Business

More investment as companies
turn to wood pellets for
energy

As more businesses adopt environmentally friendly practices, demand for wood pellets as a source of renewable fuel is on the rise, a senior government official has said.

Hadi Daryanto, the director general for development of forest production at the Forestry Ministry, said recently that demand was being propped up by the increasing number of companies engaging
in the profitable carbon trading business.

“Demand will continue to rise and that’s why the wood pellet business is very promising,” he told The Jakarta Post.

Based on data from Wood Resources Quarterly, the latest market report released by international consulting company Wood Resources International, world production of wood pellets reached almost 10 million tons last year.

The company forecasts that total production will double in the next five years as more companies adopt green business practices and fossil fuel prices increase.

Europe is currently the biggest market for the wood pellets, which are mostly supplied by Canada. But as market in the United State surges due to the greener policies adopted by the Obama administration, the US will buy more wood pellets, taking supply from Europe.

As a result, the report said, Europe will seek other Asian, African, and Latin American sources.
A number of companies have reportedly sought renewable investment opportunities in the regions, particularly in Asia.

Hadi noted that Carbon Positive, a private company from the United Kingdom, has set up a joint venture with PT Usaha Tani Lestari, pledging to invest about Rp 1.8 trillion (US$176 million) to develop the renewable energy in Indonesia.

“They plan to develop about 160,000 hectares of production forests in West Nusa Tengara, East Nusa Tenggara and Papua. Their wood production from the forests will feed their wood-processing plant that they will build later,” he said.

Other foreign investors are attracted to Indonesia’s wood pellet industry, Hadi said. On of them is Korean based PT Taiyoung Engreen, which has pledged to invest Rp 3.9 trillion to develop production forests and wood pellet plants in Gunung Mas, Central Kalimantan, pending government approval.

“I think with such appeals, we’ll see more and more companies involved in  forest-related green industries,” he said.

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