It's OK To Mine The Rainforest For Car Batteries

10/10/2024 7:00:41 PM

(MENAFN- Live Mint) (Bloomberg Opinion) -- Attempts to prevent the destruction of the world's rainforests are badly off track -
and in the public mind, electric vehicles are increasingly to blame.

Felling of tropical woodlands
resulted in greenhouse pollution equivalent to 3.7 billion metric tons of carbon dioxide last year, the Forest Declaration Assessment, a group tracking deforestation,
said in a report this week. Indonesia was the biggest culprit: Compared to the area that would have been
cleared if the practice were on track to be eliminated by 2030, the country cut down an additional 530,000 hectares (1.3 million acres).

If you've been reading the news over the past year or so, you might
assume this was largely about the nickel that's used to cram more energy into EV power packs.“Indonesia's massive metals build-out is felling the forest for batteries,” announced the headline of a recent Associated Press piece.“Nickel miners linked to devastation of Indonesian forests,” declared another in the Financial Times.
A Washington Post series on similar themes carried the tag-line:
“Clean Cars, Hidden Toll.”

The claims that nickel mining is dirty and damaging aren't wrong. About 76,000 hectares of Indonesian woodlands were cleared to dig up the metal
between 2001 and 2022, according to
a study in May by Mighty Earth, an NGO focused on tropical industries. This trend may well be accelerating, along with nickel demand:
In
the four years through 2023 alone, more than 15,000 hectares were uprooted.
The industry
opens up new frontiers of logging on remote islands that were previously largely untouched, while
ore processing leaves piles of toxic, potentially unstable tailings as well as carbon pollution from coal-fired power plants.

And yet the focus on nickel risks distracting from the far bigger threat to Indonesia's rainforests -
palm oil. In the same period in which nickel mines have spread over 76,000 hectares, the country's oil palm plantations grew by 12.75 million hectares. Every year, the area where palm fruit are harvested grows by several hundred thousand hectares.

The comparison is worthwhile because every use of land involves trade-offs between biodiversity loss, climate damage, landholder rights, economic growth, politics and profit. Palm oil is a sort of
substitute for nickel in the power trains of road vehicles, since Indonesian diesel contains a 35% biofuel blend.

For all the excitement and angst around Indonesia's nickel boom, it's palm oil
that's benefiting most from Jakarta's political patronage. President-elect Prabowo Subianto promised last month to increase the biofuel blending rate to 50% as soon as next year. That's intended to
reduce dependence on imported petroleum, but it would also consume about
18 million tons a year of palm fat -
equivalent to nearly a quarter of the entire global crop. If agricultural yields don't improve, getting all that extra oil from Indonesian farms would require an extra 2 million hectares of land, far more than the most apocalyptic predictions for the future of nickel mining.

Any attempt to reverse deforestation needs to reckon with this fact.
Palm's use
in consumer products from
Nutella chocolate spread to
Head & Shoulders shampoo gets all the attention, but Indonesian road vehicles have been
by far the biggest driver of demand growth in recent decades. The country's
plantations aren't growing
so it can make more money exporting palm oil, but so it can spend less money importing crude oil.

A far better solution to that problem would be to use less oil in general by accelerating
the move to electric vehicles -
but policy on that front is falling short. Indonesia has only recently started moving toward the sort of fuel economy rules that could spur more rapid uptake of EVs and reduce petroleum consumption. The modest EV incentives that do exist
are
more focused on spurring local manufacturing than getting cheap vehicles onto the roads. The country, meanwhile, is nowhere close to government targets to install 25,000 to 30,000 public chargers by the end of the decade.

That's enough hurdles for any industry to reckon with, but convincing consumers to take up EVs is also going to depend on the availability of cheap nickel to bring down the cost of batteries. If we want that metal to be available, we're going to have to accept that Indonesia, which already produces half of the world's nickel,
is going to end up mining more of it.

The forests of Southeast Asia have real potential to provide the world's energy needs. Minimizing
damage to them will require
using this precious resource as frugally as possible. As a result, we should be favoring capital-intensive industry over
land-intensive agriculture. At current prices and output levels, a hectare given over to
mining can provide enough metal for 1,000 EVs and generate
close to 200 times as much revenue as the same area planted with palm. Rather than fretting about Indonesia's transformation into a nickel superpower, we should be welcoming it.