The discourse surrounding the implementation of a 50 per cent\nbioethanol blending policy into petrol, known as the E50 programme, has\nbecome a strategic agenda for the government in an effort to strengthen\nnational energy security and reduce dependence on fossil fuel imports.\nThis idea has emerged following the successful implementation of\nmandatory palm-based biodiesel in the diesel sector.<\/p>\n
Current Developments<\/strong><\/p>\n In theory, the use of bioethanol as an alternative fuel offers\nbenefits such as increased octane rating (RON) and a reduction in\ngreenhouse gas emissions. However, looking at the current availability\nof national raw materials, the E5\/E50 target cannot yet be categorised\nas a realistic programme for the short or medium term.<\/p>\n The supply of fuel-grade bioethanol (with a minimum ethanol content\nof 99.5 per cent) in Indonesia is currently very limited. The national\nproduction capacity for dehydrated bioethanol remains in the tens of\nthousands of kilolitres per year (USDA Foreign Agricultural Service,\n2024).<\/p>\n On the other hand, national petrol consumption reaches approximately\n35 to 36 million kilolitres per year (Ministry of Energy and Mineral\nResources, 2023). To implement a national E50 mandate, a bioethanol\nsupply of 17 to 18 million kilolitres per year would be required.<\/p>\n Currently, the implementation of bioethanol blending is only at the\nstage of limited commercial introduction, specifically the Pertamax\nGreen 95 product with a 5 per cent ethanol content (E5), distributed in\nlimited areas of Jakarta and East Java. The government\u2019s initial steps\nare still focused on revising the Bioethanol Market Index Price (HIP)\nregulations by the Ministry of Energy and Mineral Resources (ESDM) and\ndrafting a raw material integration roadmap alongside the National\nEnergy Council (DEN).<\/p>\n Land Requirements and Agricultural Commodities<\/strong><\/p>\n The main factor distinguishing the biodiesel and bioethanol\nprogrammes lies in the status of the supporting agricultural commodity\nbalance. The B35 or B40 programme is supported by Indonesia\u2019s position\nas the world\u2019s largest producer of Crude Palm Oil (CPO), with a total\npalm oil coverage of approximately 16.8 million hectares (Ministry of\nAgriculture, 2023). Conversely, commodities used as ethanol sources,\nsuch as sugarcane, cassava, and maize, in Indonesia still experience\nsupply deficits for domestic food and industrial needs.<\/p>\n Based on agronomic conversion estimates, bioethanol yields from\ndirect sugarcane juice fall in the range of 5,000 litres per hectare per\nyear (FAO\/RFA, 2023). Using molasses, the yield ranges between 3,000 to\n4,500 litres per hectare. Meanwhile, cassava plants with a productivity\nlevel of 20 to 25 tonnes per hectare produce a conversion of\napproximately 3,000 to 4,000 litres of bioethanol per hectare.<\/p>\n Consequently, to meet the 18 million kilolitre bioethanol requirement\nfor the E50 programme, if using sugarcane as the sole raw material, a\nnew sugarcane plantation expansion of up to 3.6 million hectares would\nbe needed; if using cassava as the sole raw material, land expansion of\nup to 5.1 million hectares would be required.<\/p>\n By comparison, the total area of national sugarcane plantations\ncurrently ranges from only 500,000 to 510,000 hectares (Directorate\nGeneral of Estate Crops, Ministry of Agriculture, 2024). The national\nStandard Rice Field Area (LBS) is recorded at 7.46 million hectares with\nan accumulated rice harvest area of about 11.32 million hectares per\nyear (BPS, 202ss3), and the national maize harvest area ranges from 2.5\nto 3.2 million hectares per year (BPS, 2023).<\/p>\n This means that the implementation of E50 based on sugarcane would\nrequire an increase in sugarcane plantation area of approximately 700\nper cent from the current total area. Such massive expansion has the\npotential to trigger competition for land use with primary food crops\nsuch as rice and maize, or necessitate the opening of new forest areas,\nwhich would impact environmental aspects.<\/p>\n Economic Aspects and Price Determination<\/strong><\/p>\n The bioethanol production cost structure is influenced by several key\nvariables: raw material costs (contributing 60 to 70 per cent of total\nproduction costs), energy costs for the distillation and dehydration\nprocesses, and logistics costs. According to the Bioethanol Market Index\nPrice (HIP) formula set by the Ministry of Energy and Mineral Resources,\nthe economic price of fuel-grade bioethanol ranges from Rp11,800 to\nRp14,800 per litre (Ministerial Decree ESDM No.\u00a060.K\/12\/MEM\/2023).<\/p>\n This figure is higher than the economic price of pure fossil petrol,\nwhich reaches Rp7,500 to Rp9,500 per litre, assuming global crude oil\nprices of US$70-US$80 per barrel. There is a price gap of Rp2,500 to\nRp4,000 per litre between bioethanol and fossil petrol.<\/p>\n The economic viability of the E50 programme depends on three key\nvariables:<\/p>\n Global Crude Oil Prices: The lower the price of fossil crude oil,\nthe larger the price gap that must be subsidised so that E50 products do\nnot burden consumers.<\/p><\/li>\n Fiscal Incentive Mechanisms: The success of B35 is supported by\nbalancing funds from the Indonesian Palm Oil Fund Management Agency\n(BPDPKS), collected from CPO export levies. In the bioethanol sector,\nthere is no comparable export commodity from which levies can be\ncollected to cover the bioethanol price gap.<\/p><\/li>\n Refinery Efficiency (Biorefinery): The initial capital\nexpenditure (CAPEX) for building large-scale dehydration refineries\nrequires certainty in benchmark prices over the long term.<\/p><\/li>\n<\/ul>\n International Comparison<\/strong><\/p>\n The experience of major bioethanol-producing countries provides an\noverview of the industrial scale required to support high ethanol\nblending.<\/p>\n\n
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