PT Holcim Indonesia Tbk - Case Studies and Awards

Opportunity on the Doorstep

Following approval from the Executive Board of the UNFCCC in December 2008, Holcim Indonesia is now running the largest single alternative fuel clean development mechanism project in Indonesia in terms of the volume of CO2 emissions saved. But this is more than a story of emissions reductions and certificates attained: it is also a story of improved economic opportunities for people at the micro end of the economy.

The Micro Level
Loaded high with bagged rice husks, Afnanuddin’s 8-tonne truck stops at the security gate to Holcim Indonesia’s Narogong plant in West Java. Documentation and cargo are checked before the vehicle is permitted entry and can proceed to the weight bridge. ‘50% of my transporting business revolves around Holcim: initially moving pallets and bagged cement, but more recently, supplying 500 tonnes of agricultural waste each month,’ said Afnanuddin, waiting at the Holcim biomass unloading shed while biomass quality control officers measure the moisture content of this latest consignment.

With Holcim Indonesia’s increased use of agricultural waste as a substitute for coal, Afnanuddin was able to double his business capacity from two to four trucks in 2006. By the end of 2008, seventy five micro enterprises had started, supplying the two Holcim Indonesia cement plants with rice husks, saw dust and palm kernel shells. ‘Then, effective January 1st 2009, Holcim offered me a fixed contract for delivering 500 tonnes of farm waste a month,’ Afnanuddin related. ‘The security of a fixed income gave me the confidence and opportunity to expand my business further by hiring six additional trucks. With this extra capacity, I hope to upgrade my contract with Holcim to the higher paying 1,000-tonne a month contract.’

Refining the Process
The practicalities of sourcing agricultural waste have not been without hurdles. ‘We started by trying to engage local logistics companies to source for us, but soon realized that the economic opportunity offered would have greater impact and appeal at the micro level,’ explained Wilman Husnuldoni, Biomass Field Officer. ‘Communication with local villagers was initially achieved through banners offering cash for rice husks, but the locals were suspicious of this new promotion and slow to respond. So our communication strategy developed: we set up the Holcim Biomass Sourcing Team.’

Specifically trained in negotiation at Holcim Indonesia’s internal development centre - Holcim Academy, the new Biomass Field Officers met face to face with local farmers and villagers. With time and repeated meetings, trust and dialogue developed, and the community responded warmly to the new economic opportunity on their doorstep.

‘To regulate the intake of biomass, we devised a contract-system in December 2008,’ explained Wilman. ‘Now we have three different contract types: a 1,000-tonne a month minimum; a 500-tonne a month, and a contract for small irregular deliveries. Our Biomass Officers, briefed by the Production team, inform the suppliers how much stock is required, and the suppliers arrange their schedules to meet that demand.’ This system not only guarantees supply for Holcim and fixed payment for the micro transport enterprises, but guarantees work for the informally employed truck drivers and loaders working for the transporters. The system of payment for the incoming biomass was also refined from an end-of-month system to a cash-on-delivery system – a move which is more sympathetic to the biomass collectors who have limited cash flows.

The Project
Holcim Indonesia is the first of the Holcim Group to receive UNFCCC approval for the substitution of fossil fuels by alternative fuels in a cement plant. ‘Following approval, we are now in the process of auditing the effective emission reductions to gain the carbon credits,’ said Vincent Aloysius, Geocycle Country Manager: ‘We expect to save an average of 500,000 tonnes of CO2 each year for the next ten years – making our project the largest single CDM in Indonesia in terms of tonnes of CO2 emissions saved.’

‘There is much to do before we can reach our CO2 reduction targets,’ continued Vincent. ‘In order to achieve the incrementally increasing CO2 emissions reductions targets over the next few years, we require a solid team effort to optimise our feed rate. In many ways 2009 will be a year of optimisation: using current infrastructure efficiently, developing the skills of operators, and running internal competitions to champion and optimise smooth steady feed rates.’

The Clean Development Mechanism is designed to help industrialized countries reach their greenhouse gas emission targets through investing in sustainable development projects in developing countries. Benefits to participants include greater operational efficiency, closer community relations, healthier local environments, and a stronger reputation for being a responsible company with green investors and shareholders. Globally Holcim has reduced CO2 emissions per tonne of cement by 16.3% since 1990 with a goal of reaching 20% by 2010. Holcim Indonesia has reduced emissions by 12% from 2002 to 2007.

Author: Oepoyo Prakoso, Holcim CDM Project Manager
oepoyo.prakoso@holcim.com