Building Capacity and Sharing Lessons on Fuels in Indonesia

Sustainable bioenergy and liquefied petroleum gas (LPG) were the topics of discussion last month at Bioenergy Week in Indonesia.

The Global Bioenergy Partnership (GBEP), an international initiative hosted under the UN Food and Agriculture Organization (FAO), hosted their Third Bioenergy Week in Medan, Indonesia, May 25-29th. Presenters and participants from across the world gathered to discuss social, economic and environmental sustainability and development opportunities across Asia. Roundtables were assembled to confer on how the GBEP community can coordinate actions towards sustainable advanced biofuel development in the region.

Bioenergy has a significant role to play in addressing the world’s energy and cooking needs. More efficient technologies, processing methods, sustainability considerations and supportive policy frameworks could drive substantial impacts on carbon mitigation, deforestation and health. In India, for example, there are over 840 million tons of biomass available that could be converted to useful fuels and electricity for a variety of productive uses, including clean cooking.

Conduct thorough assessments of local energy needs and sustainable biomass/bioenergy potentials
Ensure multi-stakeholder engagement in bioenergy planning and decision-making
Create stable, long-term policy frameworks
Streamline and speed-up authorization/licensing procedures
Promote sustainable agricultural intensification
Invest in improved infrastructure and logistics
Promote the establishment of robust and efficient supply chains for biomass and residues
Support smallholders in bioenergy supply chains through inclusive business models
Strengthen the capacity of smallholders in order to increase their productivity and help them comply with sustainability requirements.

Beyond their bioenergy policies, Indonesia is also known amongst energy development circles for their large scale LPG conversion program. The launch of the Indonesian Government’s Kerosene to LPG Conversion Program began in May 2007. The Program’s goal was to replace the use of kerosene for cooking by providing consumers with a free start-up kit of a 3 kg cylinder, stove set, and initial gas, while also reducing the economically-burdensome subsidy on kerosene.

Before the program, about 87.5% of the population relied on kerosene for household cooking. As a result of the program, the use of LPG for domestic cooking has increased from 6.4% to 91.1%. In urban areas, 93% of the households used LPG after the conversion program and in rural areas, more than 89% of the households were using LPG after the program. To date, the program has been implemented in 23 provinces with over 50 million users of LPG and 8.2 million kiloliters of kerosene withdrawn.

Even with the successes of the Kerosene to LPG Conversion Program, a few key challenges were present. Safety practices in the Indonesian LPG Industry needed improvement. To address this issue, the implementing partner, Pertamina, and the World LPG Association held a Best Practice workshop with all stakeholders to identify the issues and develop an action plan to improve the safety situation. They also hold an audit to implement safety practice inspections in their distribution nodes. Early on in the program, there were also reports of scarcities in kerosene in the non-converted areas, likely due to groups that bought kerosene in non-converted areas and sold it in converted areas. Additionally, in some locations, the supply of LPG was not meeting demand, causing major issues where both fuels were not available. As a result, Pertamina provided additional LPG buffer stocks as well as socialization efforts to increase awareness and ensure a smoother long-term transition.

In many developing countries, LPG is fast becoming an important source of fuel for cooking. The Indonesian LPG conversion program is an interesting example of clean fuel market development that can yield positive impacts on health and the environment, and it provides some valuable lessons for other countries in the midst of their own LPG policy reforms. A few key lessons from the Indonesian model include:

The need for strong institutional bodies, such as the government or an appointed regulator, supporting the implementing companies with consistent financing and regulatory schemes
Efforts should be taken to minimize the negative impacts and social risks, such as a gradual withdrawal of the current fuel and increasing the pace over time to limit the period of consumer distress
A monitoring center should be created to mitigate risks and handle customer issues
Appropriately limiting geographical target areas to enable rapid and significant positive impact to first establish a footprint
Effective, integrated and continuous communication including post-program socialization
Usage and support of existing fuel distributors (kerosene agents and retailers).

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