(Sustainable) Biofuel Use:

Development, Challenge, Risk in the

Global Context
Alloysius Joko Purwanto
Pertamina Energy Dialogue 2024
Park Hyatt Jakarta, 19 March 2024

2018
Biofuel use in Global Context
What should Indonesia do?
• Biofuel use in Indonesia: current situation and the possible future
• Current ASEAN’s biofuel export and import
• Stocktaking of the current situation
• Sustainable Aviation Fuel (SAF) as an opportunity…
Biofuel Use in Indonesia: Current Situation
Well-known gaps between demand (gasoline vs diesel) and supply (biodiesel vs bioethanol)

Biofuel policies: plan, implemented & the real bled rate Historical gasoline and diesel consumption from land transport activities
35
40000
Biodiesel and bioethanol blend rate (%) in transport fuel

30
B30 35000

25 30000

20
B20 19,9 25000

million litres
15 20000
12,7
10 10,3 15000
8,2

5 5,4 10000
2,6
0 0 0 0 0 0 0 5000
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Biodiesel - planned (2008) Biodiesel - implemented (2015, 2019) 0

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Biodiesel - blend rate (USDA, 2019) Bioethanol - planned (2008) Diesel 27125 26030 29528 28649 27220 25433 25372 27843 28785 29621
Bioethanol implemented (2015) Bioethanol - blend rate (USDA, 2019) Gasoline 23863 36447 29276 30511 30925 31528 31986 33548 34353 35246

Source: ERIA study for Indonesia Ministry of Industry (2024, forthcoming) Source: USDA/MEMR (2019)
Indonesia’s Future Situation* – Mandatory Pathways
Diesel should be replaced by around 60% to 70% by Gasoline should be replaced by around 13% to 30%
diesel related biofuels in the next 20 years by gasoline related biofuels in the next 20 years
Four yearly consumption of diesel (left chart) and gasoline (right chart) related biofuels
200
187 187
250 236 180
Average growth rate: ± 1.4% / year
171
175 174
180 167
167
212 159 161
156
160 148 151
200 71 144
184 139
169 140
165
85
Average growth rate: ± 4.9% / year 131

Million kilolitres
142 55 120
Million kilolitres

150 137 122 150

128 47 140
66 68 100 132 156
116
109 43 150 155
104 145
95 58 37 42 156
100 89 54 80 152
85 37 144 147 150
75 139
28 33 34
57
47
54
20 24
Current 60
54 23
50 51
53 118 biodiesel 40 17 19
8 8 92
0
9
0 71 66 68
85 capacity 17 18 19
58 51 55
0
25 32 38 36 42 44 Current 20 10 11
35 18
37
8 19 18 19
0 bioethanol 0 0 0 0 0 2 6 2
3 7 5 5
CON MOD OPT CON MOD OPT CON MOD OPT CON MOD OPT CON MOD OPT capacity CON MOD OPT CON MOD OPT CON MOD OPT CON MOD OPT CON MOD OPT
2021-2024 2025-2028 2029-2032 2033-2036 2037-2040 2021-2024 2025-2028 2029-2032 2033-2036 2037-2040

Biodiesel Green diesel High blended biodiesel and flex fuel Pure diesel sum 4 - yearly Bioethanol Green gasoline High blended bioethanol and flex fuel Pure Gasoline sum 4 - yearly

*Conservative assumption on electric vehicle penetration is used

Source: ERIA study for Indonesia Ministry of Industry (2024, forthcoming)
Current ASEAN Biofuel Export – Import (1/2)
Bioethanol: Thailand as the main exporter – Should Indonesia
Import from Thailand?
Bioethanol export - ASEAN by country Bioethanol import - ASEAN by country
600
600
541,35
517,77
503,13
475,94 500
500
438,57
415,85 416,3 421,22
400
400 352,94 352,72 331,04 333,33

Million litres
311,84 319,59
Million litres

291,22 297,66
277
300 256,74
300 235,23
214,28
200
200

100
100

0
0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Indonesia Malaysia Philippines Thailand Viet Nam
Indonesia Malaysia Philippines Thailand Viet Nam

ASEAN countries: Indonesia, Malaysia, Philippines, Thailand, and Viet Nam

Source: OECD Agricultural Outlook (https://stats.oecd.org/Index.aspx?QueryId=36348# )
Current Biofuel Trade of ASEAN (2/2)
Biodiesel: Malaysia & Indonesia as the main exporter while
Thailand switched from importer to exporter
Biodiesel export - ASEAN by country Biodiesel import - ASEAN by country
800 747,64 800
688,53
700 633,01 700
629,71

600 540,57 600

502,63 494,06
475,46
500 500
Million litres

Million litres
398,96
400 400
289,14
300 300

200 200

100 100 53,27 47,99

27,98 30,74
0,81 0,79 0,79 0,78 0,77 0
0 0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Indonesia Malaysia Philippines Thailand Viet Nam Indonesia Malaysia Philippines Thailand Viet Nam Total

ASEAN countries: Indonesia, Malaysia, Philippines, Thailand, and Viet Nam

Source: OECD Agricultural Outlook (https://stats.oecd.org/Index.aspx?QueryId=36348# )
Indonesia’s Future Situation – Non-Mandatory Pathways (1/2)
If new “no-blending wall” biofuels enter the market and sold as
alternative fuels at the stations
CPO consumption in the baseline scenario 2 New biofuel products enter in 2025 with initial prices 30%
25,00
higher than B30 diesel price
12.000
21,54
10.000 10.412
20,00

Fuel price (IDR/litre)

8.952
15,88 8.000
Million kilolitres

8.312
8.009
7.758
15,00 7.162
6.000
11,49

10,00 8,46 9,03 4.000

2.000
5,00

2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
0,00
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040

Conventional diesel fuel New biofuel - "equal-price-2030" scenario

New biofuel - "equal-price-2040" scenario

Source: Purwanto, Lutfiana (2022)

Indonesia’s Future Situation – Non-Mandatory Pathways (2/2)
Biofuel consumption doubles/triples & CPO export drops
FAME (B100) vs new biofuels consumption CPO export
80,0
45,0
40,9 41,5
40,0
70,0 66,8 35,8
33,8 34,3
35,0 32,3
60,0

Million metric tonnes

30,0
29,1
million kilolitres

50,0 25,3
44,3 25,0 23,7
41,2
40,0
20,0

30,0 26,5 15,0

24,6 11,9
21,5
20,0 15,9 10,0
14,8
11,5 4,1
10,0
8,5 5,0

0,0
0,0
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040

BAU Scenario New biofuel - "equal-price-2030" scenario

Biodiesel - Business-as-usual Scenario New biofuel - "equal-price-2030" scenario
New biofuel - "equal-price-2040" scenario
New biofuel - "equal-price-2040" scenario
Source: Purwanto, Lutfiana (2022)
Stocktaking of Indonesia’s Situation
A rapid shift to sustainable affordable high-percentage blending rate biofuels is
must
• Sustainability perspective: current mandatory FAME (biodiesel) pathway is the second-
best solution. Its financing is problematic, i.e., fairness issues, intersectoral issues
(against food related uses), etc.
• High-blended sustainable biofuels are keys:
o 2nd generation bioethanol, from non-edible crops, e.g., lignocellulosic plants, etc.
o “no blending wall” drop-in fuels or hydrotreated vegetable oils (HVO) or hydro-processed esters and
fatty acids (HEFA) from vegetable oils and fats e.g., CPO (including RBDPO, rapeseed, soybean, animal
fat, etc.
• Business models must survive mobility electrification… SAF?
 Sustainable Aviation Fuels (SAF)
Indonesia among the non-OECD frontrunner but sustainability can be an issue
SAF Global Production Projection, by SAF Scenario, out to
2050, Compared to Projected Global Jet Fuel Demand
2050 demand in high SAF scenario: 331 million MT
While 345 MT could be produced in non-OECD from
non-food feedstock
Indonesia situation on SAF:
• Indonesia: the first non-OECD with SAF blending
mandate (5% by 2025)
• Indonesia (HEFA – Palm oil based bioavtur)
situation (CORSIA*, 2022):
- Core life-cycle (LCA) emission (feedstock
production, transportation, conversion,…
combustion): 37.40 – 60 gCO2e/MJ
- Induced land use change: 39.1 gCO2e/MJ
- Total: 76.5 – 99.1 gCO2e/MJ (rather high)
Source: ATAG (2020), World Bank (2023)
*Carbon offsetting and reduction scheme for international aviation