Difficult business

For decades, the two multinationals Siemens and Bosch have been ­making and selling up-to-date washing machines and dishwashers in Europe. Their joint subsidiary, BSH, wants to expand in Indonesia. Of course it does not make sense to try to sell fully automated appliances to poor day labourers. Therefore BSH has been making Protos, a cooker that runs on vegetable oil, in ­Jakarta since 2007. The simple appliance is the size of a shoebox, uses less fuel than conventional kerosene burners and, at least in theory, helps to protect the climate by burning biomass.

Per week, one Protos cooker consumes two litres of jatropha oil. In comparison, conventional devices need up to four litres of kerosene. Protos thus allows households to reduce their fuel costs for cooking by 54 % in the long run, saving the equivalent of around € 100 annually. And since they do not have to collect firewood, people also save time that they can use to set up a food shop or some other small business.

Nonetheless, the product has not been successful. One reason is that Protos is hard to use. First, users need alcolhol or kerosene to bring the cooker to the required operating temperature; only then can they fire it with jatropha oil through a tube. The main challenge, however, is the high procurement cost. One Protos cooker costs the equivalent of around € 50 – and that is more than many Indonesians can afford. According to the World Bank, 60 % of Indonesia’s economically active people make less than two dollars a day. To sell Protos in large quantities, the German firms would have to lower the price to € 20 instead of charging the € 50 they need to cover their costs.

The German engineers understand that success will ultimately depend on the Clean Development Mechanism. Because jatro­pha oil is made from climate-friendly biomass, carbon certificates can theoretically be used for emissions trading. Thanks to such revenues, jatropha oil could be sold at much lower retail prices, which, in turn, would make the cookers more attractive. So far, Siemens and Bosh have not earned a cent with Protos. Not quite 1,600 devices have been sold in the past few years. To break even, BSH would have to market around 10,000 per year, says Dirk Hoffmann, who handles the company’s Asian business.

Siemens and Bosch nonetheless hope that their product will make Indonesian kitchens healthier and more environmentally friendly in the future. “Roughly 100 million of Indonesia’s 240 million citizens cook with kerosene or wood,” is Hoffman’s assessment of the tremendous potential.

Corporate strategy

While Bosch and Siemens talk about serving humanity, their action is geared towards corporate goals too. Two years ago, the mechanical engineering firm Tjokro in Jakarta was contracted to manufacture all Protos components. Project manager Samuel Shiroff says costs were not a crucial issue back then, nor are they now: “Technology transfer matters more to us.” The Germans helped their partner firm set up its own production lines and train domestic workers. If the German managers succeed in entering Indonesia’s emerging market, they could soon need reliable partners for their own brands. They do not want to miss their chances in this promising country. Nonetheless, Siemens and Bosch have refrained from selling Protos under their own brands. The image of a simple oil burner will probably not help them market high tech kitchen appliances.

So far, most users of the “green” Protos cookers are Indonesian farmers who have joined Waterland, a Dutch agrarian co-operative. Waterland gives them the environmentally friendly cookers and even provides them with jatropha oil for the first year for free. Waterland’s managers want to promote eco-friendly agriculture, including large-scale jatropha production. Registering small plantations for emissions trading would be too expensive to make sense in business terms.

Whoever talks with the farmers, however, will quickly realise that they are only using Protos because they feel it is their duty. Taking part in Waterland’s Intercropping Project, they are literally at the source of the oil. On their plantations, the non-endemic jatropha trees, which produce fruit year-round, grow next to teak trees, maize and other crops. The plum-size jatropha nuts contain a lot of energy, but they are inedible.

Friedhelm Göltenboth of NatureLife, an NGO, says jatropha cannot live up to some people’s expectations. While the tropical shrub is often considered “a kind of miracle plant”, it is becoming more of a “syndrome plant with all kinds of problems”, according to the expert in biodiversity. Göltenboth says he is not comfortable with the plant growing in northern Sumatra on soil that was actually set aside for afforestation. In his view, truly sustainable forestry is something different. He warns that undesired competition will break out between the production of biofuels and food as soon as demand for jatropha oil rises.

Airline interests

Indeed, good farmland may very well become scarce soon. European airlines have started putting jatropha oil into their kerosene. Since July 2011, Lufthansa has been testing the new fuel eight times a day in a plane commuting between Hamburg and Frankfurt. The six-month research project will cost around € 6.5 million, and is expected to reduce the airline’s carbon emissions by 1,500 tons.

This first long-term test on biofuel in commercial aviation uses jatropha oil from Waterland in Indonesia and other sources. Airlines are under pressure because they will have to start buying emissions certificates from next year on, once their emissions exceed the levels allowed in the EU. Lufthansa therefore considers the use of biofuel “an investment for the future”.

Environmental pressure groups and developmental civil-society organisations oppose this strategy. After all, the massive use of jatropha oil may lead to dangerous competition, not only between energy plantations and food production, but also between energy plantations and forests that need protection. In the first case, the pressure is on food security; in the second, on biodiversity. In comparison, the problems that Siemens and Bosch face in marketing Protos hardly matter.