Bioethanol: Between Ambitious Targets and Struggling Realities
Indonesia possesses all the necessary foundations to become a major player in the bioethanol market. Bioethanol is essentially ethanol (C2H5OH) or an alcohol compound obtained through the fermentation of biomass using microorganisms. The most widely used raw materials globally are sugarcane and maize; in Indonesia, sugarcane, maize, and cassava are abundant, and agricultural land remains widely available.
The government launched a bioethanol programme on 4 November 2022, strengthening it with Government Regulation Number 40 of 2023 regarding the Acceleration of National Gas Self-Sufficiency and the Provision of Bioethanol as Biofuel. However, despite this optimism, the reality on the ground tells a different story. Currently, only 40 million litres of bioethanol are available annually. This figure is far below the requirement for the initial implementation phases in East Java and Jakarta alone, which reaches 696 million litres. In other words, the existing supply meets only 5.7% of the needs of these two provinces. Outside of Jakarta and East Java, bioethanol supply is almost non-existent, even though the programme is intended to be national in scale.
From Targets to Reality: The roadmap from the Directorate General of New, Renewable Energy and Energy Conservation (EBTKE) under the Ministry of Energy and Mineral Resources (ESDM) targets E5 (5% bioethanol) for the 2024-2028 period and E10 for the 2029-2035 period. While these targets are commendable, a major question arises: how can E5 be achieved if the basic needs of just two provinces are only 5.7% met? The E5 and E10 targets are conceptually correct, but ambition must be accompanied by mature calculations regarding supply chain readiness, production capacity, and industrial preparedness. Setting targets without ensuring field readiness results in beautiful documents that are never realised. It is better to have lower, fully achievable targets than high targets that fail year after year. The government must be brave enough to adjust timelines based on production realities.
Only Two Producers are Ready: Currently, there are 13 ethanol producers, but only two are capable of meeting the Fuel Grade Ethanol (FGE) criteria with a minimum purity of 99.5%. The remaining 11 producers still produce ethanol with concentrations of 90-94% for the cosmetics industry, or 94-99.5% for alcoholic beverage blends. The issue is not technology, as fuel-grade ethanol technology is already proven in many countries; rather, the issue is that the ecosystem has not yet been established.
There are three root causes: First, there is no market certainty, as producers are unsure if their bioethanol will be purchased. Second, there are insufficient incentives to encourage producers to upgrade from industrial or beverage grade to fuel grade. Third, the supply chain from farmers to factories remains weak. Sugarcane farmers often do not receive fair prices, making them reluctant to increase productivity. Furthermore, the bioethanol ecosystem is not well-formed.
What Needs to be Done: The government needs to focus on strengthening the supply chain before expanding targets. Priority should be given to increasing the capacity of the two producers that already meet FGE standards, providing them with full support, including guaranteed purchase agreements. For the other 11 producers, intensive assistance and fiscal incentives should be provided to those committed to upgrading to fuel grade. Meanwhile, the development of new bioethanol industries must be integrated with sugarcane plantations and the sugar industry. Sugarcane farmers must also receive attention through superior seeds, subsidised fertilisers, and price certainty. Start with small but tangible steps. Ensure the E5 target is achieved before expanding to other provinces.
Potential Will Not Become Reality Without Execution: Bioethanol is the energy of the future with extraordinary potential. However, potential will never become reality without serious and consistent execution. The question is no longer whether Indonesia can develop bioethanol—the answer is clearly yes. The question is whether we are serious about making it happen, or merely creating beautiful plans on paper.