Can Cellulosic Ethanol Empower Small Farmers in Indonesia's Alternative Fuel Market

Indonesia: Despite the significant increase in biodiesel production in the country, many farmers feel left out of the benefits. The biodiesel supply chain is currently dominated by large Palm oil firms, leaving small farmers struggling to participate. However, there may be a solution to this problem - cellulosic Ethanol. This innovative fuel is derived from plant fibers, which are primarily composed of cellulose. Indonesia's thriving Palm oil industry, the largest in the world, generates massive amounts of residual plant materials like Palm trunks, empty Palm fruit bunches, and Palm press fiber. By utilizing cutting-edge technology, these materials can be converted into Ethanol that can be blended with gasoline, providing a new outlet for farmers to participate in the alternative fuel market.

Last year, President Joko Widodo unveiled a plan to expand sugar cultivation area in Indonesia to 700,000 hectares (1.7 million acres) to promote renewable sugar-based Ethanol development and reduce the country's reliance on petroleum. However, due to the scarcity of vacant land in a nation of 280 million people, this plan may face challenges. Nevertheless, a recent study has revealed that Indonesia has the potential to produce up to 2 million kiloliters (528 million gallons) of cellulosic Ethanol annually from Palm residues alone. Interestingly, these residues are currently being exported to countries like Japan for biomass power generation purposes, as it strives to meet its renewable energy targets.

Indonesia may be tempted to export Palm waste to foreign markets, which can be profitable in the short term. However, relying solely on exports may hinder the growth of a domestic processing industry in the long run. The Widodo administration's economic strategy has consistently emphasized downstreaming, making it crucial for Indonesia to seize the opportunity to develop its own processing industry.

A potential solution for increasing the income of small farmers is through the development of a domestic cellulosic Ethanol industry. By entering long-term contracts with cellulosic Ethanol producers, small farmers can sell their empty fruit bunches and Palm fibers, which are often overlooked as a valuable resource. However, many in the industry are unaware of the economic benefits of Palm oil waste. To address this issue, the government should provide adequate training and information to raise awareness among stakeholders.

The government's national replanting program may include Palm trunks as a requirement, allowing state-owned enterprises like Pertamina to acquire them at no cost for use as raw materials in cellulosic Ethanol production. This move can potentially decrease production expenses and alleviate the burden on the national budget caused by government fuel price subsidies.

Indonesia has the potential to become a major player in the cellulosic Ethanol industry. Apart from creating jobs in factory work, transportation, and plantation, developing this industry can also provide opportunities for farmers to enter the supply chain from the early stages of its development. Unlike the well-established biodiesel industry, the newness of the cellulosic Ethanol business presents an excellent chance to encourage more farmers to participate in the national biofuel program. Indonesia's abundance of raw materials makes it the perfect time for the country to establish itself as a global leader in cellulosic Ethanol production.

Following the establishment of the industry, it is possible to explore alternative sources such as Rice straw, Corn stalks, Sugarcane bagasse, Cassava stems, and demolished wood, extending its benefits to farmers of various crops. Successful development of cellulosic Ethanol can make the Indonesian government proud to provide cellulosic Ethanol produced by farmers, for the people of Indonesia.