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[ venture] Will Indonesian Consumers Buy Cleaner Fuels and Stoves?

This year, by attaching carbon offsets to the biogas, we want to create a system that will bring a permanent income to the farmers through the continuous use of the biogas equipment. In a way, this is the opposite of a subscription scheme, so before the carbon offset scheme. We wanted to see if we could use subscription to secure some income for the biogas operation. So I asked someone who does business with cocoa farmers in South Sulawesi, one of Indonesia's poorest areas, to charge money to the farmers.

Question from me:.


It looks like the North Sulawesi project will start again, so I may go to South Sulawesi when I get the chance. Thank you again for your time. Also, the biogas equipment that we have been giving away free of charge, we will offer it on a subscription basis for a fee. Do you think your farmer would be interested in this? The approximate prices are as follows:

1) $3 a month for maintenance if I install a biogas system that someone donates to them.

2) $15 per month if I install a biogas system without a donation, but with a 3-month warranty, and you don't replace the biogas system.

3) $25 per month if the biogas system is installed without a donation and replacement is possible. If no replacement is made, the subscription fee will be reduced by $1 per month.

There could be an added registration fee, purchase, etc. After that, if the carbon offset gets a monthly multiplier donation, the monthly subscription will be lower. If the farmer can collect a large number of monthly donations, they may generate income. Do you think it would be possible for M's farmers to implement this?


Answer from Ms M:


Regarding the biogas system, I don't think farmers in South Sulawesi would be interested in it.

This is because the cost (including labour, loading and unloading waste into and out of the biogas system) is not worth it.

Currently, farmers use an average of 4 tanks of 3kg LPG gas per month per household.

At around $1.5 per tank, that's $6 per month.

No matter how much fertiliser can be produced, organic fertiliser is not so effective (obviously it is good for the soil, but farmers need short term effect), so it is not convenient for them.

Several biogas units have been installed as part of a government project, but they have been left unused because LPG gas is much more cost-effective.

Here we cook every day for a week before the wedding, from morning till night, and these days we use more than 20 tanks of LPG gas, so we don't have to use only wood, like before.

This may differ in areas where gas is tough to come by, but where it is usually available, it is difficult unless there are clear additional benefits.


Even $3 a month is probably too much for a farmer in South Sulawesi. I was thinking of starting with subscriptions first and then move on to carbon offsets. But, I think I'll start with carbon offsets, straight from the beginning. The farmer will then get income from the continuous use of the biogas kit, instead of paying for it.

By the way, Indonesia has a vast LPG subsidy: in 2019, the Indonesian government spent about $500 million on LPG subsidies. In 2020, the energy cost will have fallen, so we may not be in a similar situation. But can we continue to increase LPG subsidies in Indonesia, where a quarter to a third of the population still lives on primitive fuels such as firewood? Furthermore, LPG subsidies are based on usage, so the more people use LPG, the more the government spends. Renewable energies, such as biogas and solar, are subsidised on their introduction, so there is essentially no expenditure for users and government once they are installed. So which is better? Which is the future we should be aiming for?

The story is consistent at a macro level as Cynthia described yesterday in her blog from subsidy to purchasing power.

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