Abundant forests in Indonesia have the potential to supply Korea with much-needed biomass energy, says a Korean business delegate.
Han Gyu-seong, chairman of Korea Association of Pellet, made the statement before around 50 Korean business delegates during the “Biomass Industry in Indonesia” business forum organized by the South Korea Embassy in Jakarta on Thursday.
Thee forum discussed the prospects and challenges in developing Indonesia’s biomass potential, specifically wood pellets.
The East Asia nation saw an increase in pellet consumption, with 2013 figures estimated at 500,000 tons, compared to 174,000 tons in 2012.
Wood pellets, which can be used to fuel power plants, are compressed biomass deriving from sawdust and waste from sawmilling.
Many forum participants said the energy from wood pellets was “renewable, clean and economical”.
Korea is currently looking for biomass sources overseas, including from Indonesia, as the East Asian country is enforcing a 2012 energy policy mandating firms to resort to renewable energy to cut carbon emissions.
It is also targeting a 20 percent boost in renewable energy use as well as aiming to reduce fossil fuel consumption.
“Korea is the world’s 10th-largest energy consumer, fifth-largest oil importer, second-largest coal importer. Sixty-four percent of its electricity is produced from fossil fuels,” Han said.
To reach their objective, Korean firms have sought investments in a number of Asian countries for the development of wood pellets, mainly Vietnam and Malaysia.
Korea imported 122,447 tons of wood pellets in 2012, mainly from Russia, Malaysia and Vietnam.
According to data from Korea, Indonesia offers the cheapest pellet, with the cost, insurance and freight (CIF) price of US$ 131 per ton, below Vietnam’s US$ 144 per ton, and Malaysia’s US$ 141 per ton.
In Indonesia, Korean firm Depian Co. Ltd will work with state-run PT Inhutani III toward developing forest industries and a facility in Pelaihari, South Kalimantan, through PT SL Agri.
Depian has stated its readiness to invest US$20 million in the project, which will supply wood pellets to South Korea.
They will start building the planned facility in October and expect to start operating the plant by March 2014.
The plant will be able to produce 30,000 tons of wood pellets annually, before being upgraded to 100,000 tons annually in 2016.
Trees would be planted on 5,000 hectares to 8,000 hectares of industrial forest that PT Inhutani III was currently preparing, said SL Agri president director Muhammad Akbariah last month.
Depian plans to export all wood pellets produced at the plant back to South Korea.
Association of Indonesian Forest Concessionaires (APHI) executive director Purwadi Soeprihanto said the government should accelerate plantation forest development by issuing new licenses for industrial plantation forests, a key factor in supporting wood pellets.
“But if that is not possible, Korean firms can cooperate with domestic companies to use their licenses,” he said.
He said that out of the total industrial forest permits (HTIs) issued, only 45 percent were active. Many companies holding licenses had ceased operations due to losses.
“The government should also encourage clear incentives to utilize logging waste, as well as reduce
the fossil fuel subsidy,” Purwadi added. (asw)