Jakarta, INTI - The Center of Reform on Economics (CORE) Indonesia says the country still has around 1 million tons of sugarcane molasses that could be utilized to produce bioethanol, supporting the government's ethanol-blended fuel program.
Supply and Production Remain Key Challenges
CORE Indonesia economist Eliza Mardian stated that Indonesia produces approximately 1.9 million tons of molasses annually, yet only about 900,000 tons are currently being utilized.
"Indonesia produces around 1.9 million tons of molasses each year. Only about 900,000 tons have been absorbed, leaving another 1 million tons with significant potential for bioethanol production," she said.
Eliza explained that most molasses supplies originate from regions outside Java, while the country's ethanol processing facilities are concentrated on Java, creating logistical and transportation cost challenges.
She also highlighted the limited domestic production of fuel-grade ethanol (FGE) with a purity level above 99%, the standard required for blending with gasoline.
"Current domestic production is only around 26,000 kiloliters (KL) per year, supplied by three major producers located in Lampung, Yogyakarta, and Solo," she noted.
According to Eliza, Indonesia's total installed ethanol production capacity reaches 303,000 KL annually, but actual utilization stands at only about 172,000 KL.
She added that most of the existing ethanol output is still allocated to non-fuel industries, including cosmetics, pharmaceuticals, and food manufacturing.
Significant Investment Needed to Scale Up Bioethanol
Eliza emphasized that implementing nationwide E5 to E20 ethanol-blended fuel mandates will require substantial investment across Indonesia's bioethanol supply chain and supporting infrastructure over the coming years.
"The successful rollout of E5, E10, and eventually E20 will depend on policies that improve sugarcane productivity, alongside a mandatory blending program supported by guaranteed offtake from Pertamina," she said.
She stressed that strengthening domestic production is essential to gradually meet fuel-grade ethanol demand while reducing reliance on imports.
Meanwhile, Minister of Energy and Mineral Resources Bahlil Lahadalia has targeted the introduction of E10 fuel by 2027 as the first phase of Indonesia's bioethanol roadmap, followed by a gradual transition to E20 between 2028 and 2029, with the goal of reducing the country's dependence on imported gasoline.
Conclusion
Indonesia still has significant untapped potential to expand its bioethanol industry, with approximately 1 million tons of unused sugarcane molasses available as feedstock. However, realizing this opportunity will require addressing supply chain inefficiencies, increasing domestic production of fuel-grade ethanol, and investing in processing infrastructure. As the government moves toward implementing E10 in 2027 and gradually expanding to E20, stronger policy support, higher sugarcane productivity, and reliable industry partnerships will be critical to reducing gasoline imports and accelerating the country's transition to cleaner, renewable energy.
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