Project Overview

Indonesia is working towards a more balanced energy mix, targeting a renewable energy share of 23% by 2025 and 31% by 2050. Promoting the use of biofuels in the transport, industry, and power generation sectors is a key strategy to achieve these targets. It also aims to reduce reliance on petroleum-based transport fuels, lower the import bill, and improve the trade balance, thereby strengthening the country’s energy self-sufficiency. To date, the most significant progress in biofuel policy implementation has been achieved in the transport sector.

This study proposes a scenario-based analysis to evaluate the effectiveness and efficiency of biofuel support policies. It will examine the impacts of biofuel production on both the energy and agricultural markets, reflecting how various sectors of the economy respond to different levels of biofuel production. The analysis will also take into account the implications of the recent oil price decline and the COVID-19 pandemic. In addition, the study will assess the suitability of complementary measures to help guide market development.

The research builds on a previous ERIA study, conducted at the request of the Ministry of Industry of the Republic of Indonesia, entitled 'Market Penetration Assessment of Biodiesel (B100) and Bioethanol (E100) as Road Transport Fuels in Indonesia.'