Palm Oil, Carbon, and the (Hopefully Not) Hazy Future of ASEAN

Abdul Halim

4 min read

Indonesia has immensely benefitted from land and climate condition of Kalimantan and Sumatra, allowing it to massively open palm oil plantations in the two islands, and for decades turning the country into the world’s biggest producer of the crucial global commodity. Many experts have agreed that the industry has made crucial contribution to the Southeast Asia’s biggest economy.

However, as it is with any other industries during this decade, Indonesia’s palm oil industry has to start to move into a greener direction. There are two talking points if we want to discuss about the environmental impacts of Indonesia’s palm oil industry: peatlands and Southeast Asian haze.

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Slash-and-burn technique is a popular method for clearing lands in the dense forests of Sumatra and Kalimantan; and it is popular for a reason. Compared to other sustainable methods of land clearing, it is cost effective and relatively easy to do—a perfect combination for those looking for lands for their palm oil plantations. Although in some cases it is a viable option, it is just unsustainable to do this on a large scale such as seen in Kalimantan and Sumatra. Such practices have very high probability of having the fires spread to peatlands, particularly during the dry season.

If such fires reach peatlands, the impact is not only burned vegetations and animal migrations. Peatlands, which covers about 3% of total Earth’s surface, is very rich in carbon. It contains approximately a third of all soil carbon on Earth. When burned, it releases an incredibly toxic amount of carbon dioxide, carbon monoxide, and methane for days. Worryingly, even though the fire on land seems totally extinguished, these peatland fires primarily burn underground, releasing said chemicals in the form of gas from below the visible soils.

It is wrong, however, to assume that Indonesia’s government pay no attention to the environmental problems this practice created. Since the particularly severe fires of 2015, the administration of President Joko Widodo has allotted up to $7 billion to restore 2.5 million hectares of degraded peatland across the nation. The government also laid out efforts for forest and land rehabilitations, which in 2021 focuses on land rehabilitation using seedlings from community nurseries and permanent nurseries. The effort successfully rehabilitated 152,454 hectares of forests and land.

Southeast Asian Haze

The impacts of slash-and-burn practices perpetrated by irresponsible actors for their own personal advantage started to become a major issue for other Southeast Asian countries. Though in some cases these actors do not intentionally burn peatlands, the fire they started to clear lands frequently spread into peatlands.

During dry season, the possibility for the fires to spread into peatlands increased drastically. When a peatland is burned, it starts to release toxic smoke containing carbon dioxide, carbon monoxide, and methane. The smoke it produces has become a multinational catastrophe in some cases, impacting several nations in Southeast Asia. This phenomenon had in turn become a huge concern for ASEAN countries.

One particularly severe haze ever recorded, the 2015 Southeast Asian haze, predicted to have caused more than 100.000 deaths. That same year, Malaysian and Singaporean authorities offered to help fight the fires causing this haze. Though at first, they were rejected by Indonesian governments, eventually the offers were accepted after countless criticism from other Southeast Asian countries.

The peatlands’ carbon released that year also had a dire impact on the environment. Reports have shown that the amount of emission during 2015 Southeast Asia haze is more than Germany’s total carbon emission all year.

The severe air pollution also impacts various economic and educational sectors in several countries across Southeast Asia. Students in Malaysia and Singapore had to wear masks to go to school and almost 80.000 Indonesians were affected by the haze. Economically, the World Bank estimated that during the five months period of the severe haze crisis, it costed Indonesian government about USD 16.1 billion. This became the costliest environment-related catastrophe that Indonesia ever faced since the Aceh tsunami in 2004.

The transnational effects of the haze prompt neighbouring countries to do more than just fighting the fires. In 2002, ASEAN stepped in to try to mitigate the haze by introducing ASEAN Agreement on Transboundary Haze Pollution. However, under the so-called “ASEAN way” of non-intervention, the agreement could not really take off before Indonesia approved it.

Indonesia finally ratified the agreement in 2014; though at the time, a lot of countries still worried about Indonesia’s ability to tackle the issue. The government of Singapore also passed a law in 2014 to criminalize conducts (also effective to parties outside Singapore) which causes haze pollution in Singapore. The law seeks to punish entities (companies, not countries) in and outside Singapore which pollute Singaporean air.

Where are we in 2023?

Before we can confidently talk about the prospects of another haze episode in 2023, we should jump back to 2019—when Southeast Asia suffered from arguably one of the worst haze disasters since 2015. After several years of seemingly successful progress, the haze problem proved that it was far from being gone. At one point, the air quality in Singapore and Malaysia reached varying degrees of pollution levels never seen before in three years.

The situation changed along with the global spread of Covid-19. Due to the slow economy and restricted human activities, the promising and challenging industry of palm oil in Indonesia slowed down. As expected, the haze during 2020 and 2021 were not as severe compared to that before the pandemic.

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During 2022, however, due to an increasing pressure from the international market that demanded a “greener” solution to a global emission rate of which the industry was fuelling, the price of palm oil saw a record low. This was primarily due to the fear of a global recession, the abundance of CPO stocks in Indonesia and Malaysia, as well as the falling prices of other vegetable oils. In an effort to lift the economy, Indonesian government made several efforts in the forms of incentives and regulations adjustments to help the industry.

These incentives, however, have opened a huge possibility to cause unwanted side-effects. With Indonesia’s notoriety to take the matter of slash-and-burn practices not so seriously, it is not wrong to be worried about the current industry’s producers’ action in face of these incentives. Irresponsible actors might completely ignore the environmental impacts of the slash-and-burn practices to achieve their personal interests.

Looking at things at the third quarter of 2022, it seems that the industry’s future is hazy indeed. With prices continuing to decline as market prepare for a global recession, there could be two possibilities of this whole fiasco. First, Indonesia’s effort to lift the industry fails and the price continues to decline. Second, the incentives and efforts fuelled the industry’s irresponsible actors to start fires that will impact several nations at a rate that is likely to be hazardous.

In both cases, things are hazy for both Indonesia and the region.


Editor: Emma Amelia

Abdul Halim

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