One of the critical pillars of Indonesia's economy is palm oil. In 2023, the economic value of the palm oil sector, from upstream to downstream, exceeded Rp750 trillion, contributing about 3,5 percent to the national GDP (Gross Domestic Product).

The palm oil industry has proven to be a driver of Indonesia's economic growth and has expanded the spread of economic development outside Java. In the future, the role of palm oil is expected to strengthen, in line with efforts to industrialize and innovate sustainable biomass management.

It aligns with Indonesia's global commitment to achieving net zero emissions (NZE) by 2050. In various statements, Coordinating Minister for Economic Affairs Airlangga Hartarto noted, "Indonesia is strongly committed to achieving net zero emissions by 2050, and palm oil is a highly potential sector in supporting this target through industrialization and the sustainable use of biomass. These efforts positively impact the economy, the environment, and community welfare."

Waste Transformation

One concrete step being taken is the processing of oil palm empty fruit bunches (EFB). What was once considered worthless palm oil waste is now being transformed into an industrial resource with high added value. In a written statement on Wednesday (September 11, 2024), Putu Juli Ardika, Director General of Agro-Industry at the Ministry of Industry, stated that using EFB through enzymatic technology enables the transformation of this waste into high-value raw materials, such as bioethanol, organic acids, and various chemicals that can substitute imports.

The EFB fractionation technology, developed by the Ministry of Industry in collaboration with the Bandung Institute of Technology and PT Rekayasa Industri, funded by the Oil Palm Plantation Support Fund Management Agency (BPDPKS), now can process 1 ton of biomass per day at a pilot plant inaugurated in August 2024. This facility produces glucose, xylose, and lignin, which have wide applications ranging from animal feed to biocomposites and biofuels.

"This innovation supports our vision to make the palm oil industry more environmentally friendly and efficient while also fostering economic growth," said Putu.

Downstream Industry and NZE

The industrialization of the palm oil sector not only increases the value-added of its products but also strengthens Indonesia's commitment to reducing carbon emissions. The palm oil industry can minimize its carbon footprint by turning waste into valuable products.

These innovations in biomass management align with the Golden Indonesian Palm Oil 2045 Roadmap, a strategic plan created by the Ministry of Industry to promote the sustainability of the palm oil industry until 2045. The roadmap aims to create a palm oil industry that is not only productive but also green and sustainable, thus contributing to achieving the net zero emissions target by 2050.

The roadmap also includes developing eco-friendly technologies and innovations to utilize all parts of the palm oil plant, including biomass, to reduce reliance on fossil fuels and conventional chemical products. As the world's largest palm oil producer, with a production capacity of more than 50 million tons annually, Indonesia plays a crucial role as a market leader in the palm oil industry, including in the global market, which continues to demand environmentally friendly products.

The government can realize this goal through sustainable industrialization innovations. These steps are aimed at more than exports. Palm oil derivative products, such as bioethanol and bioplastics, also have a large domestic market. "We hope that with industrialization, we can reduce imports of fuel and chemical products and increase national industry self-sufficiency," said Putu.

Sustainable Industry

With the various innovations underway, Indonesia's palm oil industry is increasingly ready to become part of the global solution to combat climate change. Biomass management and industrialization benefit farmers and industry owners economically and support national goals in reducing greenhouse gas emissions.

The government continues to strengthen regulations related to the sustainability of the palm oil sector. To this end, through the Coordinating Ministry for Economic Affairs, the government continues to ensure that the palm oil industry can grow while adhering to strict environmental standards.

Writer: Dwitri Waluyo

Editors: Ratna Nuraini/TR/Wilda Stiana

Translator: Ratna Puspa Merdika