Dr.Sive Sivandran, CEO, PT Indo Energy Solutions
Indonesia has been known as one of the world’s leading producers of palm oil. While palm oil is a highly efficient crop, there are severe environmental consequences of the rapidly expanding industry. The use of palm oil in mills to supply its demand generates a continuous stream of waste vegetable oil of many types. Among the waste generated, palm oil mill effluent (POME) is considered the most harmful waste for the environment if discharged untreated. When discharged to waterways, the hot acidic effluent can harm aquaculture and contaminate human drinking water. And if released into the open air, it releases methane and hydrogen sulphide, which are 21 times more potent greenhouse gas contributors than carbon dioxide.
However, if harnessed properly, POME can not only mitigate the harmful effects on the environment but can also present itself as a valuable renewable energy resource. POME can be used for the generation of electricity through the production of biogas by leveraging its high chemical & biological oxygen demand. While several attempts have been made to convert this waste into valuable products, one company that has truly proven that it can successfully create a fully sustainable advanced biofuel business through the processing of POME is PT Indo Energy Solutions (IES). Established in 2014, IES is the largest aggregator and exporter of EU-certified Indonesian sourced POME. Since its inception, the company has systematically approached and solved the various problems encountered in large-scale POME aggregation and export including logistical and quality control issues. “INDO Energy is in business to prove that through the careful and sustainable management of resources, it can tackle some of the greatest challenges facing the world today. Sustainable Development suggests that meeting the needs of the future depends on how well we balance social, economic, and Environmental objectives today,” asserts Dr. Sive Sivandran, the CEO of Indo Energy.
Innovative Pioneer in the Palm Energy Industry Domain
Every year, Indonesia produces about 2 million tonnes of waste palm oil. And the waste ponds of the CPO mills are the major source of supply of POME. IES contracts with the mills directly and extracts the waste oil from the ponds and transports them to intermediate facilities (hubs) by road trucks. Once the waste oils are aggregated in its hubs, it is then transported to its storage and processing facility in Lampung, which is in close proximity to Port Panjang, which has a designated export facility with two berths, storage tanks, a direct pipeline, the first of its kind for this port. It also includes a state-of-the-art laboratory for POME sample testing. Today, IES has seven collection and storage hubs across the Indonesian archipelago (Sumatra, Kalimantan, and Sulawesi) and more than 150 staff.
Pivoting through Challenges
While the abundance of POME supply in Indonesia offers an opportunity for sustained growth for IES, initially it faced several challenges to reach where it is today. It began its journey with a team of 5 and a small facility in Lampung with a storage capacity of 200 MT. Due to lack of demand, for the first 4 years, all it could ship was only 100 to 500 MT per month in a container. However, it all changed when the EU declared some products as a sustainable feedstock for biodiesel, and the companies that use those feedstocks were allowed to get a rebate from the government which can be used against their penalties for carbon emission. The demand for biodiesel increased in 2018 when the EU commission added POME to the list of sustainable feedstocks. This is when many oil majors started looking for the product to get the rebate in Europe so that they can neutralize the penalties they were being charged for carbon emissions. The same year, one of the oil majors approached IES and signed up a long-term contract with the company. And, this marked the beginning of the IES success story. “This is all because of the fact that this product became accepted as a sustainable feedstock by the EU and we had the infrastructure ready. So, we were able to use the opportunity and increase the volume with the help of the oil majors who have been buying all our products. We are immensely proud of our contribution towards making it commercially viable for POME to be utilized as an advanced biodiesel feedstock,” adds Dr. Sivandran.
Highly Committed to Quality and Sustainability
One of the key factors that set IES apart from the rest is its quality control. POME is typically thought to be of low quality and low yield due to the nature of its waste source. Also, using POME as a feedstock for biodiesel presents processing challenges. However, all the products at IES are well accepted in maintaining quality and sustainability criteria which allows it to earn the trust of its customers. In addition to having a fully functional, cutting-edge laboratory in its processing facility in Lampung, IES also has mobile testing units. It also has a proficient team for managing the quality of the supplies. Additionally, each shipment is tested and verified by independent experts for external verification by its buyers. “From the beginning, we are very vigilant about our quality control. We have maintained an excellent reputation in the industry. We’ve been selling all our products to very large oil majors,” opines Dr. Sivandran. IES believes that by supporting the low carbon fuel market, it can help reduce greenhouse gas emissions and deforestation while providing jobs to local communities and helping countries achieve energy security. Using 100% local labor, IES has created a lot of employment in rural Indonesia.
Besides quality, sustainability is another pillar that gives IES a unique edge in the market. IES is fully certified by the International Sustainability & Carbon Certification (ISCC) and by the Italian National Scheme (INS) for sustainable supply of feedstock, the two primary institutions policing and managing the integrity of the supply of sustainable feedstock into the EU. IES strictly follows the regulations that enable its buyers to claim special rebates.
Continues Contributing Towards a Sustainable Future
As the demand for renewable is increasing and so is the production of waste palm oil, IES aspires to further enhance its ability to better serve its customers. Looking at the escalating need, it aspires to further expand its operation to all the nooks and corners of Indonesia and continue to grow in terms of its processes and quantity of supply. “Our plan for the future is to increase our volume, expand our operations to at least 5 times what we are doing now. Also, we would like to encourage people who are interested in sustainable development to come and talk to us about how we can work together and improve the situation and get more and more material out into their market if we have more funders coming to help us,” affirms Dr. Sivandran. With its extensive and vast local supply network, unwavering commitment to quality and sustainability, and value-driven services, IES is laying the foundation for continued excellence and market leadership in the renewable energy sector.
