Assessing the Ambition and Reality of Biofuels in Indonesia
Indonesia has positioned biofuels as one of the key instruments in its energy transition agenda toward net-zero emissions by 2060. Originating from Presidential Regulation No. 5 of 2006 on National Energy Policy and Presidential Instruction No. 1 of 2006 on the Provision and Utilization of Biofuels, this policy was subsequently reinforced through mandatory blending in 2008. From the outset, biofuels were intended not only to bolster energy security, but also to reduce reliance on fossil fuels and foster rural development.
However, after nearly two decades, the trajectory of biofuel development faces several challenges. Implementation has become increasingly concentrated on palm oil-based biodiesel, while the development of bioethanol and biojet fuel has progressed at a slower pace. Meanwhile, supply chains that remain supply-driven, limited engagement of smallholders and communities, incentive governance issues, as well as risks to food security and the environment reveal a gap between policy ambitions and implementation realities.
This study reassesses the role of biofuels in Indonesia's energy transition: what biofuels are being developed for, who benefits, who bears the risks, and what a more just, inclusive, and sustainable policy direction looks like. It offers a critical analysis alongside a new roadmap through empowering communities and smallholders, diversifying feedstocks, utilizing biofuels in strategic sectors, and safeguarding ecosystems.
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Learn more about the evaluation of two decades of biofuel policy in Indonesia and a new path toward a just energy transition.
