The Ministry of Energy and Mineral Resources (ESDM) continues to push the development of new renewable energy (EBT), including bioethanol biofuels (BBN), as part of the national strategy to reduce carbon emissions. One idea being proposed is the potential for providing incentives for bioethanol-powered vehicles.

However, there has been no specific discussion about these incentives until now. According to Eniya Listiani Dewi, Director General of New Renewable Energy and Energy Conservation (EBTKE) at the ESDM Ministry, the possibility of offering incentives remains open.

Businesses committed to reducing carbon emissions through the use of bioethanol could benefit from the economic value of carbon. “To get these incentives, producers must build a bioethanol ecosystem from upstream to downstream, similar to what has been done by the battery-based electric vehicle industry,” she said on Monday (September 23, 2024).

A concrete example of the efforts made by electric vehicle manufacturers can be seen in Hyundai, which built a battery packing facility in Cikarang with an investment value reaching Rp900 billion. It becomes a real example of how an ecosystem should be built to support environmentally friendly industries. This major investment has created a significant impact, and the same is expected from bioethanol vehicle producers if they wish to receive similar incentives.

Bioethanol Implementation

So far, bioethanol in Indonesia has already been implemented through Pertamax Green 95, a fuel blend containing 5 percent bioethanol (E5), which is now sold at 75 gas stations in Jakarta and Surabaya. This is an early step in the government’s long-term plan to increase the ethanol blend in fuel to 10 percent by 2029.

However, the development of bioethanol in Indonesia has been relatively slow. Based on the ESDM Ministry Regulation No. 12 of 2015, Indonesia should have reached a 20 percent ethanol blend (E20) by 2025. Unfortunately, that target seems far from being achieved, as the country is still at the E5 stage.

One of the main challenges faced is that only few of bioethanol industries meet the criteria to produce fuel-grade bioethanol. To accelerate the development of the bioethanol industry, policies supporting the sector’s growth are necessary.

Currently, out of the 13 bioethanol industries in Indonesia, only two meet fuel-grade criteria, while the rest are still producing food-grade bioethanol. The government needs to push the bioethanol industry more significantly and quickly. It means that building a bioethanol ecosystem, both in terms of production and distribution, is a critical step to ensuring the sustainability and success of this program.

If that can be achieved, the chances for incentives will increase. Moreover, significant investments in this sector will attract more industry owners and technologies, creating a positive domino effect for the economy and the environment.

Clean Energy Transition

The development of bioethanol in Indonesia is a vital step in the clean energy transition, given the great potential of this sector, both in terms of natural resources and the need for environmentally friendly energy.

Indonesia can become one of the key players in the biofuel industry. Support from various parties, including the government, producers, and the public, will be crucial in determining the future of bioethanol in Indonesia.

Eniya Listiani Dewi said, “The ecosystem must be built, and incentives will follow.” If the bioethanol industry can create a strong and sustainable ecosystem, government incentives will be in line with the incoming investments.

This will not only drive industry growth but also support Indonesia’s goal of achieving net-zero carbon emissions by 2060. With strong commitment from all parties, bioethanol can become one of the key solutions in mitigating climate change and reducing dependence on fossil fuels in Indonesia.

Translator: Ratna Puspa Merdika