Indonesia's Biodiesel Industry

    The Indonesian biodiesel program was launched in 2006 through Presidential Regulation 5/2006 (revoked by Government Regulation 74/2014) as a measure to curtail the national level of spending on diesel-fuel imports, which was subject to global market increases for crude oil. The program, coordinated by a special team for the development of biofuels, aimed to take advantage of Indonesia’s large palm-oil industry to provide feedstock for producing biodiesel domestically. The biodiesel program also supports the government’s initiative to increase the national renewable energy mix to 23% by 2025 and 31% by 2050 as mandated in the National Energy Policy. This program is an opportunity to strengthen the local downstream sector of the palm oil industry by expanding the production of end-products.[1]

    A Glimpse of Biofuel

    Biofuel is a fuel derived from vegetable materials and is divided into three major groups, namely biodiesel, bioethanol, and pure vegetable oils. Biodiesel what is meant is the product of Fatty Acid Methyl Ester (FAME) or Mono Alkyl Ester produced from biological raw materials and other biomass. Meanwhile, what is meant by bioethanol is ethanol products produced from biological raw materials and other biomass. Meanwhile, pure vegetable oil is a product produced from vegetable raw materials that are processed mechanically and fermented.[2]

    Potential commodities in Indonesia as biofuel feedstock are sugar cane (bioethanol) and palm oil (biodiesel). However, sugarcane as a raw material for bioethanol continues to decline. At present, there are only two producers in Indonesia producing bioethanol with a production capacity of 40.000 kl. [3] While on the other hand, the palm oil industry in Indonesia continues to grow rapidly. Providing employment for the community, as well as contributing to Indonesia's foreign exchange. The palm oil industry has finally become an industry that cannot be denied has played an important role in the Indonesian economy. Both as a support industry for biofuel raw materials, as well as mixed materials for other derivative products.

    The policy to use biodiesel as fuel in Indonesia formally began in 2006, marked by the issuance of Presidential Regulation 5/2006 on National Energy Policy. It is in this regulation that biofuel gets a room in the context of national energy. The main background of the implementation of this policy is related to national energy security and independence. [4]

    Energy security is defined as the availability of public access to cheap energy sources, while energy independence is defined as the utilization of domestic energy resources.[5]

    The background of using biodiesel can vary, but in an era where climate change is a global challenge, the main setting of biodiesel use is to reduce greenhouse gas emissions. Biodiesel as part of new and renewable energy is seen as a solution for emissions in the transportation sector and energy in general.

    Footnotes:

    1. A Azis Kurniawan et al., Dynamics of Indonesian Biodiesel Downstream and Upstream Industry: Study, Jakarta: Coaction Indonesia, 2018. (kembali)
    A Azis Kurniawan et al., Dynamics of Indonesian Biodiesel Downstream and Upstream Industry: Study, Jakarta: Coaction Indonesia, 2018.
    2. Ministry of Energy and Mineral Resources, Regulation of the Minister of Energy and Mineral Resources Number 32 of 2008 on Provision, Utilization and Business Administration of Biofuel (BBN) as Other Fuels, article 1. (kembali)
    Ministry of Energy and Mineral Resources, Regulation of the Minister of Energy and Mineral Resources Number 32 of 2008 on Provision, Utilization and Business Administration of Biofuel (BBN) as Other Fuels, article 1.
    3. Agus Cahyono Adi et al, Handbook of Energy & Economic Statistics of Indonesia 2018, Jakarta: Minstry of Energy and Mineral Resources, 2018. (kembali)
    Agus Cahyono Adi et al, Handbook of Energy & Economic Statistics of Indonesia 2018, Jakarta: Minstry of Energy and Mineral Resources, 2018.
    4. The Republic of Indonesia, Presidential Regulation Number 5 of 2006 on National Energy Policy, article 1. (kembali)
    The Republic of Indonesia, Presidential Regulation Number 5 of 2006 on National Energy Policy, article 1.
    5. The Republic of Indonesia, Government Regulation Number 79 of 2014 on Policy National Energy, article 1. (kembali)
    The Republic of Indonesia, Government Regulation Number 79 of 2014 on Policy National Energy, article 1.