From Hormuz to Sumatra… How did Indonesia fortify its energy security with hybrid fuel? | economy

As part of its quest to enhance its energy security, Indonesia is moving towards establishing a hybrid biofuel model based on blending palm oil with petroleum diesel, in a context affected by the fluctuations of global energy markets and the repercussions of disruption of sea lanes, most notably the Strait of Hormuz.

Al Jazeera correspondent Suhaib Jassim, from a gas station on the island of Sumatra, monitors the birth of a new generation of government-subsidized biodiesel, which global energy turmoil has pushed to the forefront as part of a strategy to diversify fuel sources and reduce dependence on imports.

This “B50” hybrid fuel is based on mixing palm oil with diesel in an equal proportion, as part of a government policy targeting energy independence, with officials confirming that the program is continuing despite market fluctuations and disturbances in vital strategic global sea lanes.

Indonesia’s experience with biofuels dates back to the early 1990s, when research began on mixing palm oil with petroleum diesel, before the percentage gradually developed from 10% to 50% during two decades of experiments and continuous industrial expansion.

About 30 industrial facilities, in cooperation with a government oil company, participate in the production of biodiesel, but practical use has revealed technical challenges related to engine efficiency and fuel consumption compared to traditional diesel, according to circulated testimonies of users in the field.

An Indonesian researcher says that research teams are working to address these problems by developing vital additives extracted from essential oils. Experiments have proven that they reduce the percentage of humidity and particles that cause deposits, and also contribute to reducing emissions and improving fuel efficiency.

Escalating supply crisis

The Indonesian project is based on the abundance of palm oil production, as Riau province alone contains about 21% of the total area of ​​​​palm plantations in the country, which amounts to approximately 17 million hectares, making it the main heart of the production of the raw material needed for the biofuel industry.

Indonesian official Ogun Ontario confirms that raising the percentage of the vital component from 40 to 50% requires providing about 3 million additional tons of crude palm oil annually, which poses a major challenge in increasing the productivity of farms, especially those managed by local farmers.

The effects of this transformation do not stop at the Indonesian borders, as the expansion of the use of biofuels was reflected in global palm oil prices, which witnessed a new wave of rise, after previous increases linked to the war in Ukraine and then to the navigation crisis in the Strait of Hormuz.

Indonesia provides about 60% of global palm oil production, and therefore importing countries are closely following Jakarta’s policies related to directing more production towards the fuel industry, fearing that this will lead to a reduction in the supply allocated to the food industry and higher prices.

The Indonesian government finds itself facing a delicate equation that combines maintaining palm oil exports, which provide an important source of hard currency and supports the income of more than two million farmers, and meeting the growing local demand for the raw material needed to expand biofuel production.

After a 35-year journey of research and development, Indonesia succeeded in achieving a fuel that equally mixes fossil diesel and palm oil, but the sustainability of this achievement will remain dependent on its ability to increase agricultural production, control prices, and achieve a precise balance between the requirements of energy security, food security, and global markets.