Using biomethane from palm oil waste to fuel sustainable growth

To make our palm oil supply chain more transparent and traceable, and help maintain ‘no deforestation’ for this key commodity, Unilever is working directly with producers and mills, bypassing traditional intermediaries and bringing much of our palm oil refining in-house.

To help ensure that more of the palm-derived ingredients that create lather in many of our global products are made this way, we’ve recently expanded Unilever Oleochemical Indonesia (UOI), our palm oil processing facility in Sei Mangkei, North Sumatra.

The challenge has been that following this expansion, UOI is now the largest greenhouse gas (GHG) emitting site in Unilever’s global operations. To meet our target of reducing our global Scope 1 and 2 emissions by 100% by 2030 (vs 2015), we need to act decisively to address the impact.

That’s why we’re shifting towards thermal renewable energy. In a market where fossil-based energy is still abundant, renewable energy opportunities are currently minimal – but corporates can help drive the clean energy transition. In the first commercial offtake of biomethane in Indonesia, Unilever has started replacing the natural gas we have been using at UOI with biomethane, created from palm oil effluent from local mills.

Partnering to reduce emissions from our operations

Expanding UOI is a key part of our strategy for growing our business, and we’ve invested heavily in the facility over the last decade. We’re determined to ensure this growth does not come at the cost of our ability to deliver on our Scope 1 and 2 climate target.

Partnering with KIS Group, a leading biogas provider in Asia, we’ve worked to secure biomethane supplies for the facility. Together, we’re sourcing biomethane from two nearby mills that are included in our sustainable palm oil development programme and are compliant with our People and Nature policy (PDF 2.04 MB). KIS is transporting the compressed biomethane (bioCNG) to UOI using trucks that run on the bioCNG themselves.

We will be expanding our partnership to a third mill by the end of 2025 and have plans in place to source biomethane from six additional mills, which adhere to our sustainability expectations, over the next two years.

Our partnership is part of a cost-effective and resilient route to decarbonisation at the facility. As we continue to scale up biomethane and sustainably sourced biomass at UOI, as part of our global strategy to leverage these energy sources to decarbonise Unilever operations, we will move closer to achieving our Scope 1 and 2 goal. We expect to source over 800,000 MMBtu/annum of biomethane at UOI, to meet almost a quarter of its energy needs by 2030.

“When expanding our operations, we must be doing it sustainably. By partnering with KIS, we’ve been able to innovate a solution that will cost-effectively lower our emissions as we continue to grow,” says Saikrishna Devarakonda, Managing Director of UOI.

Demonstrating the wider economic benefits

By transforming palm oil effluent into a source of renewable energy, we’re also influencing wider changes in Indonesia and across the palm oil industry. Indonesia’s renewable energy sources are growing, totalling 14.5%^[a] of the energy mix. With more prevalent use of biomethane, corporates can help increase its contribution to the mix. Estimates suggest there is enough palm oil mill effluent in Indonesia to produce biomethane equivalent to over 5% of Indonesia’s natural gas consumption in 2024.^{[b] [c]}

“Here we have multiple benefits. Unilever Indonesia achieves decarbonisation, and the country becomes more independent of energy imports,” says KR Raghunath, founder and CEO of KIS.

One of the benefits created by this initiative is that we will be stopping methane, an extremely potent greenhouse gas, from being released into the atmosphere or flared at these mills. And we are engaging all our suppliers on the need for decarbonisation, including the mills in our palm oil supply chain that do not supply us with biomethane.

“We’re really proud to be part of the first commercial offtake of biomethane in Indonesia and are excited to be scaling this work,” says Saikrishna. “But this is only the start. We hope that demonstrating the success of our partnership with KIS will influence other businesses to follow.”