Indonesia to Fine Palm Oil Companies $310 Million for Destroying Forests

On Friday, Indonesia said palm oil companies operating inside forested areas would be fined a total of $310 million, reported Reuters.

Indonesia and Malaysia are responsible for most of the world’s palm oil production — 85 percent — a major driver of deforestation, the Yale Center for Business and the Environment said. Deforestation accounts for 20 percent of greenhouse gas emissions worldwide.

“Clearing for oil palm plantations has been the largest single cause of deforestation in Indonesia over the past two decades,” a 2021 report by technology consultancy TheTreeMap and Greenpeace said. “It includes production forests, which are subject to limited economic activity, such as forest product extraction. It also covers forests for protecting watersheds and conservation forests, which include nature reserves and the country’s national parks.”

Firman Hidayat, deputy coordinating minister for maritime affairs and investment, said more than $30.7 million in fines had already been issued, but did not provide the names of the companies that had been sanctioned, Reuters reported.

“Much of the deforestation related to palm oil has occurred with companies and individuals setting fire to the landscape. In 2015, fires raged for months in Indonesia, severely impacting Indonesian and Singaporean air quality, displacing wildlife, and leading experts to assert that Indonesia was now a bigger contributor to climate change than the U.S. Palm oil development is also happening largely in biodiversity hotspots, threatening crucial species and habitats,” the Yale Center for Business and the Environment said.

Earlier, this year, the Indonesian Supreme Court upheld a fine of $61 million against oil palm company PT Rafi Kamajaya Abadi after massive plantation fires destroyed an area seven times bigger than New York’s Central Park, Mongabay reported.

In November, Indonesia said approximately 494,210 acres of oil palm plantations had been identified in forest-designated areas, according to Reuters. These forests are expected to be turned back over to the state for reconversion into forests.

“As palm oil production expands, companies, NGOs, governments, and local communities are all trying to navigate how to leverage the benefits of palm oil’s efficient yields with the consequences of its production. As with any major resource system, the picture is complex,” the Yale Center for Business and the Environment said.

In 2020, Indonesia issued rules regarding the legality of palm oil plantations being operated in forested areas in order to straighten out their governance. The measures were needed, officials said, since some companies had been managing the land for years.

According to the rules, companies had until November 2, 2023, to pay fines and submit paperwork in order to get the right to cultivate their plantations.

However, even though 8.1 million acres of Indonesia’s almost 42 million acres of oil palm plantations have been discovered to be in areas designated as forests, only owners of a total of 4.13 million acres have been identified.

“The story of Brazil after 2012 warns us that gains in forest protection are fragile, and easily lost,” said Helen Bellfield, deputy director of palm oil supply chain initiative Trase, as Mongabay reported separately last year. “This is the time to intensify both government and private sector efforts, such as strengthening the ISPO [Indonesian Sustainable Palm Oil] standard and stepping up implementation of zero deforestation commitments, including more detailed traceability reporting.”