APEC - Asia-Pacific Economic Cooperation Photos of, from left to right, a tractor operator grinding cornstalks in a field, a man inspecting switchgrass, a handful of wood chips, and a filling station providing E85. APEC Biofuels Home

Indonesia Biofuels Activities

Outline map of Indonesia.

Here you'll find information about Indonesia's work in biofuels. Learn more about its:

Background

Indonesia sees biofuels as one of the key instruments to accelerating economic growth, alleviating poverty, and creating employment opportunities while also, under the Kyoto Protocol, mitigating greenhouse gas emissions. The government had set up goals of reaching 2% biofuels in the energy mix by 2010 (5.29 million kiloliters), growing to 3% by 2015 (9.84 million kiloliters) and 5% by 2025 (22.26 million kiloliters). A major challenge to achieving these goals is financing, and the government has provided a set of incentives to attract domestic and foreign investors. The government prohibits rainforest deforestation for biofuels purposes.

Production

Ethanol production in Indonesia was about 140 million liters in 2007, and the economy plans to reach 3,770 million liters in 2010 (Figure 1). Biodiesel production in 2007 was about 1,550 million liters and it is estimated to reach 5,570 million liters in 2010 (Figure 2).

Figure 1. Planned Ethanol Production Facilities (INBT 2008)

A map showing planned ethanol production facilities in Indonesia up to 2010. Fifteen facilities are shown, with both sugarcane and cassava resources represented. If you need more information regarding the data in this map, please contact Anelia Milbrandt at anelia_milbrandt@nrel.gov.

Figure 2. Planned Biodiesel Production Facilities (INBT 2008)

A map showing planned biodiesel production facilities. Thirteen are included, with production highlighted up to 2010. If you need more information regarding the data in this map, please contact Anelia Milbrandt at anelia_milbrandt@nrel.gov.

Feedstock

The main biodiesel feedstock in Indonesia is crude palm oil (CPO) due to the well- established CPO industry and potential for the increase in production. Indonesia surpassed Malaysia in palm oil production in 2007 and is now the world leader. Together, Malaysia and Indonesia provide 87% of the world's palm oil. Indonesia's CPO output is estimated to be 17.4 million tonnes in 2007, up from 15.9 million tonnes in 2006. There are 6 million hectare (ha) of oil-palm plantations. The government established laws and regulations guiding their expansions to prevent deforestation.

Other potential biodiesel feedstocks in Indonesia include coconut oil and jatropha. In 2006, Indonesia's coconut oil production was about 880,000 tonnes, with between 450,000 and 550,000 tonnes used for export purposes. Jatropha is still in the early stage of development and there are concerns that it is not feasible for large-scale production. At least two companies are making serious preparations to use jatropha as a feedstock. Though using jatropha would remove the conflict between food and fuel, jatropha is more labor-intensive and produces less oil than oil palm. At this time, Indonesian government efforts appear to be focused on using jatropha in villages where electricity is not cost-effective (USDA).

Currently, fuel ethanol in Indonesia is produced from sugarcane molasses. Indonesia has about 5.5 million acres dedicated to sugarcane production, and several companies want to expand their plantations. Indonesia is among the top 10 sugarcane producers in the world with about 30 million tonnes per year. Indonesia is also looking at cassava as feedstock for ethanol. There were 52,195 ha planted with cassava in 2007 and it is expected to increase to 782,000 ha. In Indonesia, 1 ton of molasses yields about 250 liters, and 1 ton of cassava yields about 155 liters of anhydrous ethanol (USDA).

Due to abundant biomass resources, such as palm fruit shells, rice husk, sugarcane bagasse, and other crop and forest residues, Indonesia is interested in cellulosic ethanol production and actively supports R&D in the area.

Economics

The following charts show specific economic statistics for the member economy.

BiodieselUS$/liter
From palm oil0.41
From jatropha0.48

Source: APEC Biofuels Task Force, 2007

Biofuels in use

B5 (Biosolar) and E5 (Biopertamax) are available through the state-owned oil firm Pertamina. In January 2008, Pertamina reduced the percentage of biofuels in its Biosolar and Biopertamax products from 5% to 2.5% due to rising palm oil prices and lack of incentives.

Infrastructure and Vehicles

B5 is offered at 228 gas stations in Jakarta, Surabaya, and Bali. Since December 2006, E5 is offered at 14 stations in Jakarta, 7 in Surabaya, 4 gas in Malang, and 11 in Bali. Bio-premium (E5 using Premium blend) is offered at 1 station in Malang.

Trade

While Indonesia exports small amounts of biodiesel to China, the European Union (EU), and the United States, CPO remains the main trading commodity. The Indonesian Palm Oil Producers Association estimates that Indonesia's palm oil exports were slowing down in 2007, mainly because of the growth in domestic biodiesel consumption. Exports reached 12.1 million tonnes in 2006, and it is estimated at 13.1 to 13.2 million tonnes in 2007. If palm oil production in Indonesia reaches more than 18 million tonnes in 2008, exports may be about 14 million tonnes, but it will also depend on the growth of the biodiesel industry (Pacific Biofuel).

The main export market for Indonesian ethanol is Japan. The future of ethanol export is uncertain, considering the growth of domestic fuel ethanol demand.

Policy

Some of the current biofuels policies in Indonesia include:

  • Presidential Instruction No.1/2006 to 13 central and regional government institutions on supply and utilization of biofuels as alternative energy (January 2006)
  • Presidential Regulation No.5/2006 on National Energy Policy, calling for 5% biofuels in the energy mix by 2025 (January 2006)
  • Presidential Decree No.10/2006, established by the National Team for Biofuels Development to coordinate industry expansion (July 2006)

While the Indonesian government had expressed strong interest in biofuels development, it has been moving slowly and cautiously in implementing supporting policy. The government subsidizes biodiesel, bio-premium, and bio-pertamax at the same level as fossil fuels, leaving Pertamina to cover the difference when biodiesel production costs exceed fossil fuel costs. The government is considering providing various incentives, including value-added tax (VAT) reductions for business players, and excise duty cuts for biofuels users. In 2007, the government announced an interest rate subsidy of Rp 1 trillion for farmers growing biofuels crops including jatropha, oil palm, cassava, and sugar cane.

Some of the following documents are available as Adobe Acrobat PDFs. Download Adobe Reader.

Sources

  1. Indonesia National Biofuels Team, April 2008.
  2. Ministry of Energy and Mineral Resources (MEMR), presentation given at the USDA Global Conference on Agricultural Biofuels Research and Economic, Minneapolis, Minnesota, August 2007 (PDF 2.1 MB)
  3. Pacific Biofuel, August 2007
  4. U.S. Department of Agriculture, GAIN Report, 2007 (PDF 43 KB)
  5. APEC Biofuels Task Force (BTF) Report to the Eight Energy Ministers, 2007 (PDF 972 KB)