[su-re.co venture] Basic reality about bioethanol production in Indonesia

su-re.co team is researching bioeconomy in East Java

Ola, this is Takeshi from CEO of su-re.co

I'm doing quite a bit of biogas-related energy research now, but until about 2018, I was also investigating various renewable energy sources, including bioethanol. Sweden has been interested in bioethanol technology and it has been mentioned for some time that Indonesia actually has considerable potential. This can be imagined given the similarities in the climate divisions between Indonesia and Brazil. A long time ago, I heard from a Brazilian researcher that he had been asked by the Indonesian government that technical cooperation on bioethanol, in the past. In reality, Indonesia has made no progress in its plans to convert around a fifth of its gasoline consumption to bioethanol by 2025. I'm writing an academic paper based on research I've done previously with the Stockholm Environment Institute (SEI) and Stockholm University of Technology (KTH). I'll put a bit of background on this below.

Sugarcane production in East Java

Sugarcane is one of the major crops in Indonesia and is conventionally used for sugar production. The industry has persisted since Dutch colonial times when sugarcane plantations were established on existing smallholder agricultural lands, mostly in Central and Eastern Java (Nelson & Panggabean, 1991). Indonesia’s sugar sector was self-sufficient until 1985 but cane yields have since stagnated due to political, economic, and market dysfunctions, and the country is now one of the largest importers. In 2013, 57% (3.34 million tonnes) of total sugar consumption was imported (Khatiwada and Silveira, 2017: 353). Currently, 70% sugarcane is cultivated on Java with smallholder sugarcane farming predominating the sector.

Issues of Indonesia’s sugar industry

Indonesian total sugarcane area, especially on Java, is declining (Toharisman and Triantarti, 2016: 367). Sugarcane has also had to compete with other crops, especially rice and palm oil with much more attractive returns, discouraging farmers in East Java from growing sugarcane. Therefore, utilizing sugarcane biomass to create bioethanol is a sustainable alternative to the expanding and environmentally destructive palm oil industries. This study considers a prerequisite ‘reboot’ for bioethanol development in Indonesia.

Bioethanol from sugarcane

Globally, bioethanol dominates the renewable energy supply in the transport sector (Aditiya et al., 2016: 632). Fuel ethanol increased by around 4% between 2014 and 2015 as government policies in many countries are increasingly promoting ethanol production through various subsidies and blending targets (Timilsina et al, 2010). Bioethanol as a transport fuel contributes to reduce local air pollution, dependency on imported fossil oil and greenhouse emissions. Among the various biofuels, bioethanol from sugarcane is already commercially produced in many countries such as Brazil, where it is used as an octane enhancer. Results from an analytical hierarchy process showed that sugarcane has the biggest potential feedstock to produce ethanol in Indonesia. The analysis was based on criteria including 1) food crop with surplus production, 2) plant productivity, 3) yield of biofuel, 4) multipurpose energy plant, 5) plant development readiness, 6) government policy, and 7) uncompetitive land use for food crop/easiness to grow in marginal land (Hambali et al., 2016: 629).

Indonesia’s bioethanol targets

Indonesia is aiming at diversifying the country’s energy mix, which includes a 5% minimum share of biofuel in the total national energy consumption by 2025. Regarding transport, fuel ethanol blending of the total gasoline fuel consumption should fulfil 2% by 2015, 5% by 2016, 10% by 2020 and 20% by 2025 (Khatiwada & Silveira, 2017). The main intention of the regulations is to reduce Indonesia’s dependence on imported fossil fuel and also to support regional development in rural areas (Hasibuan & Nazir, 2017).

However, there exists no roadmap defining how the bioethanol blending targets will be achieved. Although bioethanol in Indonesia began to be produced from molasses in 2007, the activities were interrupted in 2010 due to economic regression and liberalising policies. Global gasoline consumption is expected to increase by 6.5% per year (ibid). With these statistics, it is imperative the government of Indonesia find alternative solutions to the transport sector and define a biofuels roadmap.