Oil Palm Plantations

When this article was first written, the story of Indonesian oil palm was simple: Western governments promoting biodiesel were sacrificing Southeast Asian rainforest so that motorists in Europe could feel greener. That framing is now obsolete. The pressure on Indonesia's forests is still real, but almost every driver has changed, and a foreign resident trying to understand the issue in 2026 needs the current picture, not a snapshot from 2006.

The demand no longer comes from the West

The biggest reversal is who is buying. Since 2020 the dominant force behind Indonesian palm-oil-for-fuel has been Indonesia's own mandatory blending programme, not Western policy. The blend has climbed steadily: B20 in 2016, B30 in 2020, B35 in 2023, B40 from January 2025, and B50 (half palm-derived FAME, half fossil diesel) legislated to take effect from 1 July 2026, with a transition period to deplete B40 stocks. That makes Indonesia one of the highest biodiesel blenders on earth. The programme is funded by a levy on palm-oil exports, raised to 12.5 per cent, and is pursued for energy security and to cut the diesel import bill rather than for the climate.

The West, meanwhile, has moved the opposite way. The EU's Deforestation Regulation will bar palm oil linked to deforestation from entering the European market (now applying from December 2026 for large operators, mid-2027 for smaller ones), and the EU's renewable-energy rules already treat palm-based biofuel as high deforestation-risk and are phasing it out of their targets. Curbing Western demand, in other words, no longer curbs the planting. The lever is now in Jakarta.

Palm biodiesel still carries a heavy carbon cost

The core objection to palm biodiesel has not aged, however. Oil palms are small, bush-like trees, so the tall rainforest canopy that stores far more carbon must be felled and burned before they go in. Worse, once the drier land is used up, plantations push into swamp forest that grows on peat. Draining that peat exposes it to the air, it oxidises, and it releases carbon for decades. Grown this way, palm biodiesel can be worse for the climate than the crude oil it replaces. A plantation is also a biological desert: a single species across thousands of hectares excludes the diverse life the forest held, and invites pest outbreaks that are then met with pesticides leaching into the water.

The industry contests the deforestation label and has a genuine point on efficiency. Palm supplies a large share of the world's vegetable oil from a small share of its cropland, yielding several times more oil per hectare than soybean or sunflower. Indonesia is now the world's largest producer: roughly 16.8 million hectares, over 50 million tonnes of crude palm oil, some US$44 billion in exports in 2025, and around 16 million jobs, with nearly half the planted area held by smallholders. This is a formalised national industry, not a frontier free-for-all.

The forests, and what lives in them

After roughly a decade of decline, Indonesian deforestation surged about 66 per cent in 2025 to an estimated 433,751 hectares, the worst in eight years. The main drivers were President Prabowo's food- and energy-self-sufficiency estates and nickel mining, with oil palm now expanding east into Papua as Sumatra and Kalimantan run short of land. Even Tanjung Puting National Park in Kalimantan is still being cleared: one concession-holder razed over 3,000 hectares in 2025, much of it mapped orangutan habitat, despite court rulings.

The wildlife picture is more precise, and grimmer, than the old warning of species merely "at risk". All three orangutan species are now IUCN Critically Endangered: Bornean (about 104,700, up-listed in 2016), Sumatran (about 14,000) and the Tapanuli orangutan (fewer than 800, the most endangered great ape). The Sumatran rhino is Critically Endangered with perhaps 34 to 47 animals left in the wild, and the Sumatran tiger is Critically Endangered with under 600 mature individuals. Rescues and captive breeding continue, but every trend line points down.

Certification now exists; enforcement lags

There is a governance framework now, which there was not in 2006. Indonesian Sustainable Palm Oil (ISPO) certification is mandatory under Presidential Regulation 16/2025, extending to downstream industry by March 2027. The forest moratorium on clearing primary forest and peatland was made permanent in 2019. On paper, the free-for-all has ended. In practice the gaps are wide: as its deadline arrived, only around 40 per cent of the planted area was ISPO-certified and independent smallholders barely 1 per cent, and the moratorium is only a presidential instruction that excludes millions of hectares and has lost forest inside its own boundaries. Certification exists; the money and the political will to enforce it are the missing pieces.

Geothermal is no longer hypothetical

The old essay treated clean power as a hoped-for miracle. It is now measurable. Indonesia is the world's second-largest geothermal producer, at roughly 2,744 MW by the end of 2025, and was the fastest-growing large market that year, though it still taps only about a tenth of its estimated 23,742 MW of potential; the 2025-2034 electricity plan targets 5.2 GW by 2034. One caveat worth knowing: geothermal is legally permitted even inside conservation forest, so it is not automatically forest-sparing. Indonesia's energy transition is real and funded, but it is now framed as energy independence with fossil fuels as the transitional backbone, not a clean break. The forests will be decided by policy made in Jakarta, and it is worth watching which way it turns.

Contributor: RossScholes

Have comments or corrections? Please email editor [at] livinginindonesia.info.