Palm Oil Biomass Based EcoIndustrial Cluster in Indonesia

Case Study of Siak Hulu, Kampar,

Riau Province
Prof. Tjandra Setiadi, Ph.D.
Faculty of Industrial Technology, ITB
Bandung, Indonesia
tjandra@che.itb.ac.id
Tjandra 1

Country Profile - Indonesia

Area
: 1,904,000 km2
Population
: 222.20 millions
Growth rate
: 1.34%
GDP per capita : USD 1,946 (2008)

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

45.5 % of the
worlds CPO are
from Indonesia

Major Environmental Concerns

9 Water Surface water pollution due to improper
management of industrial waste, agriculture, mining &
domestic waste water
9 Energy Depending on fossil energy
9 Air and atmosphere Air pollution due to emissions in big
cities exceeds the standards
9 Land and forest Illegal logging and land conversion
9 Coastal and marine Unhealthy Exploitation practices
Tjandra 2

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, presently
Chinese 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%)
Tjandra 3

Foreign Direct Investment in Indonesia

70

Top 10 Industries

% of Total

60

2002

2003

2005

2006

2004

50
40

9 Food and beverages

9 Sea product
processing
9 Textile and textile
products
9 Footwear
9 Palm oil
9 Wood
9 Rubber and Rubber
Goods
9 Pulp and paper
9 Electrical machinery
and electrical tools
9 Petrochemical

30
20
10
0
Europe

America

Asia
Australia
Region

Africa

Other

% of Total

40
35

2002

2003

30

2005

2006

2004

25
20
15
10
5

Country

Tjandra 4

Other

Saudi Arabia

India

Thailand

Chinese
Taipei

China

Singapore

Philippines

Malaysia

Korea, Rep.
of

Japan

Hong Kong,
China

Area and CPO Production

Value (Millions)

20
18

Area (Millions Ha)

16

CPO (ton)

14
12
10
8
6
4
2
2007

2005

2003

2001

1999

1997

1995

1993

1991

1989

1987

1985

1983

1981

1979

1977

1975

1973

1971

1969

1967

Year

Production (Millions ton)

Crude Palm Oil (CPO) Production in Indonesia

12.0
2003

10.0

2004

8.0

2005

6.0
4.0
2.0
0.0
Sumatera

Java

Bali and
Nusa
Tenggara

Kalimantan Maluku and

Papua

Islands

Tjandra 5

Area (Millions Ha)

Palm Plantation Area in Sumatera by Province

1.6

2003

1.4
1.2

2004

1.0

2005

0.8
0.6
0.4
0.2
0.0
Nanggroe North
West
Aceh Sumatera Sumatra

Riau

Jambi

South Bangka Bengkulu Lampung

Sumatera Belitung

Province

Production (Millions ton)

Crude Palm Oil (CPO) Production in Sumatera by Province

2003

3.5

2004
3.0

2005

2.5
2.0
1.5
1.0
0.5
0.0
Nanggroe North
West
Aceh Sumatera Sumatra

Tjandra 6

Riau

Jambi

South Bangka Bengkulu Lampung

Sumatera Belitung

Province

STUDY AREA

Tjandra 7

STUDY AREA
1.
2.
3.
4.
5.
6.

PT Multi Palma Sejahtera POM (45 t FFB/h) non plantation

PT Sinar Agro Raya POM (45 t FFB/h) non plantation
PT Inti Indo Sawit Subur Buatan I (60 t FFB/h)
PT Sinar Siak Dian Permai POM (90 t FFB/h)
PT Meridan Sejati Surya POM (45 FFB/h)
PTPN V Sei Pagar (30 t FFB/h)

Palm oil mill

Biodiesel plant
Biomass power plant

Km22

Km25 Km34

Riau Siak Hulu Cluster

Tjandra 8

Km40

Km50

3
Km60

0 mi

10

Study Area : Plantation

Paddy, cassava, corn, sweet potato are main product of

agriculture
Plantation : 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

Plantation Area (ha)

2000000

Palm oil plantation

compared with other
crops in Riau
Province

1600000
1200000
800000
400000
0
Rubber

Coconut

Palm oil

Coffee

Sago palm

Crops

Tjandra 9

Social Data
Population in Kampar by Year

RIAU PROVINCE

600000

Population

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

560000

520000

480000
2003

Population in Kampar by sub-district

2004

2005

Year
80000

Population

70000
60000
50000
40000
30000
20000

Sub-district

Perhentian Raja

Siak Hulu

Tambang

Kampar Utara

Rumbio Jaya

Kampar Timur

Kampar

Bangkinang

Bangkinang Seberang

Tapung Hilir

Tapung

Tapung Hulu

Salo

XIII Koto Kampar

Gunung Sahilan

Kampar Kiri Tengah

Kampar Kiri Hilir

Kampar Kiri

Tjandra 10

Kampar Kiri Hulu

Bangkinang Barat

10000

2006

Waste from Palm Oil Activities

Tjandra 11

Plantation

FFB

POM

Oil palm trunk

Oil palm
frond

EFB
Waste
POME

root
Palm kernel shell

Biomass waste
Tjandra 12

FFB-Fresh Fruit Bunches

POM Palm Oil Mill
EFB Empty Fruit Bunches

BIOMASS UTILIZATION IN PALM OIL MILL

EFB

Tjandra 13

Baseline of Waste Management

Practices in POMs
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.
Tjandra 14

Potential Environmental Impacts

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
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

Tjandra 15

Palm Oil Value Chain

Possible Uses

EFB incineration mulch or

fertilizer

Biogas from POME existing

energy system or for electricity
generation

Excess PKS combustion with

the other POM solid wastes

Dewatered EFB heat and/or

electricity or organic diesel

The recovered remnant oil

supplement for CPO production or
used to produce bio-diesel

Palm
Plantation

Fresh Fruit
Bunches

Crude Palm
Oil
Extraction

Crude Palm
Oil

Refining
Process

Excess
Empty
Remnant
LiquidWaste
Waste
Excess
Empty
Remnant Liquid
Oil
Palm
Oil
Palm
Oil Palm Oil Palm Fruit
Palm
Palm
Kernel
Root
PalmOil
Oil
Palm Kernel Oil
Root Frond
Fruit
Oilfrom
from
Trunk
Frond
Trunk Bunches
Mill
Effluent
Shells
EFB
Mill Effluent
Shells
Bunches
EFB
Tjandra 16

POTENTIAL SOURCES OF RAW MATERIAL IN SIAK HULU

No

Palm Oil Mill

FFB, ton/year

Indo Sawit

210,000

Sinar Agro

150,000

Multi Palma Sejahtera

150,000

Sinar Siak Dian Permai

250,000

Sei Pagar PTPN V

150,000

Meridan Sejati Surya

150,000

Total

CPO
Solid waste
EFB
PKS
MF
Liquid waste
POME

1,530,000

: 336,600 ton/year
: 351,900 ton/year
: 91,800 ton/year
: 198,900 ton/year
: 918,000 ton/year

Tjandra 17

The Possible Eco-Industrial Cluster

RURAL AREA

CPO & DERIVATIVES

POM

Power
generation

LOCAL DEMAND &

EXPORT

Industrial & economic

DEVELOPMENT

Value added
products

Biomass
waste
Tjandra 18

UTILIZATION
OF WASTE

Urban area

Potential Socio-Economic Impacts

1. 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

Tjandra 19

Potential Socio-Economic Impacts

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

Tjandra 20

SWOP-Analysis
Opportunities

Strengths
Availability of biomass waste as
raw material for power generation

Create working opportunities

Several Palm Oil Mill industries

Spread-out the development

Government Policies on renewable

energy

Reduce the pollution through biomass

power generation

Prevent the urbanization

Reduce the dependability to fossil fuel

Weaknesses

Potentials

Lack of awareness on technologies to

recover the agricultural resources

Decentralized a power generation

systems

Low investment on utilization of palm

oil biomass waste

Community participation in local

natural resources management

Migration to the cities at Riau

(Pekanbaru and Dumai)

Create several value added products

from palm oil biomass waste
Organic farming from biomass ash

Tjandra 21

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
Tjandra 22

Tjandra 23