Bumitama looks to methane capture to reduce emissions, fuel potential revenue stream

PALM oil giant Bumitama Agri is looking to set up methane capture facilities in its mills, which is expected to reduce the production of the greenhouse gas at each mill by between 60 per cent and 70 per cent.

The palm oil company has already started its methane capture capabilities at its mill in the Riau islands in Indonesia, and will be looking to develop these facilities at its other 13 mills, said Lim Sian Choo, chief sustainability officer of Bumitama Agri.

Methane – which traps more heat than carbon dioxide – is released at Bumitama’s mills as liquid waste generated from palm oil production sits in a lagoon while it is being treated before it’s safe enough to be released.

“So when we do the lagoon cover, the methane gas is captured in the cover. And then we convert this methane into something that’s useful, to fuel the boiler or to supply electricity to PLN (the Indonesian government-owned monopoly for electric power distribution) ... So now, there is this potential,” said Lim in an interview with The Business Times.

When asked how much of Bumitama’s carbon emissions can be reduced from methane capture, Lim said she is not able to disclose it yet.

If this strategy is proven a success, Bumitama will be able to sell its biomass waste made up of empty fruit bunches and palm oil kernel, which is currently used to fuel its mill boilers, as feedstock for the production of sustainable fuel.

Lim noted that Bumitama has received much interest from other companies regarding the sale of its biomass waste. This includes several Japanese firms, as well as Neste, an oil refining company that currently operates the world’s largest sustainable aviation fuel manufacturing plant.

While this could potentially be a new revenue stream for Bumitama in the future, she said that it is not expected to be a significant one.

Out of its 190,000 hectares of land permitted for plantation, about 40,000 ha has been set aside as a conservation area.

Bumitama had previously stated that it intends to increase the sequestration capacity of these areas to offset its emissions.

When asked if the company has any plans to monetise these conservation areas in the form of carbon credits, Lim said that is not the company’s focus for now. However, a study the group conducted previously of an area spanning about 50,000 ha – which includes its biggest conservation project – revealed that the carbon sink is large enough to generate a sizeable volume of carbon credits.

“We already have this conservation area, and if the carbon sink can be proven and can be properly calculated, then for us, it is like helping our shareholders to maximise profitability. After all, we have set aside this land. Not to use it to the maximum is also not correct. (If so), we’re not doing justice to our shareholders,” she said.

Even then, Lim noted that the 40,000 ha of conservation areas are accumulated from many small and disjointed patches of land. So it may not be practical to get auditors to come in and do the necessary verification if Bumitama were to issue carbon credits from these separate pieces of conservation areas.

“So we also have to be pragmatic about what we can do and cannot do. And our business is really about sustainable palm oil. That’s our focus area,” she added.

Besides methane capture technologies, Lim said that Bumitama is also targeting to reduce its emissions by using more organic fertilisers, switching to biofuels in its transportation vehicles and replacing its diesel generators with fuel converted from methane.

When asked about the European Union’s deforestation law on Bumitama, Lim said the concern is not very high, based on the stress tests and risk mapping done by the group.

For one, the company already implemented its “no deforestation” policy in 2015. Also, the amount of palm oil products that are exported to the EU is actually fairly low.

That being said, Lim said the company’s main concern is that the EU deforestation regulation has not clearly indicated the methodology that will be used to assess whether the palm oil products are a result of deforestation or not.

The law, which was passed in June 2023, stated that traders who sell commodities such as soy, palm oil, wood, cocoa, coffee, and rubber to the EU market must be able to prove that the products do not originate from recently deforested land or have contributed to forest degradation.

Discussions are ongoing between Malaysian and Indonesia authorities and their EU counterparts on the certification schemes the economic bloc will be using.

In the meantime, Bumitama is working with its buyers, as well as its buyers’ buyers, on their procurement approach so that the company will be able to comply.

Bumitama is also taking steps such as segregating its mills and tanks between those that have been certified as sustainable and those that have not.