Indonesia Turns to Biofuels for Energy Independence, But Experts Say Renewables Are the Better Path

President Prabowo’s plan to end fuel imports by 2029 relies heavily on palm oil and sugarcane, raising concerns about deforestation, food security, and whether biofuels can truly replace fossil fuels at scale

Indonesia has announced an ambitious plan to stop all fuel imports within four years by switching to homegrown biofuels. But environmental experts and energy analysts warn the strategy could backfire, threatening forests and food supplies while falling short of the country’s actual energy needs.

President Prabowo Subianto wants Indonesia to stop importing diesel by 2026 and end all fuel imports by 2029. His plan centers on dramatically expanding palm oil-based biodiesel and sugarcane ethanol production.

The government plans to roll out B50 fuel, a blend containing 50 percent palm oil biodiesel, nationwide by next year. It would also require 10 percent ethanol in gasoline by 2030.

The Financial Promise

The economic case appears strong. Indonesia currently spends 520 trillion rupiah ($31.5 billion) annually on fuel imports. Cutting that bill in half would free up 250 trillion rupiah for development projects, the President said.

“Energy independence significantly strengthens the state’s finances,” Prabowo stated. “If we can reduce imports by half, we will have 250 trillion rupiah to redirect toward regional development.”

Indonesia is already the world’s largest palm oil producer, generating over 56 million tons annually. The country currently uses a B35 biodiesel mandate, blending 35 percent palm oil with conventional diesel.

For rural communities, expanded biofuel programs promise higher demand for palm oil and sugarcane, potentially boosting incomes for millions of smallholder farmers.

The Scale Problem

But energy experts say biofuels cannot replace fossil fuels at the scale Indonesia requires. The country’s energy demand continues rising as the economy grows at 8 percent annually through 2029. Electricity demand alone is expected to increase by 4.7 percent per year.

Meeting the E10 ethanol requirement would demand an 8.7-fold increase in current ethanol production. That would require converting millions of hectares of land that could otherwise grow food or provide ecosystem services.

“Biofuels have substantial limitations when it comes to scaling,” according to energy transition research. The primary issue is that biofuels compete directly with food production for limited agricultural land.

This creates pressure to convert forests and farmland. As biofuel production increases in one location, it pushes food production elsewhere, often onto newly cleared forests.

Deforestation Risks

Environmental concerns are mounting. Indonesia has identified 2.3 million hectares of protected forests that could be converted into “food and energy estates” as part of a broader plan to convert 20 million hectares of forest for agriculture.

While officials argue these areas are already degraded, environmental groups warn this could trigger Indonesia’s largest deforestation project ever.

The carbon calculations are particularly troubling. When forests are cleared for palm oil or sugarcane plantations, the carbon stored in trees and soil is released into the atmosphere. Life cycle assessments show that palm oil biodiesel can have carbon intensities higher than fossil diesel when land-use change emissions are included.

For sugarcane ethanol, research shows it can take 20 years for emissions reductions to “pay back” the carbon released from forest conversion. The European Union has recognized these risks by phasing out imported palm oil biodiesel by 2030.

Food Security at Risk

The biofuel push is already affecting food supplies. Last year, for the first time, consumption of palm oil for biodiesel in Indonesia surpassed consumption for food. 46 percent of total palm oil production went to biodiesel, compared to 44 percent for food.

This diversion has contributed to rising cooking oil prices. Researchers note that as more crude palm oil goes toward biodiesel production, the edible oil supply for domestic consumption shrinks.

Provinces with heavy biodiesel-linked palm cultivation show higher food import dependencies, suggesting that Indonesia’s biofuel policy framework can undermine local food self-sufficiency. These trade-offs directly contradict the President’s goals of achieving food and energy independence within five years.

Indonesia’s Renewable Advantage

While biofuels face these constraints, Indonesia possesses vast renewable energy resources without such limitations. Solar, wind, and marine energy offer paths to energy independence without the environmental and social costs.

The country receives an average of 4.8 kilowatt-hours per square meter per day of sunlight, world-class for solar generation. In August 2025, the government announced a 100 gigawatt solar program, allocating 80 GW for mini-grids across 80,000 villages and 20 GW for centralized plants.

The economics are compelling. Solar panel costs have fallen dramatically, making solar generation cheaper than coal or natural gas in most locations. Battery storage costs plummeted 27 percent year-on-year in 2025, reaching record lows of $78 per megawatt-hour for four-hour storage systems.

Combined solar-and-battery systems now deliver electricity at just $57 per megawatt-hour, far cheaper than diesel generators that power Indonesia’s remote areas.

Untapped Wind and Marine Resources

Indonesia possesses approximately 60.6 gigawatts of onshore wind potential and 94.2 gigawatts of offshore wind potential. Several regions, including West Nusa Tenggara and Sulawesi, have wind speeds of 6-7 meters per second, excellent for wind generation.

Currently, the country has minimal wind capacity installed, making this an enormous untapped resource.

As an archipelago with over 81,000 kilometers of coastline, Indonesia also has staggering marine energy potential. Tidal energy potential is estimated at 19.5 gigawatts, wave energy at 17.9 gigawatts, and ocean thermal energy conversion at 41 gigawatts.

The Palu Bay Tidal Energy Project in Central Sulawesi is expected to produce 10 megawatts of electricity. While marine energy technology is still developing, it offers immense long-term potential without competing with food production or driving deforestation.

Economic Returns

Research shows that scaling renewable energy in Indonesia delivers strong economic returns. Every dollar invested in renewables generates $1.41 in economic benefits.

Renewable deployment could create nearly 1 million jobs in construction and manufacturing, plus 1.8 million jobs in ongoing power generation operations by 2050. In coal-producing regions alone, expanding renewables could create 96,000 jobs while attracting $9.4 billion in investment.

These jobs cannot be outsourced. Solar installers, wind technicians, and battery system operators must work locally. Moreover, shifting away from imported fossil fuels strengthens energy security. Indonesia’s domestic oil production has declined since 1997, making the country increasingly dependent on volatile global markets.

A Question of Priorities

This is not an argument against biofuels entirely. They can play a supporting role in Indonesia’s energy transition, particularly for aviation fuel and sectors where electrification is difficult.

The issue is scale and prioritization. Indonesia should cap biofuel expansion at levels that do not threaten food security or drive deforestation. The government’s earlier plans for B50 biodiesel have already been abandoned due to technical and funding constraints, a sign that scaling biofuels beyond current levels may not be feasible.

Instead, the country should prioritize renewable energy development. The 100 GW solar program is a step in the right direction, but it needs to be accelerated. Onshore wind should be developed more aggressively. Marine energy research should be substantially funded.

The Choice Ahead

President Prabowo’s goal of energy independence by 2029 is achievable. But reaching it requires recognizing both the potential and the limits of different energy sources.

Biofuels can contribute to reducing diesel imports in the short term. But they cannot replace all fossil fuels without creating new problems: deforestation, food insecurity, and potentially higher carbon emissions when land-use change is considered.

Renewable energy offers a path to genuine energy independence. These resources are abundant in Indonesia, create no food security concerns, drive economic growth through job creation, and deliver environmental benefits rather than environmental costs.

Indonesia stands at a crossroads. The decisions made now will determine whether the country achieves sustainable energy independence or repeats the mistakes of pursuing unsustainable biofuel expansion at the expense of forests and food security.

The technology exists. The economics work. What remains is political will to prioritize renewables alongside, rather than instead of, biofuels.

References:

• President Prabowo aims to stop diesel import by 2026, push Papua for energy self-sufficiency
• Uncovering Indonesia’s marine energy potential and its challenges
• Indonesia 100GW solar goal report