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Accelerating sustainable bioenergy business in Indonesia

Updated: Nov 25, 2020

“Pertamina (a state-owned oil and gas giant in Indonesia) is projecting to increase biofuel production, by blending bioethanol with petrol. Bioethanol needs quick delivery distribution to the fuel station, and it is already supported by infrastructure. Pertamina is already connected with a plantation company, trying to start the biogas plant. The technology is already proven, but it hasn’t been used yet, it is still in the processing stage. Pertamina are having difficulty raising funds to run the programme. With no subsidy from the government, Pertamina has to sell the product at market price.

“This is becoming a top issue with the end user consumer and also a production issue”, said Andiyanto Hidayat (Technology and Product Development Manager Gas Directorate of Pertamina) in a workshop held last week. Pertamina is helping the government to meet the mandated 20 percent biofuel blend in its projected 26 million KL of biodiesel.

On 11-13 May 2016, the European Commission research programmes (GreenWin and TransRisk) in partnership with Udayana University, and the Indonesia Climate Change Trust Fund conducted an international workshop in Bali, on “Sustainability and Resilience of Bioenergy for Climate Change”. The workshop developed and shared ideas for green business models, investment opportunities, and partnership on energy poverty eradication and resilient livelihood with bio-energy.

Syamsidar Thamrin (Deputy Director of Weather and Climate at the Ministry of Development Planning ( Bappenas ) noted that bioenergy will account for 13 percent of the total energy using renewable sources, of 23 percent by 2025 and 31 percent by 2050 in Indonesia, but currently bioenergy reaches just 5.1 percent of the target. Accelerating sustainable bioenergy business can support Indonesia’s Intended Nationally Determined Contribution (INDC) on climate change to achieve the target of reducing emissions.

The workshop session also mentioned feed-in-tariffs in bioenergy. In 2015, the government revised feed-in tariffs for biogas and biomass. The revision is expected to pave the way for palm oil companies to utilize palm oil waste for biofuel. Feed-in tariffs in Indonesia require a state-controlled utility, such as state-owned electricity firm (PLN), which purchases electricity from renewable energy producers at predictable prices that vary from one area to another. Such policies are vital in the current setup of Indonesia’s energy market, where both the upstream and downstream are still heavily regulated and controlled by state-owned companies.

Another stimulation for specific bioenergy projects is grants to foster research and development and encourage deployment of new technologies. An Indonesian example is the HIVOS (Dutch organization for development) program named BIRU in partnership with local stakeholders of biogas for households which have been taking place in several provinces in Indonesia with a total biogas reactor installed reaching a total of 14,173 units.

In terms of finance, state-owned lender Bank Negara Indonesia Tbk (BNI) representatives who also attended the workshop, said they are ready to finance bioenergy development programmes.

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