The Indonesian Palm Kernel Shell Business Association (APCASI) estimated that the exports of oil palm kernels would nearly double to 2.6 million tons by 2020 from this year’s figure of about 1.8 million tons.

APCASI said that orders from Japanese buyers had increased as more biomass-fired power plants in the country had shifted to kernel shells to run their power generators.

The increased interest was expressed by Japanese companies during a visit of APCASI members to Japan recently. Representatives from the Energy and Mineral Resources Ministry, the Trade Ministry, the Indonesian Oil Palm Estate Fund (BPDP-KS) and the Association of Agriculture Experts (Perhepi) were also part of the APCASI delegation.

“The energy sector has become an attractive market of oil palm by-products. We used to rely heavily on crude palm oil for exports, but now the by-products are also usable as biomass fuel,” Perhepi chairman Bayu Krishnamukthi said during a press conference in Jakarta recently.

Bayu said the demand for palm kernel shells from Japan had increased sharply as the country was targeting to increase the portion of new and renewable energy to its energy mix to 25 percent by 2030 from 14.6 percent in 2016.

Japan also expects to increase the contribution of kernel shells to the energy mix to 4 percent from 2 percent during the same period. “Currently, palm kernel shells exports have reached 1.6 million tons, 800,000 of which were bought by Japan,” he said.

Other major importers of palm kernel shells were South Korea, several European countries and the United States, he added.

Palm kernel shell production is heavily affected by oil palm production in Indonesia. In 2016, production of palm kernel shells stood at 8.35 million metric tons (MT), compared to domestic production of oil palm at 33.5
million MT.

Meanwhile, in 2015, 8.48 million MT of palm kernel shells were produced compared to oil palm at 31.28 million MT.

Bayu added that increasing the productivity of oil palm plantations was preferable to expanding existing oil palm plantations in order to boost exports of palm kernel shells and other oil palm products.

During the press conference, APCASI chairman Dikki Akhmar said the association secured export orders worth US$1.5 billion over 10 years.

“The palm kernel shells will be used as the power source of five biomass power plants with a combined capacity of 320 megawatts (MW) across Japan,” said Dikki. “Two of the plants, in fact, will fully rely on palm kernel shells.”

Indonesia, he added, had only begun exporting palm kernel shells in 2014. “Palm kernel shells used to be just waste product of oil palm, but now it can sell for as high as $80 per MT,” he said.

Nevertheless, the palm kernel shell business is still hampered by difficulties in accessing the by-product.

Only 15 to 20 percent of palm kernel shells produced by palm oil producers were exported, as the rest was already put into use by domestic industries, especially crude palm oil mills, Dikki said.

“It is only easy to find them in remote areas that remain untouched by the general public. Shells in more accessible places will go directly to local factories to be used as fuel. We are trying to come up with a solution to this, such as by combining kernel shells with bunches of oil palms, which can also be used as biomass fuel.” (dea)

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