Observer: Sugarcane-based bioethanol development needs market certainty

Agricultural observer Khudori from the Indonesian Political Economy Association (AEPI) has stated that the development of the sugarcane-based bioethanol industry requires a scheme that guarantees business sustainability, from market certainty and offtakers to financial support. According to him, the success of bioethanol development is not solely determined by increased sugarcane production, but also by the availability of an ecosystem capable of maintaining bioethanol’s competitiveness in the long term. “To date, there is no public service agency like the Plantation Fund Management Agency (BPDP) in the sugarcane-based sugar industry. When fossil fuel prices are low, will the government subsidise bioethanol? And who will be the offtaker?” Khudori said in a statement in Jakarta on Friday. He noted that the biodiesel programme has been able to progress to the implementation of a B50 blend because it has a fixed buyer, namely PT Pertamina (Persero), and funding support through the BPDP. He said a similar scheme needs to be considered if the government wants to develop bioethanol sustainably. Khudori reminded that Indonesia previously developed a gasohol programme, petrol with a 10 percent ethanol blend, in the 1980s and again pushed for biofuel utilisation through Presidential Regulation No. 5 of 2006 on the National Energy Policy and Presidential Instruction No. 1 of 2006 on the Provision and Utilisation of Biofuel as an Alternative Fuel. However, both programmes were discontinued, partly because bioethanol lost its competitiveness when fossil fuel prices fell. Beyond the sustainability aspect, he assessed that the target of producing 110.1 million tonnes of sugarcane by 2030 still faces challenges in terms of land expansion, increased productivity, yield rates, and raw material supply certainty. Khudori highlighted the projection for PT Sinergi Gula Nusantara (SGN) to expand its sugarcane area to 670,561 hectares by 2030, while its area in 2025 is only 212,437 hectares based on data from the Ministry of Agriculture’s Directorate General of Plantations. He also questioned the assumption that all molasses can be allocated for bioethanol production, as molasses is currently also used as a raw material in the food, alcohol, and cosmetics industries. “If we rely on molasses, as long as sugarcane production does not increase significantly, the continuity of bioethanol raw materials will become an existential problem,” he said. The government plans to accelerate the development of molasses-based bioethanol to support the implementation of a 10 percent ethanol-blended petrol (E10) as part of efforts to strengthen national energy security. To support the programme, the government is targeting the construction of 30 to 50 bioethanol plants. Currently, PT Pertamina (Persero) has only implemented limited sales of 5 percent ethanol-blended petrol (E5) at around 170 public fuel stations (SPBU) in Jakarta and East Java.