SUSTAINABLE SUPPLY CHAIN GAP ANALYSIS ON PALM OIL CULTIVATION FOR BIODIESEL BETWEEN THE EU RED II AND INDONESIA ISPO CERTIFICATION SYSTEM

• Main Author: Annisa, Aninda
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/49617
• Institution: Institut Teknologi Bandung

Palm oil is among one of the most consumed plant-based oil in the world. Today, its demand is projected to keep increasing as the palm oil usage is no longer only in food and health sector, but also in energy and transportation. Among one of the top importers for palm oil is the European Union and on the other hand, among one of the top exporters for palm oil is Indonesia. However, the recent European Union Renewable Energy Directive 2018/2001 or also called as the EU RED II, has threatened the smooth export and import trade activity between Indonesia and the EU on palm oil for biodiesel. The EU RED II require palm oil to be certified as low ILUC-risk and also proven in its cultivation to be sustainable and has a certain level of greenhouse gas emission savings as set in the EU RED II. The record of massive forest fire in Indonesia are highly associated with oil palm plantation expansion. Further, some report shows that a significant expansion on land with high carbon stock was observed. In 1990, oil palm plantations in Kalimantan, Indonesia were only about 903km2 , growing in 2000 to 8360km2 , and reached 31.640km2 in 2010. Thus, Indonesia’s palm oil is usage in energy and transport sector of the EU is subject to be gradually phased out to 0% by 2030 due to its high-ILUC risk and unsustainable practice of the cultivation. Actually, Indonesia already has sustainable certification system in place to ensure the sustainability practice of oil palm plantations in Indonesia through Indonesia Sustainable Palm Oil (ISPO) certification set under the Ministry of Agricultural of Republic of Indonesia Regulation number 11/2015. Considering that Indonesia claim to be sustainable yet the EU consider the opposite, there is a gap between sustainable practice of oil palm plantations set in between the EU RED II and the ISPO certification. The gap analysis in this research is analyzed by first constructing the sustainable supply chain model of the palm oil cultivation for biodiesel according to the EU RED II and ISPO certification. With an extensive literature review of previous researches and reports on sustainability practices and level of compliance from the economic operators in Indonesia towards ISPO certification, the gap is analyzed between the status quo of Indonesia’s sustainable oil palm plantations practices with the EU RED II set as the reference. The result shows that there are 17 major difference in sustainable supply chain practices between the EU RED II and ISPO Certification system. The reason for the gap is varying from low law enforcement system, social issues, to the absence of law or management plan itself. In conclusion, the research proposes a strategic action can be adapted by Indonesia to comply with the EU RED II decided by using AHP.