RI to run market trial for 5-percent bioethanol mix
The Energy and Mineral Resources Ministry, with state-owned oil and gas firm Pertamina, plans to conduct a market trial for the Pertamax brand motor fuel with 5 percent bioethanol mix (E5) this month or next. The trial is part of the ministry’s program to raise biofuel use. However, previously, a push for a 2 percent bioethanol mix (E2) failed because of high bioethanol prices and a lack of incentives for raw material producers.1
Indonesia’s bioethanol will come from sugarcane, but Pertamina president director Nicke Widyawati has said the bioethanol-mixed fuel program will not disrupt food supplies.
Instead of the sugar itself, she explained, waste from the sugar production process would be used to make the fuel. The SOE also revealed that the product had passed its development trial in Surabaya, East Java.2
For the market trial, the energy ministry’s new, renewable energy and energy conservation director-general, Dadan Kusdiana, said the disparity between E5’s price and unmixed Pertamax would not be subsidized. This lack of subsidies makes sense since the product’s introduction is partially aimed at reducing the fuel subsidy allocation in the state budget.
However, price disparity led to failure in the previous attempt to introduce bioethanol fuel through E2. Therefore, the government should instead conduct a trial to introduce incentives to targeted Pertamax fuel consumers to encourage them to switch to E5 in order to curb the impact of the price disparity between E5 and its pure gasoline counterpart.
President Joko “Jokowi” Widodo has set a target for Indonesia to produce 1.2 million kiloliters (kl) of bioethanol from sugarcane by 2030 through Presidential Regulation No. 40/2023, which the president signed into law on Jun, 16.3
The regulation, in Article 3, stipulates a legal basis for Indonesia’s bioethanol production road map, which will include a bioethanol production target of 1.2 million kl and the authorization of an additional 700,000 hectares (ha) of land for sugarcane cultivation, with a target of 93 tonnes per ha of annual sugarcane production by 2030.4
As of 2021, 449,800 ha of land were being employed for sugarcane cultivation in the country, according to Statistics Indonesia (BPS) data, while the country’s total annual sugarcane production is currently between 70 to 75 tonnes per ha.5 Moreover, Indonesia’s total bioethanol production is currently only around 200,000 kl per year. Dadan added that the current level of total annual production for fuel-grade bioethanol accounted for 40,000 kl per year of that figure.6
The expansion of land for sugarcane cultivation would benefit both the performance of and employment in the sugarcane industries, but it could also be counterproductive to E5 and other Indonesian biofuels’ indirect aim of combating climate change. The deforestation necessary for the expansion would damage natural ecosystems, as has happened with palm oil plantations, and worsened future prosperity due to climate damage could be the price paid for medium-term gains.
In response to the steep rise in global crude oil prices in the 2000s, surpassing US$70 per barrel in 2005, the government formulated the 2006-2025 blueprint on biofuel development for the acceleration of poverty and unemployment reduction, which aims for energy independence through biofuel. The blueprint set a minimum of 5.25 million ha of land dedicated for biofuel feedstocks, with a minimum of 1.5 million ha each allocated for oil palm, jatropha and cassava, and a minimum of 750,000 ha for sugarcane.7
Early on, people were optimistic and eager to participate as farmers and biofuel producers in the program. However, their markets failed except for oil palm, which could rely on the established cooking oil market, due to farmers’ low production and the high supply needed by producers. Bioethanol factories were also unable to secure stable cassava and sugarcane supply, leading to 15 biofuel factories shutting down by 2013, including Medco Ethanol Lampung, which suffered a $20 million loss in investment.8
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