E50 and Key Aspects to Consider
The discourse surrounding the implementation of a 50 per cent bioethanol blending policy into petrol, known as the E50 programme, has become a strategic agenda for the government in an effort to strengthen national energy security and reduce dependence on fossil fuel imports. This idea has emerged following the successful implementation of mandatory palm-based biodiesel in the diesel sector.
Current Developments
In theory, the use of bioethanol as an alternative fuel offers benefits such as increased octane rating (RON) and a reduction in greenhouse gas emissions. However, looking at the current availability of national raw materials, the E5/E50 target cannot yet be categorised as a realistic programme for the short or medium term.
The supply of fuel-grade bioethanol (with a minimum ethanol content of 99.5 per cent) in Indonesia is currently very limited. The national production capacity for dehydrated bioethanol remains in the tens of thousands of kilolitres per year (USDA Foreign Agricultural Service, 2024).
On the other hand, national petrol consumption reaches approximately 35 to 36 million kilolitres per year (Ministry of Energy and Mineral Resources, 2023). To implement a national E50 mandate, a bioethanol supply of 17 to 18 million kilolitres per year would be required.
Currently, the implementation of bioethanol blending is only at the stage of limited commercial introduction, specifically the Pertamax Green 95 product with a 5 per cent ethanol content (E5), distributed in limited areas of Jakarta and East Java. The government’s initial steps are still focused on revising the Bioethanol Market Index Price (HIP) regulations by the Ministry of Energy and Mineral Resources (ESDM) and drafting a raw material integration roadmap alongside the National Energy Council (DEN).
Land Requirements and Agricultural Commodities
The main factor distinguishing the biodiesel and bioethanol programmes lies in the status of the supporting agricultural commodity balance. The B35 or B40 programme is supported by Indonesia’s position as the world’s largest producer of Crude Palm Oil (CPO), with a total palm oil coverage of approximately 16.8 million hectares (Ministry of Agriculture, 2023). Conversely, commodities used as ethanol sources, such as sugarcane, cassava, and maize, in Indonesia still experience supply deficits for domestic food and industrial needs.
Based on agronomic conversion estimates, bioethanol yields from direct sugarcane juice fall in the range of 5,000 litres per hectare per year (FAO/RFA, 2023). Using molasses, the yield ranges between 3,000 to 4,500 litres per hectare. Meanwhile, cassava plants with a productivity level of 20 to 25 tonnes per hectare produce a conversion of approximately 3,000 to 4,000 litres of bioethanol per hectare.
Consequently, to meet the 18 million kilolitre bioethanol requirement for the E50 programme, if using sugarcane as the sole raw material, a new sugarcane plantation expansion of up to 3.6 million hectares would be needed; if using cassava as the sole raw material, land expansion of up to 5.1 million hectares would be required.
By comparison, the total area of national sugarcane plantations currently ranges from only 500,000 to 510,000 hectares (Directorate General of Estate Crops, Ministry of Agriculture, 2024). The national Standard Rice Field Area (LBS) is recorded at 7.46 million hectares with an accumulated rice harvest area of about 11.32 million hectares per year (BPS, 202ss3), and the national maize harvest area ranges from 2.5 to 3.2 million hectares per year (BPS, 2023).
This means that the implementation of E50 based on sugarcane would require an increase in sugarcane plantation area of approximately 700 per cent from the current total area. Such massive expansion has the potential to trigger competition for land use with primary food crops such as rice and maize, or necessitate the opening of new forest areas, which would impact environmental aspects.
Economic Aspects and Price Determination
The bioethanol production cost structure is influenced by several key variables: raw material costs (contributing 60 to 70 per cent of total production costs), energy costs for the distillation and dehydration processes, and logistics costs. According to the Bioethanol Market Index Price (HIP) formula set by the Ministry of Energy and Mineral Resources, the economic price of fuel-grade bioethanol ranges from Rp11,800 to Rp14,800 per litre (Ministerial Decree ESDM No. 60.K/12/MEM/2023).
This figure is higher than the economic price of pure fossil petrol, which reaches Rp7,500 to Rp9,500 per litre, assuming global crude oil prices of US$70-US$80 per barrel. There is a price gap of Rp2,500 to Rp4,000 per litre between bioethanol and fossil petrol.
The economic viability of the E50 programme depends on three key variables:
Global Crude Oil Prices: The lower the price of fossil crude oil, the larger the price gap that must be subsidised so that E50 products do not burden consumers.
Fiscal Incentive Mechanisms: The success of B35 is supported by balancing funds from the Indonesian Palm Oil Fund Management Agency (BPDPKS), collected from CPO export levies. In the bioethanol sector, there is no comparable export commodity from which levies can be collected to cover the bioethanol price gap.
Refinery Efficiency (Biorefinery): The initial capital expenditure (CAPEX) for building large-scale dehydration refineries requires certainty in benchmark prices over the long term.
International Comparison
The experience of major bioethanol-producing countries provides an overview of the industrial scale required to support high ethanol blending.
- Brazil: Produces approximately 35 to 37 billion litres of bioethanol per year by utilising 8.8 to 9.8 million hectares of sugarcane land (CONAB/USDA FAS, 2024). Brazil allocates approximately 50 per cent of its total national sugarcane harvest specifically for ethanol production. The country implements a mandate…