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Biomass as an opportunity to solve Indonesia's energy challenge

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Thomas FUNGENZI 12th June 2015
Cranfield University

Module - Principles of Sustainability

Biomass as an opportunity
to solve Indonesia’s energy challenge
Thomas FUNGENZI
MSc Land Reclamation and Restoration, Environment Department, Cranfield University,
Cranfield, MK43 0AL, United Kingdom

ABSTRACT
Indonesia is facing an energy challenge where energy security, energy poverty and
climate change issues are competing with others. To address these issues, last decades have
been characterized by a growing interest for biomass energy. This document gives an
overview of the actual situation, focusing on the energy and biomass profile of the country, as
well as its potentials and threats. Indonesia is heavily dependent on fossil fuel, especially oil.
Despite large natural resources of fossil energy, the supply kept not pace with the growing
demand for energy. Important amount of biomass could be used to produce different form of
energy and at the same time solving energy security and poverty issues, as well as
contributing to climate change mitigation. In addition, bioenergy could address socio-
economic and environmental issues. However, if the wrong direction is taken, its
development could lead to a grey picture.
Keywords: Indonesia, Biomass, Energy, Renewable energy, Biofuel.

1. Introduction
Many seek to anticipate an important energy transition. As time goes along, demand for
energy keep growing while non-renewable energy resources are depleting. On the other
hand, waste management is a struggle because it does not generate significant or simply no
profit at all. In a circular economy framework, wastes can become a source of energy and that
is why biomass energy has drawn the attention of businesses and authorities. This briefing
document aims at giving an insight into energy issues of a moderately developed country,
Indonesia. More specifically, attention is focused on biomass energy as a way to address
energy issues. This paper will give an overview of current challenges and opportunities of this
sector to potential investors or entrepreneurs already engaged in biomass energy production.
First of all, Indonesia and its characteristics in terms of energy use and production are
introduced. Secondly, this report explores current approaches to convert biomass into energy
in Indonesia. Ultimately, last section indentifies opportunities and as well as potential future
issues.

2. Energy profile of Indonesia

With almost 254 million inhabitants, Indonesia (map presented in annex A) is the 5th most
populated country in the world, right after the United States. Its land surface area is
approximately 1,810,000 square kilometres, placing this country in 15th position worldwide

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Thomas FUNGENZI 12th June 2015
Cranfield University

(CIA, 2014). With approximately 17,000 islands, Indonesia is the world largest archipelago,
which constrains the energy distribution across the country (Measey, 2010). The land is
covered by: 52% of forests; 13% of arable land; 12% of permanent crops; 6% of permanent
meadows and pastures; 17% of other land (FAOSTAT, 2011).
Indonesia holds vast energy resources and is a strategic actor on the global energy arena.
To date, it is the world largest exporter of thermal coal (75% of its production which reach
approximately 260Mt; BP Statistics, 2014). It was also a member of the OPEC organization,
but in 2004, Indonesia became net importer of oil and left the organization in 2009. A high
domestic demand and a decline in the production of oil forced the nation to redirect its
production to meet its needs. Indonesia is also a significant natural gas holder (i.e., 13th
largest reserve of the world and 4th largest exporter of liquefied natural gas; EIA, 2014). In
2012, crude oil and natural gas resources were expected to be exhausted in 23 and 52 years
respectively (MEMR, 2010; Hasan et al., 2012).
Indonesia total primary energy consumption is dominated by non-renewable source of
energy (73% of the total, figure a. can be found in annex B). Between 1980 and 2009, energy
production has multiplied by 2.8 and energy consumption by 5. Comparative developments of
the production and consumption of non-renewable energy (i.e., natural gas, coal and oil) can
be found in annex C (figure a). The electricity installed capacity relies heavily on coal (i.e.,
48%, full distribution available on figure b. in annex B; EIA, 2014). In 2026, the projected
demand for power will be approximately four times higher than the one of 2006 (as shown on
figure c. in annex B; Carbon Trust, 2014). Economic development and population growth have
led to a rapid increase of Indonesia total primary energy consumption (i.e., 44% rise between
2002 and 2012). However, energy supply did not keep pace with demand. Due to different
constraints (e.g., geographical fragmentation; MOE, 2011), many areas remain isolated from
the electric grid which explains the significant use of biomass and waste, especially for
cooking purposes (Carbon Trust, 2014; EIA, 2014). And even in grid-connected area, this
situation led to power-shortages, because energy needs sometimes exceed installed capacity
(Carbon Trust, 2014; EIA, 2014).
Gunningham (2013) argues that Indonesia now faces a real energy challenge, defined as
an ‘energy trilemma’. For him, “the central challenge for energy governance is how to manage
a complex energy trilemma involving the sometimes competing demands of energy security,
climate change mitigation and (particularly in developing countries) energy poverty”. Energy
security is undermined because: (1) key energy sources are depleted, (2) electricity network
has been developed when oil was cheap and abundant, (3) oil fuel is predominant in these
plants, (4) oil price rises, (5) of geopolitical factors, and for some other reasons (Faizal, 2011;
Gunningham, 2013). Indonesia is suffering from energy poverty because, despite large gas
and coal resources. Even if 72.9% of the population has access to electricity in 2011 (World
Bank, 2014), in 2004, it has been estimated that 95% of rural residents and 45% of urban
residents relied on biomass as a primary fuel for cooking, which represent 72% of the
population (OECD-IEA, 2006). National Geographic reports that, in 2011, 131 million people

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Thomas FUNGENZI 12th June 2015
Cranfield University

rely on wood and biomass cookstoves (2013). Finally, climate change may seriously affect
agriculture and food security in Indonesia. Projected increased reliance on fossil fuel might
logically lead to higher greenhouse gas emissions. Besides the obligations imposed by the
United Nations Framework Convention on Climate Change (UNFCCC), Indonesia have much to
gain by developing renewable energy and energy efficiency (Gunningham, 2013).
For all these reasons, Indonesia must diversify its energy sources and focus more on
renewable energy. In spite of important potential sources (e.g., geothermal, biomass,
hydroelectric), actual participation in power generation is only 3.25% (ESDM, 2011; Hasan et
al., 2012), hence the current growing interest for biomass energy.

3. Biomass to Energy
The potential of biomass energy in Indonesia is estimated at around 50GWe (ESDM,
2011), whereas the installed capacity (using biomass energy) is approximately 1,600MW
(Faizal, 2011). To fully appreciate this huge potential, it must be said that total installed
electricity generation capacity is estimated to be 44GWe in 2012 (Singh & Setiawan, 2013).
This means that theoretically, a total and efficient use of the biomass could almost double
current capacity.
First, it is important to explain on which type of biomass this potential is built. As it is
highlighted by the Carbon Trust (2014), Indonesia faces not only an energy challenge but also
a real challenge in terms of waste management. Broadly speaking, organic waste can
potentially suitable for bioenergy and can be distinguished between municipal and industrial
waste. The former refers to solid waste produced by domestic activities while the latter
includes agricultural waste, wood residues for forestry activities and even outputs produced
by agro-industries such as palm oil and sugar mills. However, it is important to stress that the
bioenergy potential previously presented correspond to energy made with waste. The
broader issue related to bioenergy crops deserves to be further discussed but first, this report
will first look at the Waste-to-Energy situation.
As presented in annex D (figure a), about 64Mt of municipal solid waste (MSW) are
produced each year. It is composed by 40% of organic and paper/card material, coming from
households (40% of the total; annex D figure b) and is potentially suitable for bioenergy. A
large part (more than two-thirds) is disposed in landfill sites. Poorly controlled (because of
insufficient funding), these sites form a real informal industry. The Jakarta post claimed in
2009 that 1.2 million waste-pickers recycle half of Indonesia’s plastic waste under unsafe and
unhealthy conditions, and appeal for better working conditions. These cheap open dumps
also have negative environmental externalities and contribute to pollute the ground and the
air (Carbon Trust, 2014).
Several commodities offer an opportunity for bioenergy within the agro-
industrial/forestry sector. The most significant are, in order of importance are palm oil, rice
paddy, sugarcane, corn, rubber and cassava. As calculated by Conrad & Prasetnyaning (2014),

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Thomas FUNGENZI 12th June 2015
Cranfield University

the first three together could theoretically generate 46 GWe annually. Nevertheless, two
important criteria have to be taken into account to narrow-down from theoretical to technical
potential: (1) the regional biomass concentration and (2) the PLN transmission grid (PLN is the
state-owned electricity company).
The same reasoning applies in the case of MSW and in both cases and generally two
other criteria must be considered to assess the real potential for electricity generation: (1) the
chosen technology and (2) the nature of the feedstock(s). The NL Agency (2012) identified
bioenergy projects on the basis of its ‘maturity level’ and its ‘level of commercialisation’,
reflecting that a there is currently a wide range of conversion technologies in place. The
Carbon Trust (2014) clearly states that the Waste-to-Energy (WtE) industry is at an early stage
of development, consisting of:
 2 large scale land fill gas project;
 Several scattered anaerobic-digester plants;
 1 commercial scale incinerator under construction;
 A series of potential projects in preparation phases.
Globally, to develop a strategy for biomass energy in Indonesia, it is possible to categorise
the projects depending on their specific orientation. Hence, strategies can be divided in: (1)
‘biomass for household energy’, (2) ‘biomass for power’ and (3) ‘biofuel for transport’.
Current programs to support household energy remain small in scale while larger ‘biomass for
power’ projects have been implemented (i.e., biomass gasification and combustion).
Compared to other strategies, biofuel for transport received greater emphasis. Indeed,
biomass can be used to produce biofuels like biodiesel which can substitute fossil fuel in
diesel power plants located in remote areas without access to the electricity grid (Singh &
Setiawan, 2013).
Indeed, bioenergy has many several positives outcomes to offer, but the future picture is
not all bright.

4. A mixed picture
Besides being an alternative source of energy, biomass energy also contribute to
eliminate waste. Moreover, additional potential benefits include “contribution to national or
regional economic growth through business expansion and employment generation, reduction
in import fossil fuel resources, security of energy supply and reduction of greenhouse gases”
(Carlos & Khang, 2008). As explained previously, biodiesel mixed with diesel oil can substitute
a part of fossil fuel and be applied to diesel engine without any technical modification.
Furthermore, biodiesel does not emit black exhaust smoke and could be considered as ‘less
bad’ for health than current diesel, and is biodegradable and environmental friendly (Hasan et
al, 2012). For Rosillo-Calle & Hall (1992) biomass has not only a positive impact on the
atmosphere (avoidance of SO2 and NOx emissions) but it is also a widely and easily available
fuel source. Concerning policy, Indonesia has a positive setting, even this can be argued. For

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Thomas FUNGENZI 12th June 2015
Cranfield University

instance, the Presidenial Regulation No.05 set out targets for a higher biomass energy
contribution in the future power-mix by 2025 (i.e., 5% of biofuel and 5% ‘other renewable’,
including biomass; see annex B figure d.) and feed-in tariffs for renewable energy for small &
medium scale plant have been introduced by Ministerial Regulation No.04 in 2012 (Singh &
Setiawan, 2013; Carbon Trust, 2014). Because a large amount of palm oil mill are privately
own, the development of on-site waste-to-energy project should be facilitated (Conrad &
Prasetyaning, 2014). On the other hand, contrary to the situation in Brazil, private sector only
has license to manage the land and does not own it. That should facilitate the implementation
of new policy by the government (The Jakarta Globe, 2013).
However, even if biomass energy has a green reputation and is considered as a
sustainable option, it is only in a very limited extent. Abbasi & Abbasi (2010) emphases that
biomass may be carbon neutral but is not nutrient neutral since the biomass is exported from
it has been cultivated. In addition, biomass exploitation as any modern intensive farming can
cause environmental degradation and ecological disruptions. Moreover, the “quantity of fossil
fuel saved in the course of the production and the utilization of biofuels is not always greater
than the quantity of fossil fuels used” (Abbasi, 2010). Indeed, biomass production requires
fossil fuel inputs. Furthermore, its production can be a driver of deforestation and drainage of
peatlands, which is attributable to palm oil development and causes important emissions of
greenhouse gases (Sagar & Kartha, 2007). Looking at the issue of land use, food security and
water supply potential “food versus fuel” and implicit “water for food versus water for fuel”
tradeoffs have to be seriously considered (Rosegrant et al., 2008). Bioenergy can be
developed by shifting land, labour and capital resources away from poor rural inhabitants,
landless farmers, underemployed labourers like waste pickers and more (Sagar & Kartha,
2007).

5. Conclusion
Indonesia has been lucky to own a wealth of resources, but unfortunately, they are not
inexhaustible. Oil reserves are depleting. Demand for energy is rising and supply does not
keep pace. Still, this country disposes of a renewable form of energy which can find its place
in circular economy system. Farming, forestry and agro-industries wastes become other
facilities’ inputs. Biomass energy offers a great opportunity to solve not only energy problems
but also offers a chance for a sustainable development, improving socio-economic and
environmental situation of this country. Technical solutions and policy exist to support its
development, but further efforts are required. However there are environmental concerns,
which if managed incorrectly, could mean that biomass for energy could create as many
problems as it solves. These issues have a universal nature and should therefore be addressed
by involving as far as possible, all the key stakeholders. By taking a holistic approach it could
be possible to find the most appropriate solutions. Today it is clear that Indonesia will rely on
coal to support its economy and energy supply. Will Indonesia becomes an example of Jevon’s
paradox? Developing the right policies and programs are one part of the answer but as Jimmy

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Thomas FUNGENZI 12th June 2015
Cranfield University

Carter said about energy, “(…) By acting now we can control our future instead of letting the
future control us.”

References
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production and utilization. Renewable and Sustainable Energy Reviews, 14(3), 919-937.
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http://www.carbontrust.com/news/2014/06/waste-to-energy-in-indonesia>
Carlos, R. M., & Ba Khang, D. (2008). Characterization of biomass energy projects in Southeast
Asia. Biomass and Bioenergy, 32(6), 525-532.
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na_Sector_Analysis_of_Potential_and_Framework_Conditions.pdf>
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<http://www.eia.gov/countries/analysisbriefs/Indonesia/indonesia.pdf>
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Cranfield University

Mujiyanto, S., & Tiess, G. (2013). Secure energy supply in 2025: Indonesia's need for an energy policy
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World Bank (2014). Accessed online October 24, 2014 at <http://data.worldbank.org/>

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Annex A
- Map of Indonesia (CIA, 2014)

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 Figure a: Indonesia primary energy Figure b: Indonesia electricity generation capacity by
consumption in 2012 (EIA, 2014) source in 2012 (EIA, 2014) Annex B
Thomas FUNGENZI
Cranfield University

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12th June 2015

Figure c: Indonesia project power demand up Figure d: Indonesia national energy mix 2005-2025
to 2026 (Carbon Trust, 2014) consumption in (Mujiyanto & Tiess, 2013)
2012 (EIA, 2014)
 Annex C

Figure a: Indonesia non-renewable energy production

Thomas FUNGENZI
Cranfield University

and consumption (adapted from BP Statistics, 2014)

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 Thomas FUNGENZI 12th June 2015
Cranfield University

Annex D

Figure a: Indonesia’s agricultural wood and waste generation per source (Carbon
Trust, 2014)

Figure b: Indonesia’s Municipal Solid Waste composition, source and handling

statistics (Carbon Trust, 2014)

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