Plenty Magazine has a look at the steady replacement of orang utans (and their home forest) with palm oil plantations in Indonesia - Orangutans and palm-based biofuel don't mix.

I have come to northern Sumatra, an island in the Indian Ocean covered with twisting dirt roads and steep green mountains, to report on the orangutans because there isn’t much time. Experts say the world’s 30,000 remaining orangutans will go extinct in 3 to 20 years. The last of the hairy apes live on the islands of Indonesia and Malaysia, where they spend most of their time in the trees, eating fruits and leaves.

Here in Indonesia, their forest home is being leveled at a rate faster than 300 football fields per hour, according to Greenpeace forest campaigner Hapsoro, primarily to make way for palm oil plantations, vast expanses of non-indigenous palms where the trees’ fruit is harvested for its rich oil. The oil is found in sundry products, from snack foods to beauty products, and is increasingly being used in biofuel production. The rainforest is disappearing so quickly that there is not enough food left for the orangutans to forage. In the Bukit Luwang national Park, they are hand fed bananas from park rangers to supplement their diet.

“The future for the orangutans is in the hands of the humans now,” said Dharma Bhodi, a park ranger at Bukit Luwang who was born and raised in this remote region. As Bodhi talks, an adolescent male orangutan hangs lazily by one arm in a tree above us. He looks down occasionally, gives a bored look, and reaches for a handful of leaves to chew. “Humans have been cutting down the forest for plantations. I have seen the places that used to be rainforest and now are plantation, you can’t recognize it anymore,” he said. “Neither can the orangutans."

Palm oil has long been a staple in Indonesia. There (and in products the world over) it’s used in everything from soap to ice cream. Over the last year and a half, crude palm oil has become even more valuable in the global rush for environmentally sustainable biofuels: In fact, due to rising demand, the price for the oil has increased by 88 percent. Poor countries like Indonesia, the world’s leading palm oil producer, are clearing thousands of acres of pristine rainforest to plant the crop.

Plantation proponents say that palm oil is environmentally superior to fossil fuel because it doesn’t add to the earth’s over-all carbon dioxide levels. Instead, carbon dioxide created when the biofuel is burned is absorbed by the plant itself. Another boon is the economic growth for small landholders and family farmers.

Critics say those benefits aren’t worth the ecological costs of palm oil production. Destruction of rainforest to make room for plantations releases huge amounts of carbon dioxide: clearing land produces some 400 mega-tons of the greenhouse gas annually in Indonesia. Meanwhile, orangutans and other species that call the rainforest home are left searching for food, water, and shelter in a barren mudscape.

But some in Indonesia are working to stem the spread of the seemingly unstoppable palm industry. Hardi Baktiantoro founded the Centre for Orangutan Protection in Indonesia, a Jakarta- based non-profit. He, his wife, and her brother wear matching T-shirts that say “Palm Oil Kills.” Together, along with his two toddlers, they take frequent trips to document decimated rainforest areas. He takes photos while she shoots video for use on their website, in reports, speaking engagements, and direct-action events. They are trying to save what’s left of the rainforest for the orangutans.

“I find dead orangutans, they have starved to death. There is no food, no water,” he said. He tells me that on the Indonesian island of Kalimantan (formerly Borneo), more than ten orangutans are starving to death each day because of palm-oil driven deforestation. “The situation for orangutans today is very, very critical. The experts say the orangutans will be extinct in 2015. The orangutans will be extinct in next three years unless the government takes extreme action to save them. But instead they are planning convert 455,000 hectares of forest [in Kalimantan] into new plantations, mostly palm oil,” he said.

I spent a week in Malaysia back in June, loafing about in the sun on the island of Langkawi. While I mostly tried to ignore the news flow, I did read the local paper each day and there seemed to be plenty of energy related stories on the boil. These ranged from prominent exposure of the global "energy and food crises" to more locally focused issues, which I'll take a look at in this post.

Tourism

Tourism is Malaysia's third largest foreign exchange earner after manufactured goods and palm oil, so rising fuel prices are likely to crimp the local economy (although palm oil exports would seem likely to offset the impact on the other 2 sectors).

This was borne out anecdotally during my visit, as the resort driver who took us to the airport at the end of our visit noted that off season was much quieter than normal, with a occupancy rate of around 30% compared to the usual 50%, which he blamed on the rising price of oil. This doesn't seem to be reflected in overall visitor numbers so far though, so perhaps it is just the higher-end resorts that are being impacted so far.

As taxi drivers go he seemed remarkably well-informed about energy issues, following this opening gambit with a long line of questions about my opinion of the future of oil prices, the pros and cons of using LPG / CNG fuelled cars vs electric cars, what energy sources Australia used to generate electricity, how much fossil fuel we export and the impact of the Australian drought on rice prices.

Oil Production

Malaysian oil reserves, believed to be around 4 billion barrels, are estimated to last less than 20 years at the current rate of production. The country is now widely assumed to now be past peak. The country is still a net oil exporter, however there has been speculation that this may end as soon as 2011, becoming yet another example of the "export land" phenomenon.

The EIA forecasts that Malaysia’s oil production will fall to 693,000 bbl/d in 2008, a 13 percent decrease from 2006 levels. Most new oil fields are located offshore. Recent finds have largely been off Sabah state on the island of Borneo, with 26 deepwater fields discovered since Murphy Oil discovered the Kikeh field in 2002. Seven of these fields are slated for development over 2008 to 2012. For the time being, these new fields are compensating for the depletion of existing fields, with production rebounding somewhat recently.





Oil represents around 10% of Malaysia's export income.

Peak oil wasn't mentioned in the local press during my visit, though Shell was doing a roadshow of their latest scenario planning output - Blueprints or the Scramble.

Petronas

Petronas is Malaysia's national oil company - wholly owned by the government and reporting directly to the Prime Minster (not Parliament). It ranks in the top 100 corporations globally, is the 8th most profitable in the world and the most profitable in Asia.


Petronas' oil income has enabled the Malaysian government to fund all sorts of grand experiments, from the famous Petronas Towers in Kuala Lumpur to paying for Malaysian astronauts to go into space as passengers on Russian expeditions - this wasteful expenditure has come in for criticism though from people concerned that this dwindling income stream could be put to better uses and is often being wasted.

This criticism has increased in recent months, as Petronas' soaring income has been matched by cuts to government fuel subsidies, resulting in a 40% jump in the price of fuel (though it is still cheap enough for smugglers to try to arbitrage the price difference between Malaysia and Thailand it seems, judging by the local press) and sparking protests across the country.

The government has responded to the unrest by offering a special dividend to "ease the people's burden".

The company is trying to adapt to declining discoveries in its home market by expanding abroad in a variety of locations, including Myanmar, Russia, Mauritania, South Africa, Sudan and Iran.



Palm Oil And Food Prices

Malaysia is one of the world's largest producers of palm oil - an important feedstock for biodiesel production.



The price of palm oil has soared in recent years, from around 1200 ringgit per ton to almost 4000 ringgit per ton - only recently sinking back to the 3000 ringgit per ton mark.

Oil palm cultivation uses 67 percent of Malaysia's agricultural land, and around 500,000 people work in the industry. The country expects palm oil production will hit 20 million tonnes by 2020.

There has been concern expressed locally as well as internationally about the impact on food prices of using palm oil for fuel instead of for cooking. There are also concerns that continued expansion of oil palm cultivation will mean extinction for the orang utan.

During the mild panic that erupted over rising rice prices in the first half of the year, the Malaysian government threatened to start bartering palm oil for rice, bypassing international commodity markets entirely.



Gas Prices And Rubber Gloves

Rubber prices have soared in recent years, with rubber plantations now expanding rapidly as a result, sometimes at the expense of palm oil plantations.

My energy enthusiast taxi driver noted that this has been positive for rubber farmers like his father, who are frequently small holders and traditionally had a difficult and lowly paid job. Apparently over the past decade incomes for these farmers have increased 10 fold, from something like $30 per month to $300 per month (no - you won't get rich becoming a rubber farmer).



Gas prices have also risen sharply, amplified by cuts to government subsidies.

The combination of these two factors has meant trouble for rubber glove manufacturers, who use both rubber and gas in glove production. One Malaysian business, Kossan, is the world's third largest glove manufacturer - producing 12 billion items per year - with gas comprising the bulk of production costs. Another Malaysian producer, Top Gloves, is the world number one, producing 30 billion gloves per year.

Glove manufacturers aren't the only ones impacted, with the price of tyres and rubber boots also on the rise.

Somewhat surprisingly, given Malaysia's relatively plentiful gas supplies, peninsula Malaysia has insufficient supply to meet demand, with 23% of gas used imported.

This has lead to the bizarre situation of the country building coal fired power plants to meet its energy needs, baulking at building a gas pipeline and instead relying on Indonesian coal exports. On a slightly brighter note, the coal plants are replacing a lot of existing diesel fuelled generators, and the government is promoting the upgrade of old gas turbines to new efficient models.