Strategic Biofuel Resilience: Ending Fossil Fuel Imports

Palm Oil Magazine
Strategic Biofuel Resilience: Ending Fossil Fuel Imports

PALMOILMAGAZINE, JAKARTA – The palm oil industry has been a key economic pillar in Indonesia and Malaysia since its expansion in the 1970s. Through the PIR (Perkebunan Inti Rakyat) scheme in Indonesia and FELDA (Federal Land Development Authority) in Malaysia, smallholder farmers have played an active role in plantation management.

From an initial 300,000 hectares, Indonesia’s palm plantations have now expanded to 17 million hectares, with an additional 3 million hectares of licensed but undeveloped land—totaling 20 million hectares, making it a nationally strategic resource.

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Palm oil is processed into Crude Palm Oil (CPO) from the fruit’s flesh and Palm Kernel Oil (PKO) from its seeds. Advances in agronomic and engineering technology have increased oil extraction rates to 32%, with Fresh Fruit Bunch (FFB) yields reaching 40-45 tons per hectare per year. This efficiency makes oil palm the most productive oil-producing crop globally.

Also Read: SPKS Focuses on Rejuvenating Smallholder Palm Oil to Increase Farmers’ Productivity

Beyond cooking oil, palm oil is now a key raw material for oleochemicals and biofuels, including biodiesel, biojet fuel, and biogasoline. These technologies address the global push for renewable energy, offering superior fuel quality compared to fossil-based fuels. B40 biodiesel, set for release in 2025, boasts a cetane number of 51.2, making it compatible with European vehicles.

 

Addressing Biodiesel Challenges

Concerns over biodiesel’s impact on engines remain a point of debate, yet real-world experiences suggest otherwise. The author, who has used diesel vehicles with biodiesel for seven years, reports no major issues. Additionally, since 2009, Indonesia’s Ministry of Agriculture has tested B100 biodiesel, showing it to be more efficient than conventional diesel—delivering 13.1 km per liter compared to diesel’s 9.6 km per liter.

However, the key challenge lies in palm oil supply, not fuel quality. Smallholder plantations in Indonesia produce only 2.5 tons per hectare per year, far below the 8-ton potential. State-owned plantations (PTPN) achieve the highest productivity at 4.1 tons per hectare, but they cover only 3.5% of the total plantation area.

 

Boosting Productivity for Energy Independence

To strengthen biofuel resilience and reduce fossil fuel imports, Indonesia aims to double palm oil production from 50 million to 100 million tons through intensification. Key strategies include:

  1. Fertilizer Optimization – Increasing fertilizer application from 1 kg per tree per year to 8 kg could double productivity.
  2. Modern Agronomic PracticesProduction Force Management methods can boost yields by 100%.
  3. Infrastructure & Water Management – Controlling water levels and improving production roads will enhance efficiency.
  4. Utilizing Licensed Land – Developing 3 million hectares of unused licensed land can significantly expand output.

Additionally, PTPN’s role must be strengthened. With higher productivity and substantial tax contributions, expanding PTPN through the acquisition of neglected private plantations and new land development could be a game-changer.

 

Establishing State-Owned Biofuel Enterprises

Currently, private companies dominate biodiesel production. Establishing 120 state-owned biofuel processing plants would enable Indonesia to refine 60 million kiloliters of palm oil-based fuel, ensuring energy self-sufficiency.

Government fertilizer subsidies would not only boost Fresh Fruit Bunch (FFB) yields but also increase farmer incomes and generate substantial tax revenue. The economic multiplier effect includes regional economic growth, job creation, and poverty reduction.

 

Achieving Energy Independence & Global Leadership

The B100 biofuel program is technically and economically viable. The primary hurdle—raw material availability—can be addressed through productivity-enhancing strategies. By taking bold strategic actions, such as expanding PTPN’s role, providing fertilizer subsidies, and establishing biofuel plants, Indonesia can:

Dominate the global palm oil market
✅ Achieve national energy independence
✅ Support sustainable development
✅ Solidify its position as an innovative agrarian powerhouse

With the right policies, Indonesia can stop importing fossil fuels and lead the world in sustainable bioenergy. (*)

Author: Memet Hakim / Senior Palm Oil Agronomist, Founder of Production Force Management Method / Advisory Board Member of APIB & APP TNI

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