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Indonesia’s biofuel (BBN) policy was initially designed as a multi-commodity strategy but later shifted to be dominated by palm oil based biodiesel (CPO). This shift was driven by efforts to reduce dependence on fossil fuels, achieve energy sovereignty, and absorb national CPO surpluses. As a result, policy direction has focused more on palm oil market engineering than on energy diversification.

Palm oil based biofuel development faces serious ecological, economic, and social challenges. Ecologically, upstream production particularly deforestation and peatland conversion generates significant emissions despite lower tailpipe emissions. Economically and socially, the policy relies heavily on subsidies, has yet to significantly improve regional revenues or independent smallholder welfare, and still contains supply-chain traceability gaps that risk human rights violations.

The government needs to update the national biofuel roadmap, which has not been revised since 2006, to clarify direction and improve governance. Feedstock diversification beyond palm oil should become a key priority to enhance sustainability and energy resilience. Promising alternatives include waste-based sources such as used cooking oil, rice straw, and bagasse, as well as non-food crops like nyamplung, malapari, and kemiri sunan.