Oil Palm Plantations as a Strategic Industry for

Sustainable & Renewable Energy in Indonesia

Dimas Yunianto Putro, PhD Candidate

Introduction
The existence of the palm oil industry is considered strategic for the national economy. The
palm oil industry is also considered capable of building food security and energy sovereignty and
is currently being encouraged to develop downstream to boost domestic economic activity.
National oil palm plantations have grown rapidly, expanding both upstream and downstream.
Until now, oil palm plantations and palm oil mills have spread to more than 200 districts in
Indonesia. The production of crude palm oil (CPO), palm kernel oil (PKO), and biomass has
become the economic support for these central areas of the palm oil industry.
Renewable energy absolutely must be developed, because the existing energy, such as diesel,
still uses raw materials from petroleum, over time it will run out because it cannot be renewed.
One of the renewable energy sources available to Indonesia is biodiesel and palm-based
bioethanol. As a country that has the world's largest oil palm plantation, oil palm plantations are
not only a producer of edible oil and non-edible oil, but also have the potential to become a
renewable energy "mine". Biodiesel itself plays a major role in reducing greenhouse gas
emissions in 2020, biodiesel contributes to reducing emissions of 22.48 million tons of CO 2
equivalent and it is estimated that by the end of 2021 it will contribute to reducing emissions of
25.4 million tons of CO2 equivalent. The contribution of biodiesel in 2020 has succeeded in
reducing 22% of greenhouse gases from fossil energy use, as Indonesia's target stated in the 2030
National Determined Contribution (NDC) document.
Oil palm plantations are an important industry in the national energy transformation plan
from non-renewable energy to renewable energy. In this regard, Indonesia has been developing
renewable energy substitution since several years ago through the mandatory policy of palm
biodiesel which has now become B30. Through the mandatory policies B15 (2015) and B20 (2016),
Indonesia was able to reduce imported fuel which automatically saves imported foreign
exchange. In 2015 there was at least a savings of USD 5.6 billion. Meanwhile in 2020, it was
recorded that the volume of biodiesel absorbed for the B30 program reached 8.4 million kiloliters.
This means that there is a saving of foreign exchange on imports of fossil diesel of USD 2.66 billion.
The government has determined biodiesel as a future alternative energy transition. This
biofuel not only saves foreign exchange from fossil energy, but also reduces greenhouse gas
emissions. Biodiesel is a biofuel consisting of a mixture of methyl ester compounds from long
chain fatty acids which is intended as an alternative fuel for diesel engines. Crude Palm Oil (CPO)
is used as the main raw material for biodiesel. The simple technique is that 30% of processed
mixed palm oil of fatty acid methyl esters (FAME) is mixed into diesel oil to produce a product
called B30. This policy was initiated in 2006 starting with B5 and began to be massively produced
starting in 2016 to increase diesel fuel by 20%.
Palm Oil Plantation as a Renewable Energy “Factory”
Oil palm plantations can be viewed as biological “factories” to capture and store solar energy.
Through the process of photosynthesis/assimilation of oil palm plants, solar energy is captured
and stored in complex chemical bonds of carbon and hydrogen. Carbon is absorbed by oil palm
plants from the earth's atmosphere, while hydrogen is obtained from water that plants absorb
from the soil. Therefore, oil palm plantations, like other crops, are carbon sequestration
absorbers from the earth's atmosphere.
Palm oil plantations and mills produce large amounts of solid and liquid waste that have not
been utilized optimally. The fiber and some of the palm kernel shells are usually used as boiler
fuel in the factory, while oil palm empty fruit bunches, which account for about 23% of processed
fresh fruit bunches, are usually only used as mulch or compost for oil palm plantations. Besides
producing palm oil, palm oil also produces palm biomass such as empty fruit bunches, shells,
midribs, trunks, and palm oil sludge. From 11 million hectares of oil palm plantations, 182 million
tons of dry biomass can be produced. With the fermentation technology from the biomass, 27
million tons of bioethanol or bio premium can be produced. In addition, with biogas technology,
palm mud ponds can be used as biogas to replace natural gas and produce bioelectricity.
While biomass through advanced processes (chemical and biological) can be obtained
bioethanol as a substitute for premium fossils (gasoline). This biomass is often referred to as
second generation biofuel. In addition to biodiesel and bioethanol, from palm oil mill waste or
POME (palm oil mill effluent) through biogas technology (methane capture) energy can be
harvested in the form of methane gas (biogas) as a substitute for natural gas. In contrast to fossil
energy (diesel, premium, and natural gas) which cannot be renewed (non-renewable) and will
eventually be depleted, palm oil biofuels (biodiesel, bioethanol, and biogas) are renewable
energy.
Palm Bioethanol Production Technology
The Indonesian Institute of Sciences (LIPI) has developed a 2nd generation bioethanol
production technology to support the conversion of fossil fuels. This technology is able to convert
biomass waste, especially empty oil palm fruit bunches into bioethanol. It was found that empty
oil palm fruit bunches, waste from palm oil mills, can be used as raw material for bioethanol. As
we know that the number of empty palm oil bunches is very large, abundant in various places in
Indonesia. Therefore, this condition can support the lignocellulose bioethanol industry on a large
scale.
 Palm oil waste consists of cellulose and hemicellulose components. To treat palm oil waste
in an integrated manner, we can use the biorefinery concept that utilizes biomass as a raw
material for the production process for energy sources, chemicals, foodstuffs, and medicines. By
decomposing the cellulose component of palm oil waste into glucose, the glucose resulting from
the decomposition of cellulose is then fermented into bioethanol. In 2014 the conversion of
ethanol to bio gasoline was carried out using a solid acid catalyst and dehydration of ethanol with
natural zeolite.
Chemical Research Center – LIPI has built a pilot plant for bioethanol production from
lignocellulosic materials with a capacity of 10 L/day with a purity >99.5%. Several activities were
carried out in 2011–2013, from preparing facilities and utilities for the pilot plant, installing, and
testing it, to testing bioethanol production several times a year. In 2013, bioethanol production
was carried out using a pilot plant which produced around 150 L/ton bioethanol. The efficiency
of each stage of the process at the pilot plant is quite high, which is around 85–99%. Bioethanol
trials have also been carried out on vehicle engines in a static state to a mixture of 25% bioethanol
with premium without a decrease in engine torque and power.
Korea Investment Prospects on Bioethanol
The potential for biomass production of Indonesian oil palm plantations is around 182
million tons. If it is processed into ethanol, it can produce 23.7 million kilo liters of bioethanol
every year. In addition, the utilization of 147 million tons of POME (palm oil mill effluent) can
produce 4127 million m3 of biogas. The results of the reconciliation of the national oil palm cover
area coordinated by the Coordinating Ministry for Economic Affairs in 2019 have identified an
area of 16.38 million ha, with the distribution of community plantations (both self-help and
partnerships) of 6.72 million ha (41%), large state plantations of 0.98 million ha (6%), and large
private plantations at 8.68 million ha (53%). Experts have also projected that by 2030 the
distribution of oil palm area will be dominated by smallholder plantations at 60%, large private
plantations at 36%, and large state plantations at 4%. As the largest producer country that
controls about 55% of the world's palm oil market share and utilizes no more than 10% of the
total global land bank for vegetable oil, Indonesia is able to produce 40% of the world's total
vegetable oil that can convert to bioethanol.
The 1st generation bioethanol is made from food ingredients containing starch and sugar,
the 2nd generation bioethanol is made from plantation, forestry, and agricultural waste as raw
material. The 2nd generation of bioethanol is ready to replace gasoline which is a non-renewable
energy source. This 2nd generation of bioethanol cooperation project is taking place between the
Indonesian Institute of Sciences (LIPI) and the Korea International Cooperation Agency (KOICA)
in the development of a 2nd generation bioethanol plant. KOICA helped fund the equivalent of
IDR 30 billion. The funds were used to build a bioethanol factory at the Research Center for
Science and Technology (Puspiptek) Serpong, South Tangerang. In addition, funds to finance
experts, both from Korea who were brought to Indonesia and experts from Indonesia, for
comparative studies to Korea.
 Furthermore, ESDM (Ministry of Energy & Mineral Resources) R&D Agency and the Korea
Institute of Energy Technology Evaluation and Planning (KETEP) have collaborated since 2015,
especially regarding new and renewable energy. This cooperation was strengthened through a
Memorandum of Understanding (MoU) signed on May 16, 2016 at the 6th Working Level Task
Force RI-South Korea in Seoul. Energy has become one of the most important issues globally in
the last few decades, so the problems posed by the energy sector also require global partnership
solutions.
Conclusion
Indonesian oil palm plantations produce two types of renewable energy, namely 1st
generation biofuel in the form of biodiesel and 2nd generation biofuel in the form of bioethanol
(biomass-based) and biogas (POME-based). The energy is produced simultaneously (joint product)
and is sustainable. The potential for biomass production of Indonesian oil palm plantations is
around 182 million tons of dry matter. If it is processed into ethanol, it will produce 23.7 million
kilo liters of bioethanol every year. In addition, it also produces about 147 million tons of POME
which can produce biogas of 4127 million m3.
Oil palm plantations are an important industry in the national energy transformation plan
from non-renewable energy to renewable energy. Biodiesel is a partial substitute for diesel,
premium substitute bioethanol and biogas as a substitute for natural gas. Thus, Indonesian oil
palm plantations are one of the national renewable and sustainable energy strategic industries.
Besides needing to be protected, it also needs to be promoted as an important part of the
strategy to build national energy sovereignty, including the conversion of non-renewable energy
to renewable energy.

References

• https://www.eria.org/news-and-views/three-point-pathway-for-promoting-sustainable-
palm-oil-production-and-trade/
• https://ap.fftc.org.tw/article/1408
• https://thepalmscribe.id/asian-agri-affirms-its-long-term-sustainable-business-strategy/
• https://www.itb.ac.id/news/read/57916/home/palms-could-be-the-stable-source-of-
renewable-energy
• https://gapki.id/en/news/21539/oil-palm-plantations-make-no-contribution-to-the-
economy-myth-facts-3-01