Biofuel Policy and Politics in Indonesia: How Large Agro Industries Gained Favour from Government Biofuel Policy

Abstract

The overall aim of this research is to conduct an in-depth study of the political construction of biofuels in Indonesia and explain the implications for understanding the development of the contemporary biofuel industrial complex. The research focuses on building understanding of the role of politics and the materiality of crops in the development of agro-fuel alliances. The overall argument is that the alliance between biofuel and large agro industries did not happen as a form of capitalization on biofuel policy by private stakeholders, but instead involves interactions between complex political process within government and both the biofuel and agricultural feedstock industries. The research combines concepts from political ecology and agrarian political economy to create a conceptual basis for understanding the political processes underlying the biofuel nexus in Indonesia. The study involved an abductive analysis conducted as a means of interpreting the complex data used in this research, which included policy documents, interviews and field observations. The research concludes that though the Indonesian government created policy initially intended to use biofuels as means to solve problems of energy security, environment and rural poverty, ultimately policy (both directly and indirectly) resulted in outcomes that favoured the emergence of alliances between biofuel companies and large agro industries. Such alliances did not result in the resolution of the problems that the government initially set out to address. The research shows how the bonding between biodiesel and palm oil agro industries were, in part, created through both historical and contemporary policy processes. However, ultimately the analysis reveals the significance of inertia and insufficient political will in the implementation of biofuel policy for the emergence of agro-fuel alliances and failures to address the core policy problems of energy security, environment and rural poverty.