PALM OIL AS THE BACKBONE OF BIOENERGY TO STRENGTHEN NATIONAL ENERGY SECURITY

TL;DR

Indonesia is mitigating its reliance on imported fossil fuels by developing palm oil as the foundation of its national bioenergy strategy. By fully utilizing crude palm oil, plantation biomass, and mill effluent across three generations of bioenergy, the industry provides a stable, affordable, and sustainable domestic energy supply. This transition directly strengthens national energy security while significantly reducing greenhouse gas emissions through a circular economy.

INTRODUCTION

From the 1970s to the mid-1990s, Indonesia was known as one of the world’s major fossil oil-exporting countries. Along with Middle Eastern countries, Indonesia was also a member of the world’s oil-exporting organization, the Organization of the Petroleum Exporting Countries (OPEC). However, this situation began to change as domestic oil production declined. Entering the early 2000s, domestic production was no longer sufficient to meet continuously increasing demand, causing Indonesia to become dependent on imports. This change marked Indonesia’s transition from a net oil exporter to a net oil importer. With this change in status, Indonesia became highly vulnerable to fluctuations in global oil prices.

The intensification of geopolitical tensions in the Middle East, which subsequently affected energy shipping through the Strait of Hormuz beginning in early 2026, contributed to a significant increase in global oil prices. This is because the Strait of Hormuz is a crucial shipping route through which approximately 20 percent of global crude oil trade passes (UNCTAD, 2026). Disruptions in this shipping corridor can trigger significant volatility in global energy markets (US Energy Information Administration, 2023) and generate shock effects in oil-importing countries (Nugroho, 2026).

The impact of the conflict was also felt by Indonesia, given its position as an importer of fossil crude oil. As a result of higher fossil oil import costs, Indonesia faces the risk of increased pressure on energy subsidies, a weakening trade balance, and higher consumer price inflation due to rising transportation and logistics costs. High inflation resulting from increases in energy (fuel) prices has the potential to increase poverty (Kpodar and Liu, 2022; Yaqin et al., 2023).

The conditions above serve as a reminder that high dependence on imported energy makes a country’s economy more vulnerable to external shocks. Therefore, diversification of energy sources by utilizing domestic resources is an important strategy for strengthening national energy security.

This urgency has become increasingly relevant to the direction of national development under the administration of President Prabowo Subianto, which places energy self-sufficiency as one of the strategic development agendas. Energy self-sufficiency is to be achieved not only through increased fossil energy production but also through diversification of national energy sources. Government Regulation No. 40 of 2025 (PP 40/2025) identifies the utilization of renewable energy sources in the form of biofuels/bioenergy as one of the strategies for national energy diversification (Hasan, 2026).

The development of bioenergy as part of new and renewable energy (NRE) has become increasingly important to support Indonesia’s commitment to reducing greenhouse gas (GHG) emissions. This commitment is realized through the Second Nationally Determined Contribution, with a target of achieving net zero emissions by 2060 or earlier (Republic of Indonesia, 2025). Bioenergy contributes to achieving the SNDC target through two main mechanisms, namely the substitution of fossil energy to reduce GHG emissions from the transportation sector and increasing the share of NRE in the national energy mix to support the transition toward a low-carbon energy system.  

In this context, Indonesia has strategic biological resources that can be developed as bioenergy feedstock. One of the most promising resources is palm oil. 

Palm oil’s contribution to energy security is actually no longer merely potential, but has already been demonstrated through the development of palm oil-based biodiesel (Fatty Acid Methyl Ester/FAME), supported by the Biodiesel Mandatory Program (PASPI, 2023; PASPI Monitor, 2023^d; PASPI Research Team, 2026^b). Palm’s contribution to national energy security still has considerable opportunities for further development. 

Along with the expansion and deepening of downstreaming, the scope for utilizing palm as a bioenergy product remains substantial. This shows that the development of bioenergy products opens opportunities for palm oil to become one of the backbones for strengthening national energy security. In addition, the development of palm-based bioenergy as a substitute for imported fossil energy also forms part of global climate change mitigation efforts while reducing Indonesia’s exposure to global oil market fluctuations and potential risks of other economic losses. This shows that palm oil is not merely a commodity/business product, but has become part of national energy security as well as climate and economic resilience.

This article will discuss the potential of palm-based bioenergy products. The discussion will continue by examining the contribution of the palm oil industry to strengthening national energy security.

PALM BIOENERGY POTENTIAL

Essentially, the production process of oil palm plantations is a process of harvesting and storing solar energy (PASPI, 2023). Through photosynthesis, solar energy captured by palm fronds is used to convert carbon dioxide (CO₂) and water into organic compounds that are stored in the plant. Thus, oil palm plantations become expanses of biological bioreactors that function to capture solar energy and convert it into chemical energy (and organic compounds) stored in palm oil and biomass. As long as the sun continues to emit its energy and is supported by the availability of water, carbon dioxide, and good growing conditions, the process of energy harvesting by oil palm plantations will continue.

With their carbon and organic compound content, all products produced by oil palm plants, such as oil, biomass, by-products, and residues from palm oil processing, can be utilized as bioenergy feedstock (PASPI Monitor, 2023^c; 2025^a). Based on the sources of feedstock, three generations of palm bioenergy can be developed as joint products (Figure 1). 

First, First Generation Bioenergy is produced through the processing of palm oil (Crude Palm Oil/CPO, Palm Kernel Oil/PKO). Palm oil has characteristics that make it suitable as bioenergy feedstock because it is chemically composed of triglycerides containing various fatty acids, with palmitic acid and oleic acid as the principal components (Knothe, 2010; Hoekman et al., 2012). The fatty acid profile forms the basis for determining the characteristics of the fuel produced. Through the transesterification process, triglycerides in palm oil can be converted into Fatty Acid Methyl Ester (FAME), known as biodiesel.

Chemically, the fatty acid content of palm oil is very similar to the hydrocarbon composition of fossil fuels (Subagjo, 2019; PASPI Monitor, 2020^b, 2025^a). Palm oil fatty acids are medium-chain hydrocarbons that are “contaminated” with carbon dioxide at one end of the molecule. To produce bioenergy with a hydrocarbon structure similar to that of fossil fuels, the carbon dioxide must be removed. Palmitic acid in palm oil can be converted into pentadecane, namely green diesel (palm diesel), as a substitute for fossil diesel. Lauric acid in palm kernel oil can also be converted into undecane, namely green avtur (palm avtur or Sustainable Avtur Fuel/SAF), as a substitute for fossil avtur. Through decarboxylation and cracking of the hydrocarbon structure, oleic acid in palm oil can be converted into green gasoline (palm gasoline) as a substitute for fossil gasoline. Processing to produce these palm-based green fuels also produces biogas as a joint product, which can substitute for natural gas/LNG.

Second, Second Generation Bioenergy is palm bioenergy produced from the utilization of oil palm biomass. In addition to producing palm oil (CPO/PKO) as the main product, the plantations also produce biomass as a joint product. The biomass in question includes empty fruit bunches, palm kernel shells, oil palm fibers and shells, oil palm trunks, and oil palm fronds.

Basically, solid palm biomass is lignocellulosic organic material composed of cellulose, hemicellulose, and lignin. These three components can be converted through thermochemical and biochemical pathways to produce bioenergy products (Naik et al., 2010; Dolah et al., 2021; Usi et al., 2022; Yanti, 2023). Bioenergy products generated from palm biomass processing include bioethanol, bio-oil, biocoal, briquettes, biopellets, biogas/biopower, and others. Bioethanol can serve as a substitute or be used in blending with fossil fuel. Meanwhile, biocoal, briquettes, and biopellets are used as substitutes for or blended with fossil coal.

In addition to utilizing biomass in dry form, Second-Generation Bioenergy can also be produced by utilizing by-products from palm oil processing, such as POME Oil and High Acid Palm Residue (HAPOR). Both products are the result of oil recovery from Palm Oil Mill Effluent (POME). POME Oil and HAPOR have relatively high fatty acid contents, making them potential feedstock for biodiesel or other alternative energy sources (Suwanno et al., 2017; Nasution et al., 2026).

Similar potential exists in Empty Fruit Bunch Oil (EFB Oil), which is obtained through the further processing of empty palm fruit bunches. Unlike POME Oil and HAPOR, which originate from POME processing residues, EFB Oil utilizes the oil content that can still be recovered from empty fruit bunches. This by-product also has the potential to be used as a feedstock for biodiesel or other forms of bioenergy.

In addition to POME residues from processing activities at mills, palm oil refineries also produce Palm Fatty Acid Distillate (PFAD) as a by-product of the palm oil refining process. PFAD can be used as a feedstock for biodiesel and other bioenergies (Mirzayanti et al., 2016; Kapor et al., 2017; Wulandani et al., 2024).

Not only residues generated throughout the palm oil production process but also waste and residues generated during the consumption of palm products have the potential to serve as bioenergy feedstocks. Used cooking oil (UCO) is a waste product or residue from the use of palm-based cooking oil that can be used as a feedstock for biodiesel (de Araujo et al., 2013; Rahman et al., 2025). In addition to biodiesel, UCO can be processed using Hydroprocessed Esters and Fatty Acids (HEFA) technology to produce sustainable aviation fuel (SAF)/bio-aviation fuel (Goh et al., 2020; Punguti et al., 2026; Pamungkas, 2026).

Third, Third-Generation Bioenergy is bioenergy produced by utilizing POME generated at palm oil mills (CPO mills). POME is generally viscous and brownish in color, with a high organic matter content, including carbohydrates, lipids/oils, proteins, and other organic compounds. The high organic content of POME, measured in terms of chemical oxygen demand (COD) and biological oxygen demand (BOD), indicates the substantial amount of organic matter available for conversion into bioenergy (Rahayu et al., 2015; Garritano et al., 2018; Meutia et al., 2024; Diyane, 2017).

POME can be utilized to produce bioenergy by adopting methane-capture technology. This technology enables methane generated during POME processing to be captured through a closed system (covered lagoon, digester, or biogas plant) and then used to produce biogas, electricity, or biomethane compressed natural gas (Bio-CNG) (Ji et al., 2013; Choong et al., 2018; Antoni et al., 2020; Sagala et al., 2024; Dewi et al., 2026). Biogas produced from POME processing is also widely used as a source of electricity at the local level, particularly in villages surrounding mills.

Another technology that can be used to produce bioenergy involves combining sludge from methane-capture digesters with algae cultivation technology to produce algal biodiesel (Lam and Lee, 2011; Yonas et al., 2012; Nur et al., 2013, 2015; Sukumaran et al., 2014; Nasution et al., 2020). POME also has the potential to serve as a feedstock for SAF that meets the criterion of a low Life Cycle Emission Factor (LCEF) (IPOSS, 2024; Bhatia et al., 2025; Pamungkas, 2026).

The discussion above demonstrates that palm-based bioenergy has substantial and diverse potential through the utilization of the main product, biomass, by-products, and residues from palm oil processing and the consumption of palm oil products. Integrated development would expand the sources of national bioenergy supply. This also demonstrates the contribution of the palm oil industry as one of the backbones of bioenergy in strengthening national energy security.

NATIONAL ENERGY SECURITY INDICATORS

Through the development of these three generations of bioenergy, the palm oil industry not only contributes to the provision of alternative energy to substitute imported fossil energy, but also becomes part of national energy security. This role is reflected in the ability of the palm oil industry to meet energy security indicators in terms of availability, affordability, and sustainability (PASPI Research Team, 2026^a, 2026^c). 

First, availability. The strength of the palm oil industry lies in its ability to provide bioenergy feedstock in large quantities, in diverse forms, and simultaneously from an existing production system. These feedstock sources originate not only from palm oil as the main product, but also from biomass, by-products, and even residues from palm oil processing and the consumption of palm-based products.

In First Generation Bioenergy, palm oil as feedstock is available in large volumes and relatively stable throughout the year (PASPI, 2023; PASPI Monitor, 2021^b). The availability of this feedstock is a determining factor in the sustainability of the development of biofuel-based energy programs (BBN). Indonesia’s experience in biodiesel development demonstrates the importance of this aspect. At the initial stage, the Indonesian Government planned to develop biodiesel based on jatropha (ESDM, 2021), but due to limited productivity and unstable feedstock supply, the biodiesel development plan shifted toward palm oil-based biodiesel. This was because the large volume of palm oil production was capable of meeting biodiesel feedstock requirements.

The use of palm oil for biodiesel has increased (GAPKI, 2026) alongside the increasingly intensive implementation of the Mandatory Biodiesel Program, from 3.8 million tons in 2018 (B20) to 12.7 million tons in 2025 (B40). When compared with Indonesia’s total palm oil production (Figure 2), the proportion of palm oil used for biodiesel increased from 8 percent to 22 percent. This means that increasing the utilization of palm oil as bioenergy feedstock can still proceed alongside meeting palm oil demand for various other downstream products.

In Second Generation Bioenergy, the potential feedstock supply is expanded through the utilization of palm biomass. In addition to the more varied types of feedstock, the volume of available palm biomass is very large. Foo-Yuen Ng et al. (2011) found that each hectare of oil palm plantation can produce approximately 16 tons of dry matter biomass per year, or approximately three times greater than CPO and PKO production. Dewi et al. (2026) estimated that the potential palm biomass generated from 16.83 million hectares of oil palm plantations in Indonesia reaches approximately 339–347 million tons, consisting of 46 million tons of empty fruit bunches, 12–16 million tons of palm kernel shells, 26–30 million tons of mesocarp fibre, 208 million tons of palm fronds, and 47 million tons of trunks from replanting. Although not all biomass can be harvested because some plays a role in maintaining the nutrient cycle to increase plantation productivity, the potential of palm biomass demonstrates the magnitude of the bioenergy feedstock resource that can be developed.

Meanwhile, POME, as a source of Third Generation Bioenergy feedstock, is routinely generated in accordance with the processing of fresh fruit bunches (FFB) into palm oil (CPO) at palm oil mills. This shows that every increase in CPO production is directly proportional to an increase in POME waste. Various studies (Madaki and Seng, 2013; Saad et al., 2021; Dominic and Baidurah, 2022) revealed that every ton of CPO produced generates approximately 2.5 to 3.8 tons of POME. 

The availability of UCO is also quite large and can be utilized as bioenergy feedstock. A study by Traction Energy Asia and TNP2K (2020) revealed that approximately 3 million kilolitres of UCO were collected in Indonesia in 2019 and had the potential to produce 0.6 million kilolitres of biodiesel. The study also revealed that the potential availability of UCO in Indonesia reaches 28.4 million kilolitres. 

Thus, the availability of palm bioenergy is more secure because feedstock availability does not rely solely on palm oil as the main product, but also includes palm biomass, by-products (such as POME Oil, HAPOR, PFAD, EFB Oil, and UCO), as well as POME waste generated as joint products throughout the production chain. In addition, the utilization of these by-products is considered more efficient and strategic for producing bioenergy because it does not require the opening or provision of special land for bioenergy crops.

Second, affordability. Palm oil is a cheaper vegetable oil and is therefore more affordable than soybean oil, rapeseed oil, and sunflower oil (PASPI, 2023; PASPI Research Team, 2026^c). As a feedstock for First Generation Bioenergy, the lower price of palm oil will result in more efficient production costs, allowing the resulting bioenergy products to be available at relatively cheaper and more affordable prices. 

This cost advantage is confirmed by the study of Lam et al. (2009), cited in Wirawan et al. (2024), which reported that the production cost of palm biodiesel in Malaysia was USD 784–804 per ton, or cheaper than rapeseed biodiesel (USD 1,035 per ton) and soybean biodiesel (USD 840 per ton). An IEA publication (2024) also revealed that the average price of palm biodiesel in Indonesia is lower than biodiesel prices in the United States, Brazil, and Europe. In addition to cheaper feedstock, implementation of Indonesia’s Mandatory Biodiesel Program is supported by a biodiesel support mechanism (incentive) sourced from the Palm Oil Fund (Export Levy) to cover the difference between the Biodiesel HIP and Diesel HIP (Sipayung, 2018; PASPI Monitor, 2025^c; BPDP, 2026), enabling biodiesel products to be marketed at more affordable prices.

The affordability of Second and Third Generation Bioenergy lies in feedstock originating from an existing production system and being generated as joint products. Therefore, its utilization to produce bioenergy does not require the provision of land or the construction of a dedicated production system. This condition provides an opportunity to reduce feedstock supply costs while increasing the economic value of biomass, by-products, and POME that were previously considered waste and had relatively low economic value (Faradillah et al., 2026). In addition, the utilization of by-products and residues/waste as bioenergy feedstock has the potential to minimize the food-fuel trade-off (PASPI, 2023; PASPI Monitor, 2021^a) associated with oil-based bioenergy (First Generation Bioenergy).

Overall, the affordability of palm bioenergy is not only related to whether bioenergy prices are cheaper than fossil energy, but also to the ability to provide energy at competitive and relatively affordable costs through the utilization of domestic resources. This approach simultaneously reduces dependence on imported feedstock, thereby reducing the economy’s exposure to global commodity price volatility and creating added value through the downstreaming of resources available domestically.

Third, sustainability. Palm has characteristics that support the long-term development of renewable energy. Unlike fossil oil, which is formed through geological processes over very long periods and has finite reserves and is therefore classified as a non-renewable resource, oil palm originates from biological resources that can be reproduced through cultivation activities and is therefore considered more sustainable for supporting energy security. 

In terms of vegetable oil production, palm oil is also relatively more environmentally sustainable than soybean oil, rapeseed oil, and sunflower oil (PASPI, 2023; PASPI Monitor, 2020^a; 2021^c; 2022^a; PASPI Research Team, 2026^a, 2026^c). Palm oil is relatively land-efficient (deforestation), emissions-efficient, relatively low in biodiversity loss, and water-efficient, as well as produces less soil/water pollution. This also shows that palm oil-based First Generation Bioenergy products are relatively more sustainable.

One of the environmental sustainability indicators frequently used is emissions. Various studies compiled by PASPI (2023) revealed that the use of palm biodiesel can achieve GHG emission savings of approximately 40–71 percent compared with emissions generated by engines using fossil energy.

The scientific findings of these studies were also the initial objective of biodiesel development in Indonesia, namely to reduce carbon emissions as part of global climate change mitigation. As the implementation of Indonesia’s Mandatory Biodiesel Program has intensified (PASPI Research Team, 2026^b), it has resulted in continuously increasing reductions in Indonesia’s GHG emissions (Figure 2), from only approximately 2.4 million tons of CO₂ eq in 2015 (B15) to 39.61 million tons of CO₂ eq in 2025 (B40). It is estimated that implementation of B50 will further increase carbon dioxide emission reductions to 44.46 million tons of CO₂.

Using a different approach, the study by Gerbens-Leenes et al. (2009) revealed that oil palm uses less water to produce bioenergy compared with other feedstock crops. To produce each gigajoule of bioenergy, oil palm requires only 75 m³ of water. Meanwhile, water use for other bioenergy-producing crops is greater, such as 184 m³ of water for rapeseed, 100 m³ for soybean, and 100 m³ for sunflower.

The utilization of POME waste into bioenergy is one strategic step for reducing emissions from palm oil production (PASPI Monitor, 2023^a, 2023^b, 2025^b). The application of methane capture technology to POME can also significantly reduce GHG emissions in palm oil production (Mathews and Ardiyanto, 2015; Choong et al., 2018; Nisa and Wijayanti, 2023)

POME processing using methane-capture technology also reduces the carbon emission footprint of palm biodiesel, thereby increasing its emission-saving capability. A study by the European Commission Joint Research Centre (2013) likewise revealed that palm oil-based biodiesel produced from palm oil mills applying methane capture technology can achieve emission savings of 62 percent or higher compared with other vegetable biodiesels, such as sunflower biodiesel (58 percent), rapeseed biodiesel (45 percent), and soybean biodiesel (40 percent)

The utilization of biomass, by-products (POME Oil, HAPOR, EFB Oil), and residual products both from palm oil processing (POME) and the consumption of palm products (UCO) as bioenergy feedstock provides environmental benefits through reducing water and soil pollution while supporting the reuse of waste within a circular economy framework (Diyane, 2017; Dominic and Baidurah, 2022; Faradillah et al., 2026). Compared with other types of feedstock, the utilization of residues such as POME and used cooking oil as bioenergy feedstock has a lower carbon emission footprint and is therefore considered more sustainable as bioenergy feedstock (Goh et al., 2020; Rahman et al., 2025; Bentil et al., 2025; Judijanto, 2025; Bhatia et al., 2025; Punguti et al., 2026; Hermawan et al., 2026).

The discussion above shows that the palm oil industry has a strategic position in strengthening national energy security. The ability to provide feedstock sustainably, produce energy at competitive costs, and reduce GHG emissions, improve resource utilization efficiency, and promote a circular economy enables the palm oil industry to meet national energy security indicators. Thus, the development of palm bioenergy needs to be positioned as part of a national strategy to build a more independent, competitive, and sustainable energy system.

CONCLUSION

National energy security has become increasingly important amid growing energy demand, dependence on imports of petroleum/fossil fuels, and geopolitical dynamics affecting the stability of global energy supplies and prices. In this context, the development of new and renewable energy (NRE), such as bioenergy, is a strategy for strengthening national energy security.

The palm oil industry has a strategic position because it is capable of providing feedstock to be developed as the backbone of national bioenergy. The potential of palm bioenergy is very large and relatively diverse, utilizing all products generated throughout the production chain. First, First Generation Bioenergy utilizes palm oil as feedstock to produce bioenergy products such as biodiesel, palm diesel, palm gasoline, and palm avtur/SAF. Second, Second, Second Generation Bioenergy utilizes palm biomass to produce various forms of bioenergy, including bioethanol, bio-oil, biopellets, biobriquettes, and biopower/biogas. Bioenergy products are also produced by utilizing by-products from palm oil processing, such as POME Oil, HAPOR, PFAD, and EFB Oil, as well as used cooking oil (UCO). Third, Third Generation Palm Oil Bioenergy utilizes POME as feedstock to produce biogas/biomethane and algae biodiesel. 

The utilization of various palm products has further implications, demonstrating that the palm oil industry is capable of meeting national energy security indicators. These indicators are the large and relatively stable availability of feedstock throughout the production and consumption supply chain of palm products (availability), the efficiency of feedstock sources produced as joint products, which has the potential to reduce production costs (affordability), and the creation of environmental benefits (sustainability) in the form of reducing GHG emissions, reducing water and soil pollution, and supporting a circular economy.

Acknowledgment

“The author extends sincere gratitude for the financial support provided by the Plantation Fund Management Agency (Badan Pengelola Dana Perkebunan) in the preparation of this popular scientific article as part of an advocacy at countering negative campaigns against palm oil.”

References