The biofuel sector is in an unusual place at the moment, as whilst it is a vital part of the transition to clean energy and transportation, particularly now that many countries are at a stage where the storage and pressure relief requirements of biofuel are well-established.
Some countries and corporations have taken a step back from biofuel production. Reuters has noted that the United States Government is currently trying to manage the impact of reducing its biofuel policies on soybean and corn farmers in the country.
However, biofuel is being tested in aviation and shipping, whilst other countries are enacting increasingly ambitious biofuel blends for both ecological and economic reasons. India has recently adopted a 20 per cent bioethanol petrol blend five years ahead of schedule.
By far the most ambitious national biofuel policy in the world is found in Indonesia, which is aiming to launch a 50 per cent biodiesel by 2026, again according to Reuters.
Why is this such an ambitious biofuel plan, how can it be achieved, and why is it so critical during a time when energy security is a global priority?
Is Indonesia’s Plan The Most Ambitious Biofuel Policy Ever?
Biofuels were introduced to Indonesian energy policy in 2006, primarily through its Public Sector Obligation industries, before establishing a 20 per cent biodiesel blend programme known as B20 in 2018.
This rapidly increased to B30 in 2020, then B35 in 2023, B40 in 2025 and finally to a proposed B50 blend at some point in 2026, although this initiative is unlikely to be in effect at the start of the year.
A B50 blend would be one of the largest ethanol fuel policies in the world since Brazil’s Pro-Alcool programme, which, for a time, incorporated an E100 pure ethanol fuel for cars due to the 1973 oil crisis, was largely dismantled in the 1990s.
It is possible in Indonesia because it has similar advantageous circumstances to Brazil’s ethanol fuel policy; the B50 plan is based on palm oil-derived biofuels, aided by the fact that Indonesia is the world leader in its production and exports the same way Brazil was a world leader in sugarcane production at the time.
Why Is Biofuel Such A Priority In Indonesia?
Much like in India, the main motivation for biofuel production in Indonesia is to reduce reliance on fossil fuels, which has not only sustainability and environmental implications, but also economic and geopolitical benefits.
The environmental benefits are relatively self-evident; a 50 per cent blend considerably reduces the use of crude oil and the implications that come with it with regard to mining, refining, shipping and exporting.
Less ecological damage from mining, fewer carbon emissions and less of a need to offset said damage are just a few of these benefits.
Much of that can be cut, since the palm oil refining process in Indonesia is already operating at considerable scale, and supply has potentially increased in part due to potential import restrictions by the European Union.
From an economic standpoint, the more palm oil that is used, the more it reduces the reliance on expensive, fluctuating fossil fuels, whilst at the same time increasing palm oil prices through (technically artificial) demand.
The 2021-2022 global energy crisis made a lot of nations think much more carefully about their dependence on energy imports, particularly with regard to crude oil, petrol and diesel.
Relying on increasing blends based on a biofuel ingredient that is readily available in Indonesia puts the country in an excellent position to boost its green economy.
Is The Plan Too Ambitious?
The rapid pace of reaching B50 fuel has drawn some criticism and scepticism from some analysts, who are concerned about the rapid rate of production and the potential impact redirecting palm oil away from imports would have on global supply.
There is the potential for this to drive up palm oil prices further, although this has been presented as a positive for domestic farmers.
From a biofuel perspective, producers need to install new equipment and test whether current Indonesian-spec cars can manage the greater concentration.
Unlike the move from E10 to E20, which would require some modification of cars that were designed to run on petrol, the biofuel initiative has been in place for long enough that cars have already been adapted to run efficiently on increasing blends of biodiesel.
The plan itself is mostly plausible, but it is a question of whether the timescales to switch from B40 to B50 in a year, rather than the average of two years, are necessarily realistic.
