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Palm Oil Biomass Based Eco-Industrial Cluster in Indonesia

Case Study of Siak Hulu, Kampar, Riau Province

Prof. Prof. TjandraTjandra SetiadiSetiadi, Ph.D., Ph.D.Faculty of Industrial Technology, ITBFaculty of Industrial Technology, ITB

Bandung, IndonesiaBandung, Indonesiatjandra@che.itb.ac.idtjandra@che.itb.ac.id

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Country Profile - Indonesia• Area : 1,904,000 km2

• Population : 222.20 millions

• Growth rate : 1.34%

• GDP per capita : USD 1,946 (2008)

Major Environmental ConcernsWater Surface water pollution due to improper management of industrial waste, agriculture, mining & domestic waste water

Energy Depending on fossil energy

Air and atmosphere Air pollution due to emissions in big cities exceeds the standards

Land and forest Illegal logging and land conversion

Coastal and marine Unhealthy Exploitation practices

Largest Crude Palm Oil (CPO) producer in the world since 2006

45.5 % of the world’s CPO are from Indonesia

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Industrial Development in Indonesia

• Major Foreign Direct Investment (FDI):

– Asia from Malaysia (16%), Singapore (12.3%), Korea (4.9%), & Japan (2.7%) and since 2004, presentlyChinese companies shows interest.

– European investment approvals from the United Kingdom (6.5%) and Switzerland (2.6%)

• FDI by sector : Agriculture, forestry, and fishery (5.6%); Mining (1.9%); Manufacturing (54.5%); Electricity, gas, and water (8.9%); Construction (15.2%); Services(13.9%)

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Foreign Direct Investment in Indonesia

0

10

20

30

40

50

60

70

Europe America Asia Australia Africa Other

Region

% o

f T

ota

l 2002 2003 2004

2005 2006

0

5

10

15

20

25

30

35

40

Hon

g K

ong,

Chi

na Japa

n

Kor

ea, R

ep.

of

Mal

aysi

a

Phi

lippi

nes

Sin

gapo

re

Chi

na

Chi

nese

Tai

pei

Tha

iland

Indi

a

Sau

di A

rabi

a

Oth

er

Country

% o

f T

ota

l

2002 2003 2004

2005 2006

Food and beverages

Sea product processing

Textile and textile products

Footwear

Palm oil

Wood

Rubber and Rubber Goods

Pulp and paper

Electrical machinery and electrical tools

Petrochemical

Top 10 Industries

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Area and CPO Production

0

2

4

6

8

10

12

14

16

18

20

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

Year

Va

lue

(M

illio

ns

)

Area (Millions Ha)

CPO (ton)

Crude Palm Oil (CPO) Production in Indonesia

0.0

2.0

4.0

6.0

8.0

10.0

12.0

Sumatera Java Bali andNusa

Tenggara

Kalimantan Maluku andPapua

Islands

Pro

du

cti

on

(M

illio

ns

to

n)

2003

2004

2005

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Crude Palm Oil (CPO) Production in Sumatera by Province

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

NanggroeAceh

NorthSumatera

WestSumatra

Riau Jambi SouthSumatera

BangkaBelitung

Bengkulu Lampung

Province

Pro

du

cti

on

(M

illio

ns

to

n)

2003

2004

2005

Palm Plantation Area in Sumatera by Province

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

NanggroeAceh

NorthSumatera

WestSumatra

Riau Jambi SouthSumatera

BangkaBelitung

BengkuluLampung

Province

Are

a (

Mill

ion

s H

a) 2003

2004

2005

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STUDY AREA

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STUDY AREA

Riau Siak Hulu Cluster 0 mi 105

Palm oil millBiodiesel plant

Biomass power plant

1. PT Multi Palma Sejahtera POM (45 t FFB/h) non plantation2. PT Sinar Agro Raya POM (45 t FFB/h) non plantation3. PT Inti Indo Sawit Subur Buatan I (60 t FFB/h)4. PT Sinar Siak Dian Permai POM (90 t FFB/h) 5. PT Meridan Sejati Surya POM (45 FFB/h)6. PTPN V Sei Pagar (30 t FFB/h)

12

34

56

Km25 Km34

Km40 Km50

Km60

Km22

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0

400000

800000

1200000

1600000

2000000

Rubber Coconut Palm oil Coffee Sago palm

Crops

Pla

nta

tio

n A

rea

(h

a)

Study Area : Plantation

Palm oil plantation compared with other

crops in Riau Province

Paddy, cassava, corn, sweet potato are main product of agriculturePlantation : Palm oil (70.43%), Rubber (26.9%)Riau is the largest palm oil plantation in Indonesia– Planted area : ~1,400,000 ha – Mature area : ~ 1,100,000 ha – Palm Oil Production : ~ 3,100,000 Ton (max)– Number of Palm Oil Mill : 126 units

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Population in Kampar by sub-district

0

10000

20000

30000

40000

50000

60000

70000

80000

Kam

par

Kiri

Kam

par

Kiri

Hul

u

Kam

par

Kiri

Hili

r

Kam

par

Kiri

Ten

gah

Gun

ung

Sah

ilan

XIII

Kot

o K

ampa

r

Ban

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ang

Bar

at

Sal

o

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Tap

ung

Hul

u

Tap

ung

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Ban

gkin

ang

Ban

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ang

Seb

eran

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Kam

par

Kam

par

Tim

ur

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bio

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Kam

par

Uta

ra

Tam

bang

Sia

k H

ulu

Per

hent

ian

Raj

a

Sub-district

Po

pu

lati

on

Population in Kampar by Year

480000

520000

560000

600000

2003 2004 2005 2006

Year

Po

pu

lati

on

Social Data

RIAU PROVINCEPopulation : 4 764 205 people Average birth Rate: 2.7 % per year Average Density : 54,64 people /km2

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Waste from Palm Oil Activities

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PlantationPOMFFB

Waste POME

EFB

Oil palm trunk

Oil palm frond

Palm kernel shell

root

Biomass waste

FFB-Fresh Fruit BunchesPOM – Palm Oil Mill

EFB – Empty Fruit Bunches

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BIOMASS UTILIZATION IN PALM OIL MILL

EFB

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• In the palm oil value chain in the area, there is an overall surplus of waste and the utilization rate of these wastes are relatively low, especially in the case for POME and EFB.

• Generation of other mill wastes can be reduced significantly by adopting cleaner production concepts. The field residues like EFB are currently disposed as mulch or utilized as fertilizer.

• Wastes from the palm oil industry lead to severe environmental problems in future and should be utilized as resources to develop a bio-economy and market the carbon neutral products.

• Biomass Utilization: Fibre and kernel shells are used to produce steam and electricity for the boiler. The boiler ash and EFB are used in plantation.

• Liquid waste is digested in open lagoon and thereafter is sent to plantation for land application as fertilizer at a BOD of between 1,000 to 3,500 ppm.

Baseline of Waste Management Practices in POMs

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• Solid waste– The utilization is still in a little amount, and the rest is

disposed on plantations

• Liquid waste– Contribute to surface and ground water pollution, Green

House Gasses (GHGs), bad odor

Potential Environmental Impacts

Conversion of forest to palm plantations decrease the area of primary forest

However illegal logging and illegal mining are the major causes of the deforestation

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Liquid Waste Palm Oil

Mill Effluent

Liquid Waste Palm Oil

Mill Effluent

Remnant Oil from

EFB

Remnant Oil from

EFB

Excess Palm Kernel

Shells

Excess Palm Kernel

Shells

Empty Fruit

Bunches

Empty Fruit

Bunches

Oil Palm Trunk

Oil Palm Trunk

Oil Palm Frond

Oil Palm Frond

Refining Process

Crude Palm Oil

Crude Palm Oil

Extraction

Fresh Fruit Bunches

Palm Oil Value Chain

Palm Plantation

RootRoot

EFB incineration mulch or fertilizer

Dewatered EFB heat and/or electricity or organic diesel

Excess PKS combustion with the other POM solid wastes

The recovered remnant oil supplement for CPO production or used to produce bio-diesel

Biogas from POME existing energy system or for electricity generation

Possible Uses

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POTENTIAL SOURCES OF RAW MATERIAL IN SIAK HULU

1,530,000Total

150,000Meridan Sejati Surya6

150,000Sei Pagar PTPN V5

250,000Sinar Siak Dian Permai4

150,000Multi Palma Sejahtera3

150,000Sinar Agro2

210,000Indo Sawit1

FFB, ton/yearPalm Oil MillNo

CPO : 336,600 ton/yearSolid wasteEFB : 351,900 ton/yearPKS : 91,800 ton/yearMF : 198,900 ton/yearLiquid wastePOME : 918,000 ton/year

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The Possible Eco-Industrial Cluster

Biomass waste

RURAL AREACPO & DERIVATIVES

LOCAL DEMAND &EXPORT

Industrial & economic DEVELOPMENT

POM

UTILIZATION OF WASTE

Value added products

Power generation

Urban area

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Potential Socio-Economic Impacts1. Job Opportunities

Creates the need biomass delivery services (transportation & biomass suplai chain)

Raw material strategies:– Supply of EFB from several POMs in the Kampar District– The dewatered EFB intended for the incinerator in the POMs will

be sent to central biomass power plant that can efficiently convert the energy from biomass into heat and power

2. Local Business Opportunities

Conversion of biomass residues in value added products, such as:– Gasification of palm kernel shells (PKS) to produce electricity– Composting of EFB, OPF to produce fertilizers– Trunk utilization to produce fibre board– OPF (oil palm fronds): as an animal feed – MF (mesocarp fibre): to produce fibre board.

Provide support to the plant such as repair and maintenance the machines

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3. Clean & renewable Energy

• Enhance the living standard in rural community

• Generate related benefits and economic activities

4. Reduction in Energy Cost

5. Poverty Eradication

• The big gap of education level and infrastructure distribution income is well not-spread in Riau province

6. Increase of Electricity Supply Coverage

Potential Socio-Economic Impacts

• Most of the rural inhabitants or households are using kerosene pressure lantern as their source of lighting.

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• Availability of biomass waste as raw material for power generation

• Several Palm Oil Mill industries

• Government Policies on renewable energy

OpportunitiesStrengths

Weaknesses Potentials

• Create working opportunities

• Prevent the urbanization

• Spread-out the development

• Reduce the pollution through biomass power generation

• Reduce the dependability to fossil fuel

• Decentralized a power generation systems

• Community participation in local natural resources management

• Create several value added products from palm oil biomass waste

• Organic farming from biomass ash

• Lack of awareness on technologies to recover the agricultural resources

• Low investment on utilization of palm oil biomass waste

• Migration to the cities at Riau (Pekanbaru and Dumai)

SWOP-Analysis

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Conclusions

• Palm oil plantation and palm oil mills clusters are already exist

• The clusters are located in the rural setting.• In this cluster, significant amount of biomass waste

generated and disposed leading to environment and local health issue.

• Introduction of new technologies, cluster management system, market orientation are essential for a successful transformation of these biomass waste.

Hence, acceleration for transformation of a region into a eco-cluster is possible with

technology innovation

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