernel Shells (POKS) from various locations in Indonesia, and,
  4. Bio-oil from Sumatra produced from palm oil waste by-products.

STC has now successfully demonstrated the technical and financial viability of the POKS and the candlenut shells and supported the development of improved drying kilns using small-scale gasification technology.

In 2012, we distributed over 1,200 tonnes of Roundtable on Sustainable Palm Oil (RSPO)-certified sustainable palm kernel shells and 400 tons of candlenut (kemiri) shells from stable agroforestry systems as feedstock for small-scale gasification units to over 1,050 farmers drying agricultural products. In 2013, we plan to distribute approximately 6,000-10,000 metric tons of biomass fuels to over 4,000 farmers.

Our funders, partners and collaborators include:  Dutch NL Agency Global Sustainable Biomass Fund (GSBF), Fauna & Flora International (FFI), PT. Export Leaf Indonesia (ELI) (a subsidiary of British American Tobacco (BAT)), and various local small-scale producers, entrepreneurs and NGOs.

 lombok deforestation

Project Background

Lombok faces interrelated threats to its energy supply, landscape integrity, water security, and local economy.  Over the last decade, kerosene has functioned as the predominant source of fuel for both household use and agricultural processing.  But in 2008, the Indonesian government announced that it would phase out subsidized kerosene starting in 2010.

The designated substitute fuels, Liquid Petroleum Gas (LPG), coal, and fuelwood, used in over 13,500 agricultural curing kilns island-wide, have generated myriad economic and environmental problems.  LPG is too expensive for many households while coal dramatically increases air pollution and carbon emissions. The recent conversion of most of the island’s agricultural curing kilns for solid fuel, led to an increase in  fuelwood use, both from legal and illegal sources.  This raises the specter of deforestation within and around Mount Rinjani National Park, which threatens critical watersheds and local water supplies.

Near Term Goal

The initiative’s primary goal is to establish a sustainable supply chain for biomass energy production, processing, and marketing for use in households and rural industries in Lombok.   The use of renewable biomass energy will create income opportunities for farmers, help alleviate poverty, reduce dependency on fossil fuels, promote biodiversity and carbon conservation, and enhance water security.

Petani BAT yang menggunakan bahan bakar kulit kemiri

Development of Sustainable Biomass Supply-Chains

 Alarming Trend: Policies introduced to correct environmental externalities may, at times, generate perverse incentives and lead to market failures. Based on a baseline study conducted by STC in 2011, 37% of the industry’s farmers used fuelwood in conventional kilns as a replacement for kerosene. If forests yield 2 m3 of wood per hectare[1] on average each year, an estimated 136,490 m3 of timber was required in the drying and curing of tobacco. Overall, this means that Lombok’s tobacco industry required 68,245 hectares of harvested fuelwood to meet its energy demand.

 

Collaborative Solution: Realizing the project outcomes hinges upon stakeholder cooperation. The Lombok Energy Initiative’s consortium of stakeholders has demonstrated that economic welfare can be balanced with environmental stewardship through the development of sustainable biomass supply-chains.

Community-Based Production of Non-Timber Forest Products:  STC partner Fauna & Flora International (FFI) facilitated the formation of 45 farmer groups and the planting of 115,840 candlenut trees as part of an improved agroforestry system which helps to rehabilitate degraded watersheds.  The activity generates two revenue streams that raise rural incomes: its fruit can be processed as a food product and sold in local markets while its shell is a non-food grade biomass suitable for thermal combustion. Semi-annual harvesting of candlenut incentivizes rural communities to maintain and protect these trees.

Mobilizing the Private Sector: Biomass products will only generate economic benefits for rural communities if producers have access to markets. Once established, supply chains become self-sustaining solutions powered by local and regional entrepreneurship. Subcontracted under the NL Agency-funded project, STC was tasked to create outlets for the project’s production; sales and distribution will begin in 2015 when the trees reach maturity.  Under the project, STC launched a pilot effort in 2010 to create demand for candlenut shells and build infrastructure linking producers to consumers. To meet interim energy needs, STC established supply lines of candlenut shells from local sources in Lombok and from Flores Island.  In addition to involving small enterprises in production, transportation and distribution, STC has also connected with major companies through their Corporate Social Responsibility (CSR) programs, two of which were consortium members in the project.

 

The Process of Commercialization: STC has worked extensively to foster institutions which not only support the project’s objectives, but also lay the foundation for other endeavours. Various rural industries can benefit from the logistical networks and financing solutions developed by STC in Lombok.

Logistics: STC’s distribution channels connect 1,200 candlenut shell producers (farmers), primarily women, from nine villages on Flores Island and also RSPO certified palm-oil plantations in Kalimantan to over 1,000 small farmer producers in Lombok. The transportation and distribution networks span over 700 km and will facilitate the development of future product markets.

Shaping Consumer Demand:  Lombok’s tobacco industry, comprised of over 12,000 smallholder farmers who supply 18 major companies, produces 70% of Indonesia’s export-grade tobacco. STC employed a bottom-up marketing strategy to promote sustainable biomass while bridging stakeholder interests lay at the heart of this campaign. The combination of technology and fuel-type used to dry and cure tobacco leaves significantly enhances farmer welfare.  Farmers seek low-cost solutions that yield a high quality product to maximize their profits. Large companies work directly with farmers to disseminate sustainable practices and supply them with fuel.

STC promoted gasification technology and candlenut shell use at the grassroots level through field demonstrations. Farmer preferences influence large companies who are then more likely to introduce the system to other farmers, thus catalyzing a positive feedback cycle potentially supporting sustainable practices. STC cooperated with two of the largest tobacco companies by emphasizing the role of sustainable biomass in their CSR and Research &Development programs while innovative technological solutions have filtered back down to farmers.

 

Impact: STC exceeded its project target of 1,000 tons by delivering 1,700 tons of palm oil kernel shells (POKS) and candlenut shells, which illustrates a growing market for sustainable biomass. But activities occurring outside the project’s planned scope are considered as a more significant indication of success:

  • Farmer groups, and other small distributors, have begun distributing and promoting POKS and candlenut shells to their local communities.
  • An independent multi-stakeholder association of biomass producers, traders, and distributors was set up in mid-2012.
  • PT. Export Leaf Indonesia (ELI) initiated a 2,000 ton order of RSPO certified palm oil kernel shells and 200 tons of candlenut shells for the 2012 season, and foresees significant further expansion in coming years.
  • New forms of sustainable biomass are being developed for various rural industries.
    • STC and FFI hosted a training-of-trainers charcoal making workshop. Some of the 15 participants from 5 villages have expressed interest in launching agriculture and agro-forestry residue charcoal projects.
    • Eager to build on this momentum, STC is currently discussing a mixed-biomass briquetting program. Charcoal produced by smallholder farmers would be combined with wood charcoal from PT. Sadhana Arifnusa’s CSR afforestation project.

 The entrance of suppliers and the development of new products will entrench sustainable biomass as viable energy solution in Lombok.

Looking to the Future: STC has suceeded in bringing the pilot project to a commercial scale in Lombok.  It will be replicating similar supply chains in other parts of Indonesia.