The role of oil palm biomass to meet liquid biofuels target in Indonesia

Indonesia aims at reducing the dependence on oil import by liquid biofuels consumption (i.e., biodiesel and bio-ethanol) in industry, transport and power sectors. The palm oil industry has played significant role in the development of biodiesel in the country producing crude palm oil (CPO) and palm fatty acid distillate (PFAD) based biodiesel. Opportunity exists for the industry to contribute to the development of bio-ethanol program by utilising the lignocellulosic biomass such as the empty fruit bunches (EFB). This study evaluates the potential of liquid biofuels production from oil palm biomass and the domestic demand for biofuels as per biofuel blending target set by the Indonesian government. The existing infrastructures as well as the investment opportunity of each type of biofuel are analyzed. While technology for biodiesel production is proven at large scale, the bio-ethanol production from EFB is not commercialized yet. The study shows that meeting the biodiesel blending target is at risk if Indonesia continues to solely reliance on the production of CPO and PFAD based biodiesel. Palm oil industry can produce nearly 7 billion litres biodiesel from CPO and PFAD in 2025 but the biodiesel domestic demand is 30% higher. The bio-ethanol program faces higher risk. EFB based ethanol through gasification and synthesis of alcohol can contribute to around 13% of the target in 2025, however the infrastructure is not ready yet. Feedstock diversification to produce liquid biofuels should be prioritized. We recommend a review of the current plan to a more achievable targets or prolong the timeline in order to secure domestic biofuels demand while continuing export. The study provides database for future modelling exercise on multi-period optimization study of palm biofuels supply chain in Indonesia in a geographically explicit way.QC 20190903