The study by researchers at Stanford and Yale universities shows that deforestation for the development of oil palm plantations in Indonesian Borneo is becoming a globally significant source of carbon dioxide emissions.
Plantation expansion is projected to contribute more than 558 million metric tonnes of carbon dioxide to the atmosphere in 2020, an amount greater than all of Canada's current fossil fuel emissions.
Indonesia is the leading producer of palm and palm kernel oil, which together account for more than 30 per cent of the world's vegetable oil use, and which can be used for bio-diesel.
Most of Indonesia's oil palm plantation expansion is occurring on the island of Borneo, also known as Kalimantan, which occupies a land area nearly the size California and Florida combined.
"Despite contentious debate over the types and uses of lands slated for oil palm plantations, the sector has grown rapidly over the past 20 years," said project leader Lisa M Curran in a statement.
Plantation leases, covering 32 per cent of Kalimantan's lowlands outside of protected areas, represent a major land bank that is slated for development over the next decade, according to the study.
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In 2010 alone, land-clearing for oil palm plantations in Kalimantan emitted more than 140 million metric tons of carbon dioxide, an amount equivalent to annual emissions from about 28 million vehicles.
This accounts for 60 per cent of Kalimantan's total forest cover loss in that time, according to the study's authors.
The study evaluated lands targeted for plantations and documented their carbon emissions when converted to oil palm.
The research team gathered oil palm land lease records during interviews with local and regional governmental agencies. These records identify locations that have received approval and are allocated to oil palm companies.
The researchers emphasise that sustainably producing palm oil, a stated goal of the Indonesian palm oil industry, will require re-evaluation of awarded oil palm plantation leases located on forested lands.