Do we have a plan B for energy?

(from the blogger:
this articles, as many other articles in this blog, not neccesarily represent the blogger point of view. as it purpose written at the blog title, this is also a storage for the relevant topics monitored from many media resources in internet.
thk, sp. siagian)


Are we dangerously dependent on Indonesia? Indonesia is India's top supplier of palm oil and coal - two forms of energy critical for our economic and individual growth. That is in itself not troublesome. But as Jakarta introduces new policies under pressure from environmental groups and local demand, can we ignore questions about future supply and its cost?

Take palm oil. Indonesia produces about 46% of global supply. Unpredictable weather keeps output volatile while new land is scarce. Last month, Indonesian President Susilo Bambang Yudhoyono banned new plantations on 65 million hectares of peat land and primary forests. Indonesian Palm Oil Producers Association says it would slow area expansion from an average of 350,000 hectares in the last four years to less than 200,000 hectares annually over the next two years.

It also triggers a tussle between Jakarta and regional governments which are allowed to explore and manage their own natural and land resources. Local governments have issued thousands of permits in mining and plantation business, the two sectors vital to increase revenues. As most allocations for palm oil plantations are in forests that cannot be used for farming, they could be revoked by this moratorium. Indonesian plantations are already under pressure from environmental groups for deforestation. Big corporate buyers such as Unilever and Nestle are demanding sustainability certification.

Currently, certified oil is a fraction of total sales but a mandatory scheme starts next year. Sustainable measures are expensive and plantations will pass on higher costs to consumers. That means people like us. At the same time, more and more palm oil is being produced by small and marginal farmers in no better condition than our own. By next year, 40% of whose yields are half that of plantations.

As their numbers grow, lower yields and inefficient scale will lift prices. More crucially, Indonesia's own demand for palm oil as food, biodiesel feedstock and industrial raw material is rising. It is world's fourth most populous nation and south-east Asia's largest economy. Affluent middle class accounts for approximately 70% of GDP. As in India, eventually the exportable surplus will dwindle, unless buoyed by faster increase in supply which is doubtful. Indonesia will never stop exporting palm oil because it fetches serious money.

A progressive export tax allows it to earn more revenue when palm oil prices rise. However, with imports expected to supply half the total consumption by 2020, India can't bank on Indonesia being always affordable or ample. Thermal coal burnt in power sta-tions faces similar risks. Indonesia is the world's and India's top supplier. Though only a fifth of our thermal coal consumption is imported today, volumes will spurt as electricity demand expands 56% in next six years. Indian companies are investing heavily in Indonesian mines for long-term supply. Yet, that is no guarantee. Already resource nationalism is raising its ugly head.
source:
http://economictimes.indiatimes.com/markets/commodities/do-we-have-a-plan-b-for-energy/articleshow/8919252.cms