Indonesia’s Push for Biomass Energy Faces Environmental and Supply Challenges

President Prabowo Subianto recently announced his confidence that Indonesia can end fossil fuel imports by expanding biomass and biofuel production from palm oil and sugarcane. However, sustainability experts warn that this strategy faces serious environmental and practical limitations that make it unsuitable as a primary energy solution.

The experts argue that Indonesia should instead prioritize its abundant solar, wind, and marine energy resources, which can provide cleaner and more sustainable power without the land conflicts and carbon emissions associated with large-scale plantation expansion.

Palm Oil Strategy Hits Supply Limits

Indonesia is the world’s largest palm oil producer, generating approximately 48 million tons annually and accounting for 59 percent of global production. The government currently requires B-35 biodiesel blending (35 percent biodiesel mixed with conventional diesel) and is considering increasing this to B-40 or B-50 levels.

However, ramping up to B-50 would require between 17 and 18 million metric tons of crude palm oil feedstock each year. Current production has plateaued and shows little growth, suggesting that supply constraints rather than refining capacity represent the real bottleneck.

Aida Greenbury, a sustainability expert with three decades of experience in Indonesian forestry and agriculture, emphasized that achieving sustainable biofuel production requires strict environmental standards that inherently limit how much can be produced.

Forest Loss and Carbon Emissions

Meeting increased biofuel demands would require converting more land to plantations. In Indonesia, that typically means clearing forests or draining peatlands, which releases massive amounts of stored carbon.

Over 3 million hectares of forest have been cleared for oil palm plantations in the past 20 years. Between 2001 and 2015, approximately 27 percent of global forest loss resulted from large-scale agriculture, with industrial palm oil as a primary driver.

Tropical forests store approximately six times more carbon than oil palm plantations. When peatlands are drained for agriculture, the problem intensifies. Converting peat areas for palm oil generates carbon footprints ranging from 0.85 to 1.9 metric tons of CO2 equivalent per ton of crude palm oil produced, compared to 0.26 to 1.4 metric tons for mineral soil plantations.

Indonesia’s peatlands cover approximately 250,000 square kilometers and represent some of the world’s most valuable carbon storage ecosystems.

Indigenous Communities at Risk

Large-scale plantation expansion also threatens indigenous peoples and smallholder farmers who have maintained sustainable relationships with forests for generations.

Documentation shows a pattern where corporations obtain concessions with minimal consultation of affected communities. Promises regarding land titles, benefits from outgrower schemes, and local amenities frequently go unfulfilled.

Some indigenous groups have been reduced from self-sufficient forest-dependent communities to poverty and reliance on casual labor at minimal wages.

Renewable Energy Offers Better Path

Indonesia possesses renewable energy resources that far exceed its biomass potential and can be developed without environmental and social costs.

The country receives annual average solar irradiance exceeding 1,700 kilowatt-hours per square meter—among the highest globally. Current installed solar capacity stands at a fraction of potential, with projections suggesting capacity could surpass 20 gigawatts by 2030 if development accelerates.

Utility-scale solar now costs between 25 and 35 dollars per megawatt-hour, substantially cheaper than the 70 to 120 dollar range for coal generation.

Indonesia’s coastal location also provides strong wind patterns suitable for power generation. The Ministry of Maritime Affairs and Fisheries estimates the country’s tidal energy potential at approximately 19.5 gigawatts, with wave energy potential at 17.9 gigawatts. These resources remain virtually undeveloped.

Additionally, Indonesia possesses the world’s largest geothermal resource base, with estimated capacity exceeding 29 gigawatts. Unlike solar and wind, geothermal provides consistent power 24/7 regardless of weather conditions.

Economics Favor Clean Energy

Renewable energy technologies have experienced dramatic cost reductions in recent years. Global costs for utility-scale solar have declined 88 percent since 2010, while wind costs have fallen approximately 69 percent. Battery storage costs have dropped 89 percent.

According to the International Renewable Energy Agency, in 2024 more than 90 percent of installed renewable energy capacity was added at cheaper costs than fossil fuel alternatives.

For Indonesia specifically, renewable energy deployment would generate economic returns of approximately 1.41 dollars for every dollar invested. The transition would create 383,000 new jobs in the energy sector during this decade alone.

Obstacles Remain

Despite the economic case for renewable energy, Indonesia’s transition faces significant challenges. Government fiscal support for fossil fuels totaled approximately 713 trillion Indonesian rupiah in 2024, with nearly 90 percent directed toward fossil fuels. These subsidies make coal-fired generation artificially cheap and undermine renewable competitiveness.

Grid infrastructure also needs modernization to integrate distributed renewable sources. Policy inconsistencies between different government agencies have created investor uncertainty.

Strategic Role for Biofuels

Energy experts do not argue that biomass has no role in the country’s energy future. They advocate a strategic approach where biofuels support specific applications—particularly aviation and shipping fuel, where electrification faces greater technical challenges.

Developing sustainable biofuel production from agricultural residues and waste products rather than purpose-grown energy crops could provide fuel without triggering additional land clearing. Palm oil mill processing generates substantial biomass that could be converted to energy without requiring new plantations.

What Comes Next

President Prabowo’s goal of reducing fossil fuel imports addresses a legitimate strategic concern, especially as crude oil prices recently surged above 110 dollars per barrel during Middle East tensions.

However, experts argue that the most effective path to energy independence involves developing domestic renewable resources rather than expanding agricultural production. What Indonesia requires now is policy alignment, fossil fuel subsidy reform, and grid infrastructure investment.

With committed implementation, the country could become a regional leader in renewable energy production while maintaining the forest and peatland ecosystems that regulate global climate patterns and support indigenous cultures.

References:

• Kompas: President Prabowo optimistic about palm and sugarcane biofuels
• Aida Greenbury on sustainability challenges