29/12/2007 (Time) - On a recent humid morning in Riau, a province on the Indonesian island of Sumatra, a young man named Suranto wakes early on a Sunday, wraps a red T shirt around his head and ambles off to the fields to work. Suranto isn't a local; he has come from northern Sumatra because there are jobs in Riau. The forests and peatlands of the area are being transformed into plantations, and workers are being paid to plant tens of thousands of young oil-palm trees in fields stripped bare of their native vegetation by burning. As Suranto stoops and digs one hole after another amid the blackened stumps of an old tropical forest, he looks like a camp follower picking through the detritus of a still-smoldering battlefield.

Which is exactly what Riau province is, in a way. Roughly the size of Taiwan, the area has become the focus of a green-versus-green tussle pitting environmentalists trying to protect Indonesia's disappearing forests against a fast-growing alternative-energy business. Palm oil, a byproduct of the oil-palm tree such as those being planted in Riau, is used for cooking and as a food additive. Growing it has long been a big business in Southeast Asia. But it can also be used in the production of a relatively clean-burning alternative fuel: biodiesel. As oil prices have soared in recent years, Indonesian companies have been converting vast tracts of forests and peat bogs into palm-oil plantations to feed a rapidly expanding biodiesel industry; between 1995 and 2005, the amount of Indonesian land being used to grow oil palms increased by some 8.6 million acres (3.5 million hectares), more than doubling total plantation area, according to a recent report on the industry by Credit Suisse.

The biodiesel boom has a high environmental cost, however. Critics say it's contributing to global warming. Tropical forests help remove millions of tons of carbon dioxide from the atmosphere every year. Burning and clear-cutting not only eliminates one of the planet's crucial air-filtration systems, the process also releases even more carbon dioxide into the air, in smoke or as gases released during the decomposition of forest waste. Annual clearing of Indonesia's carbon-rich peatlands alone releases some 1.8 billion tons of greenhouse gases, according to a Greenpeace report. Indonesia is the world's third largest emitter of greenhouse gases behind the U.S. and China, says the World Bank. "We liken what's going on [in Indonesia] to pouring petrol on a fire," says Martin Baker, a Hong Kong–based communications officer for Greenpeace International. "It's completely ridiculous to produce green fuels from places like this."

It doesn't seem so ridiculous to poor countries like Indonesia, where leaders are torn between the need to develop the country's natural resources and increasing international pressure to preserve remaining forests. This dilemma is expected to be a hot topic this month at a U.N.-led conference on climate change in Bali, where representatives from 189 nations are gathering to negotiate a set of environmental rules to succeed the Kyoto protocols, the main provisions of which expire in 2012.

With 20% of the world's emissions coming from carbon released into the atmosphere via deforestation, one of the more controversial ideas to be floated at the conference will likely be a proposal to create an international carbon-trading system that would, in effect, allow countries such as Indonesia to be paid for not cutting down their forests. Although details have yet to be hammered out, the concept is similar to a European Union carbon-trading system that sets limits on greenhouse-gas emissions, allowing companies exceeding those limits to buy "credits" from companies that produce less than their fair share of pollutants. Thus, heavy polluters are penalized (they have to pay for credits to stay within the cap), while greener groups are rewarded (they get paid for being under the cap), and the continent as a whole meets its emission targets.

But the plan has plenty of skeptics. The United Nations on Nov. 27 released a report questioning whether the carbon-trading system established under the Kyoto protocols is working. Moreover, it's unclear if developing countries would go along with such a proposal. Due to illegal logging as well as the clearing of land for farming and other uses, Indonesia has been losing between 3.7 million and 4.7 million acres (between 1.5 million and 1.9 million hectares) of trees annually for the past 10 years, a deforestation rate that is among the fastest in the world. In other words, razing forests is a big business — and carbon credits might not provide an adequate substitute for the profits that come from converting fallow land to income-producing ventures like palm-oil plantations.

And even if the government signs on to the program, ordinary Indonesians might not. Indonesian authorities in the past have found it difficult to control illegal logging and land-clearing because much of it takes place in remote areas of the vast Indonesian archipelago, beyond the reach of the law. "Even if you have money coming in, how [is the government] going to be able to assert control in these frontier places?" asks Rod Taylor, WWF International's forests program director. Indonesia's Minister of Forestry, M.S. Kaban, says this problem has been solved. "The burning is stopped. Our people are very committed," Kaban says. He notes that there were more than 7,000 criminal cases brought against illegal loggers in 2005; the crackdown has been so effective that the caseload plummeted to 616 in 2006. "I believe that in 2007, [illegal logging] cases will be very, very few," Kaban says.

That may be so — but as long as there is demand for biodiesel, it seems unrealistic to expect Indonesia to stop converting forests into plantations. These days, Riau's main highway is clogged with trucks carting processed palm oil from local refineries to the Sumatran port town of Dumai. Outside one house, not far from the provincial capital of Pekanbaru, a woman weighing out heavy red palm fruit on a scale in her front yard says her family used to only sell fruit from their 200 palm trees. But with the high prices palm oil fetches these days, she says her family members have gone into business as middlemen for the industry, helping other small growers sell to larger plantations. "We were able to move up," she says.

It's success stories like this one that will bedevil those attending the Bali conference. One of the central issues will be how to justly allocate the economic burden of reducing greenhouse emissions among industrialized countries — which have grown rich fouling the air and using up natural resources — and developing countries like China, India and Indonesia. "We have to be careful about asking developing countries to lock up their forests," says Taylor of the WWF. That is, at least until the world has found a way to make locking up the forests pay.