THE HIDDEN STORY BEHIND INDONESIA'S ETHANOL AND SUGARCANE SYSTEM

 

THE HIDDEN STORY BEHIND INDONESIA'S ETHANOL AND SUGARCANE SYSTEM

                                               Author : AM Tris Hardyanto

1.  The system was never designed for bioethanol; it was designed for sugar.

What if the weakness of Indonesia's bioethanol sector is not technological at all but structural, rooted in a system that was never intended to produce fuel in the first place?

Indonesia's bioethanol production paradigm reflects an agricultural and industrial landscape that has long emphasised sugar above all else. The integration of bioethanol emerged later as an auxiliary function rather than a core strategic objective. Land-use planning, cane varietal selection, irrigation systems, labour organisation, and milling technology were all optimised to maximise sugar yields. As a result, molasses, the essential feedstock for ethanol fermentation, is treated as a secondary commodity whose availability fluctuates depending on sugar production cycles. When sugar supply tightens, molasses is readily diverted to food-grade uses or exported, leaving ethanol production inconsistent and vulnerable (Lukum et al., 2024; Kartika et al., 2024).

 Structural dependency reveals a more profound vulnerability. Ethanol plants operate at the end of the sugar production chain, not as standalone energy assets, leading to volatile, unreliable output levels (Kartika et al., 2024). In practice, bioethanol is produced only when sugar surpluses exist, reinforcing its status as an optional byproduct rather than a strategic renewable fuel. Consequently, the viability of bioethanol as part of Indonesia's national energy security is weakened because its supply hinges on dynamics within an entirely different commodity system (Yuliani et al., 2023).

 dynamic points to a larger hidden issue in Indonesia's renewable energy landscape. Biorefinery models are currently configured to optimise profit within the sugar sector rather than integrate energy and agricultural objectives coherently. The system rewards sugar maximisation, not energy resilience. Yet research consistently shows that sugarcane processing waste, bagasse and filter cake in particular, could be developed as sustainable bioethanol feedstocks, reducing reliance on molasses while also improving environmental performance (Vučurović et al., 2022; Awodi et al., 2022). The potential exists, but the strategic framing does not.

To move forward, Indonesia requires a shift in how bioethanol is positioned within national policy and agricultural economics. Bioethanol must be viewed not as a byproduct of sugar but as a co-equal product with strategic value for energy diversification, economic stability, and climate mitigation (Kaletnіk et al., 2021; Yusof et al., 2019).  This means that aligning feedstock planning, pricing policy, mill operations, and investment incentives is necessary to jointly support sugar production and renewable fuel expansion without competing with food resources.

If Indonesia wishes to build a resilient future in renewable energy, it must redesign the system so that bioethanol is not something that happens only when sugar is abundant but something that is deliberately made possible, planned for, and protected. The real question is not whether Indonesia can produce bioethanol, but whether it is ready to rethink the system that decides what is produced at all.

 

2.  Smallholders bear the burden but do not share in the value.

The most striking irony in Indonesia's sugar economy is that the people who grow the crop shoulder the most significant risks but walk away with the smallest share of the rewards.

In the Indonesian sugarcane sector, smallholder farmers cultivate over 70 percent of the cane, yet they receive only about 20–25 percent of the value generated along the sugar value chain. The imbalance reveals a system that concentrates labour, land, and livelihood at the bottom, while financial benefits accumulate at the top. Smallholders are burdened with rising input costs, especially fertiliser and hired labour, while their income remains dependent on mill-controlled pricing and recovery reporting, processes in which transparency is consistently limited (Suwandari et al., 2025). Payment delays, which can persist for months after cane delivery, further strain farmers' liquidity, directly affecting household stability and seasonal planning (Suwandari et al., 2025).

A more profound inequity lies in how byproducts are treated. Molasses, central to ethanol production, rarely benefits the farmer who cultivates the cane. Mills generally retain the full economic value of molasses and other derivatives, reinforcing a structure where smallholders contribute to system profitability without being recognised as stakeholders in the energy or industrial outputs that follow (Suwandari et al., 2025). Even well-intended initiatives such as the "petani tebu rakyat" scheme, which claims to empower farmers, have not substantially shifted the dynamic. In practice, smallholders subsidise the larger sugar economy through low margins and high-risk exposures (Mjonono et al., 2020).

Restricted access to market information, price signals, and cost-of-production data further reinforces smallholders' limited bargaining power. Without clear visibility, farmers cannot negotiate effectively, plan investments, or evaluate alternatives. Studies indicate that a lack of information leads to diminished asset accumulation, making farmers more vulnerable to market fluctuations and less able to move into value-added or premium market segments (Dlamini et al., 2022). The result is a value chain in which decision-making authority remains concentrated among mills, traders, and policymakers, while the producers who sustain the system are structurally excluded from strategic discussions (Msemwa et al., 2024).

 Intermediaries intensify exclusion by shaping access to credit, input supply, and market connections. Intermediaries often gain leverage when information distribution is uneven, preventing smallholders from securing fair pricing or timely payments (Suwandari et al., 2025). The pattern is clear: smallholders are central to production but peripheral to power and profit. They are essential, yet treated as replaceable. Their role is foundational, yet undervalued.

Behind every sack of sugar and every liter of ethanol lies the labour of farmers who rarely see the value they generate. The issue is not simply economic; it is structural and deeply historical. The real question is how long an industry can remain stable when its foundation is built on those consistently excluded from its rewards.

3.  Molasses is both waste and gold

The story of molasses shows that value is determined by the system that decides what a material becomes.

Molasses, often labelled merely as a byproduct of sugar milling, occupies a paradoxical position in Indonesia's agricultural and energy landscape. On the one hand, it is considered a byproduct of sugar crystallisation. On the other hand, it is an essential feedstock for ethanol production, an ingredient in the animal feed industry, and a high-value export commodity. Dual identity reveals that molasses holds far greater potential than its traditional classification suggests. Recent evidence shows that export prices for molasses frequently exceed domestic prices, prompting mills to direct molasses towards international markets rather than domestic ethanol production (Almunia et al., 2021). The result is a resource that could support renewable fuel security but is instead traded away for short-term revenue.

The absence of regulatory measures requiring domestic allocations reinforces behaviour. Without quota obligations or priority-use policies, mills logically pursue the highest market return, choosing export markets when they offer greater profit margins (Klaver et al., 2023).  creates a structural disadvantage for domestic ethanol producers, who must compete for feedstocks that the national energy system itself does not prioritise. In this sense, the viability of bioethanol is not determined by technology or processing capacity but by market signals that privilege immediate export gains over long-term energy resilience (Almunia et al., 2021).

 Dynamic illustrates a more profound issue: molasses sits at the intersection of agriculture, industry, and national energy strategy, yet its allocation is governed almost entirely by private profitability rather than by public interest. When higher returns abroad outweigh the value of strengthening the domestic energy supply, the nation's renewable energy goals become indirectly undermined. A system that aspires to energy security cannot depend on a feedstock whose distribution is determined by price speculation rather than strategic planning.

Addressing imbalance requires policies that acknowledge molasses as a strategic input rather than an incidental surplus. Introducing domestic allocation quotas, or pricing mechanisms that ensure ethanol producers consistent access to molasses, would stabilise supply chains and reduce volatility in ethanol production. Such measures would also indirectly support farmers, because a stable ethanol sector creates more predictable demand for sugarcane, reinforcing the broader agricultural economy through a circular system in which byproducts fuel new value creation.

Molasses teaches us that what appears to be residue can hold the key to transformation. The question is not whether molasses is valuable, but who gets to decide its value and for what future. If Indonesia recognises molasses as more than just waste, it could become the quiet foundation of a more resilient, self-sustaining energy landscape.

4. Ethanol pricing is formulaic but disconnected from reality.

A pricing system can look rational on paper, yet still fail everyone who depends on it. Indonesia's ethanol pricing framework is one such system.

Ethanol pricing in Indonesia is governed by the Harga Indeks Pasar (HIP), which links the ethanol price to molasses costs plus a fixed margin. In theory, a formula is intended to shield producers from market volatility and ensure predictable returns. However, the practical outcomes reveal a significant disconnect between the formula and the realities of production and trade. Molasses price fluctuations directly influence HIP calculations, yet the timing of refinery purchases and the patterns of offtake often do not align with producer expectations. As a result, the stability promised by the HIP mechanism exists more in policy documents than in daily operations.

When molasses prices rise, the HIP increases accordingly. On paper, it should increase ethanol producers' revenue. In practice, refiners frequently delay purchasing ethanol during these periods in anticipation of price readjustments, reducing the intended benefit of the price increase. Conversely, when the HIP falls, producers lose incentive to maintain or expand production, as narrowing margins undermine profitability. This leads to a cycle of uncertainty on both sides of the market. The pricing formula responds to price movement, but it does not provide the predictability needed for producers to invest in capacity, technology upgrades, or long-term operational planning.

The lack of guaranteed purchase volumes deepens instability. Producers are given a price formula but not a guarantee that their ethanol will be purchased. The result is a system that appears structured, yet leaves producers vulnerable to shifts in feedstock availability, financing pressures, and international commodity price movement. Instead of serving as a stabilising mechanism, HIP often amplifies uncertainty and undermines producer confidence. Markets need not only price frameworks but also predictable access and purchasing commitments to function sustainably.

 The lack of coordinated policies that link molasses allocation to domestic ethanol needs exacerbates the situation. Without dedicated feedstock assurance, the ethanol sector is forced to compete with export-driven molasses markets that often offer higher short-term returns. Establishing domestic allocation measures for molasses would help anchor ethanol production within national energy policy rather than exposing it to speculative global pricing.

The disconnect between the pricing formula and lived realities raises a more profound question: Is Indonesia's ethanol sector being asked to build a stable industry on unstable foundations? Without aligning pricing, supply allocation, and guaranteed market access, ethanol remains a product of chance rather than strategy. The future strength of the industry will depend not on new formulas, but on the willingness to link prices to real conditions and real commitments.

5.  Cassava: the untapped promise with political landmines

A crop can be abundant, adaptable, and scientifically promising, yet remain locked behind political caution. Cassava is one such crop.

Cassava offers an appealing opportunity to diversify Indonesia's ethanol feedstock portfolio, particularly given its widespread cultivation and adaptability to diverse soil conditions. However, its formal designation as a food-security crop complicates its role.  Categorisation positions cassava within national political discourse as a staple that must be protected, creating the perception that using fresh cassava as biofuel directly competes with household food consumption. As a result, any attempt to reallocate cassava from food to energy is treated with political sensitivity, unless the feedstock source is explicitly derived from agricultural waste streams, such as cassava pulp from starch production (Nuwamanya et al., 2011; Zhu et al., 2013).

The politics surrounding cassava are further intensified by the interests of the starch industry, which controls not only fresh root processing but also the flow of byproducts. Cassava pulp, despite being rich in residual starch and lignocellulosic matter, is not easily accessible to external users because its allocation is tightly managed. Yet the same cassava pulp presents a strong technical basis for ethanol production. Studies consistently highlight its capacity to yield fermentable sugars and to achieve efficient ethanol conversion when properly processed (Ezebuiro & Ogugbue, 2015; Archibong et al., 2016). Here, cassava pulp occupies an intriguing space: it supports biofuel development while reinforcing food security by ensuring that ethanol production relies on waste streams rather than edible raw materials.

Realising potential requires more than acknowledging the possibility. It demands coordinated industrial partnerships, investment in processing infrastructure, and technological adaptation tailored to cassava pulp's material characteristics. The technology necessary for effective pulp fermentation is already available, and several studies have demonstrated high ethanol yields under optimal pretreatment and enzymatic hydrolysis conditions (Ndubuisi et al., 2018; Krajang et al., 2021). The challenge, therefore, is not technical feasibility but establishing institutional trust and collaborative frameworks among farmers, processors, technology providers, and government agencies.

Strategically prioritising cassava pulp also offers a balanced pathway to expand renewable fuel production while maintaining adherence to national food policy commitments. By using pulp rather than fresh roots, Indonesia can reduce waste, increase industrial efficiency, and generate a new revenue stream for agricultural producers without disrupting food supply chains. The approach strengthens both energy resilience and farmer livelihoods by creating multiple value nodes within the same crop system.

Cassava's promise does not lie in replacing food with fuel; it lies in recognising value where it has long been overlooked. The real question is whether Indonesia can navigate the political landscape with enough clarity to transform cassava pulp from a byproduct into a cornerstone of sustainable energy strategy.

6.  Farmers face "input inflation" without yield growth.

When costs rise but harvests stay the same, something more profound than price is broken in the system.

Sugarcane farmers in Indonesia are experiencing a sharp increase in production costs, particularly for fertilisers, labour, and irrigation, which have risen by approximately 15–25 percent since 2021. However, yields remain largely stagnant, typically ranging from 55 to 70 tonnes per hectare, and often lower among independent smallholders.  The widening gap between rising inputs and unchanged outputs highlights an underlying structural challenge: farmers are spending more without producing more. Such a pattern signals inefficiencies in both farm management systems and broader agricultural support structures.

Several factors contribute to the stagnation. Many farmers continue to cultivate ageing sugarcane varieties that are no longer well-suited to changing environmental conditions or to emerging processing technologies. These varieties may still grow, but they do not perform at optimal productivity levels. Soil management practices further constrain yields. Maintaining soil fertility requires technical understanding and adaptive management, yet many farmers lack access to the agronomic knowledge needed to replenish soil nutrients effectively. In addition, limited mechanisation results in labour inefficiencies, especially in planting and harvesting. Fragmented irrigation systems complicate water management, causing uneven or insufficient distribution that directly suppresses yield potential.

To move beyond stagnation, changes must occur both at the farm and institutional levels. Improving productivity requires coordinated land management, where consolidation or cooperative land-use arrangements enable economies of scale. Without such arrangements, farmers struggle to adopt mechanisation and modern cultivation techniques that require larger or shared operational units. While government subsidies can temporarily reduce financial pressure, subsidies alone cannot solve systemic inefficiencies. Lasting improvement calls for integrated strategies that support innovation, technology transfer, and shared learning networks among farmers.

Introducing modern agricultural technologies can enhance efficiency, but robust support systems must accompany technology adoption. To make informed decisions, farmers require access to tailored extension services, credit mechanisms that align with productive investment, and reliable market information. Studies consistently show that farms adopting improved technologies achieve better technical and economic performance, yet adoption is slow when farmers are left to absorb the risk alone. Cooperative farming models offer a practical pathway, enabling resource pooling, cost reduction, and shared experimentation with improved practices.

The challenge is not merely that inputs are rising. It is that farmers are fighting alone, with outdated tools and fragmented support. The real breakthrough will come when the system begins to reward knowledge, collaboration, and soil stewardship as much as it currently rewards purchased inputs. Until then, yield growth will remain elusive, no matter how much farmers spend.

7.  Land rent fell, but not because farming got cheaper

When the price of renting land drops, many assume that agriculture has become more efficient. However, in Indonesia's recent case, the opposite is true.

The decrease in land rental prices observed around 2024 to 2025 should not be interpreted as evidence of reduced farming costs or improved agricultural performance. Instead, it reflects deepening financial stress among farmers and landowners. The decline signals that farming is becoming less profitable, forcing landowners to accept lower rental fees to keep their land cultivated. In a healthy agricultural economy, rising productivity and strong market prices would support stable or increasing rent values. Here, lower rents reveal a sector moving under strain rather than advancing through efficiency.

 The trend is intertwined with the declining profitability of key crops. As returns decline, landowners shift from fixed cash rental arrangements toward profit-sharing agreements. These sharecropping-style arrangements allow landowners to cope with uncertain market conditions, yet they also indicate shortages of liquid capital in farming communities. When cash flow is uncertain, landowners hedge risk by tying their income directly to seasonal yields rather than fixed rents. The adjustments reveal a system that prioritises short-term survival over stable income generation.

At the same time, farmers respond to rising production costs for fertiliser, labour, and irrigation by adjusting their cropping strategies. Many turn to shorter-cycle or lower-input crops when margins on traditional cash crops narrow. While these decisions help farmers manage immediate financial pressures, they also disrupt established planting patterns and reduce the land's long-term economic value. A system that encourages farmers to choose crops for survival rather than strategic development will naturally exert downward pressure on land rents, as the land itself becomes less able to sustain profitability.

These changes reflect a broader, often-overlooked reality: lower land rents are not always a sign of efficiency. They can instead mark a retreat from investment, technological adoption, and long-term planning. When farmers operate in a context of persistent uncertainty, they scale back, simplify, and seek flexibility. The cumulative effect is declining land value, not because the cost of farming has improved, but because it has become harder to sustain.

The drop in land rent is not an economic relief; it is a warning. It signals a silent erosion of confidence in the future of agriculture. The question now is whether Indonesia will intervene with policies that rebuild profitability, support knowledge-based farming, and restore land value, or allow the trend to deepen into a cycle of decline where land becomes cheaper because farming itself is no longer viable.

8.  Technology exists, but trust does not

Innovation alone does not change agriculture. People do. Moreover, when trust is missing, even the best technology sits unused.

Although Indonesia has access to a wide range of advanced agricultural technologies, including GPS-based field mapping, mechanical harvesters, and digital soil measurement tools, adoption among farmers remains relatively low—estimated at only 20 to 30 per cent. The challenge is not primarily technical. It is social and economic. Farmers often face high upfront investment costs, uncertain profitability, insufficient training support, and deep scepticism about whether these technologies genuinely serve their interests or mainly benefit larger agribusinesses (Grabowski et al., 2019; Jayashankar et al., 2018).  The environment underscores that trust and perceived fairness shape adoption just as much as efficiency or productivity gains.

The financial barrier is transparent. For many smallholders operating on thin margins and irregular cash flow, the risk of purchasing new machinery or digital tools is daunting. Rising production costs already limit their ability to experiment. If they are not confident that technology will improve yields or reduce labour, they naturally hesitate to invest (Ryan, 2022). Maintenance expenses often deepen hesitation. Modern equipment requires ongoing technical support that rural areas may not be equipped to provide, reinforcing the fear that breakdowns could become liabilities rather than assets (Raturi et al., 2022).

Training gaps further reinforce resistance. Many farmers have limited exposure to structured, hands-on technical learning. Without clear guidance, the promise of technology feels abstract and uncertain. Where knowledge transfer is weak, the perception of risk becomes more substantial than the hope of benefit (Hua-wei et al., 2022).  Dynamic is not merely practical but psychological. If farmers do not feel confident or respected in the learning process, adoption becomes even more unlikely.

Trust shapes all of these decisions. If farmers believe that technology primarily favours larger, wealthier producers, they may conclude that adopting such innovations will only widen inequality (Alexander et al., 2023; Zhou et al., 2023). Trust is not built through instruction manuals or price subsidies. It is built through relationships, shared learning, and credible local examples. When farmers see their neighbours succeed with new practices under conditions similar to their own, technology begins to feel relevant rather than imposed.

Partnership-based approaches offer a pathway forward. Demonstration plots, cooperative equipment ownership models, farmer-to-farmer learning networks, and community-led training programs can reduce perceived risks and show practical outcomes (Ren et al., 2022). These approaches also shift technology adoption from being an individual gamble to a collective progression. When training includes not only how to operate equipment but also how it affects long-term soil health, labour efficiency, and income stability, technology becomes a tool that supports resilience rather than uncertainty (Hua-wei et al., 2022).

The technology needed for more productive and sustainable agriculture is already here. The missing belief is that it belongs to everyone, not just those who are already privileged. The future of Indonesia's farming system will depend not solely on machines and data, but on whether farmers feel included, respected, and supported in the process of change.

9.  Indonesia is caught between two ministries

Even with the right resources, technology, and ambitions, a country can fail if its institutions lack alignment. Indonesia's bioethanol story is a clear example of how misaligned institutions can hinder progress.

Indonesia's bioethanol policy currently operates within a divided governance structure. The Ministry of Energy and Mineral Resources (ESDM) is responsible for shaping renewable fuel targets and determining ethanol blending requirements. Meanwhile, the Ministry of Agriculture (Kementan) regulates the feedstocks that make ethanol possible, including sugarcane, molasses, and cassava. Each ministry holds authority over a critical piece of the value chain, yet they work in parallel rather than in coordination. Their data systems, program objectives, and budget allocations remain largely independent. As a result, the policy environment becomes fragmented, making it impossible to sustain the success of one ministry without corresponding action from the others.

 Separation creates practical inefficiencies. ESDM may advance blending mandates to support renewable energy goals, but if Kementan does not align farm-level production incentives or feedstock supply planning, ethanol producers are left without the raw materials needed to meet the target. Similarly, if energy-market regulations fail to ensure stable demand, increases in agricultural output do not automatically translate into expanded fuel production. Inertia or constraints in one domain repeatedly neutralise progress in the other.

Effective bioethanol development requires policies to be synchronised across the entire chain—from land planning and crop support to milling efficiency, logistics, pricing frameworks, blending mandates, and consumer fuel distribution. Around the world, successful transitions to biofuel economies have relied on horizontal integration among ministries and vertical integration linking national directives to provincial and local implementation systems. Each sector advances its priorities when governance remains siloed, ignoring the dependencies that define shared outcomes.

Creating an integrated bioethanol authority would provide a mechanism to unify these frameworks. Such an institution could harmonise standards, coordinate feedstock allocations, facilitate shared data platforms, align subsidies or investment incentives, and ensure that policy shifts in one domain do not unintentionally destabilise another. With shared planning and accountability, Indonesia could replace fragmented efforts with coherent progress, reducing volatility for farmers, mills, and fuel producers.

Indonesia's challenge is not merely technical. It is institutional. The system must learn to govern energy and agriculture as interdependent elements of the same strategy; otherwise, bioethanol will remain a promising vision that never fully materialises. The question is whether Indonesia can move from two ministries working side by side to one coordinated effort working toward a shared national future.

10.     The public does not see ethanol as an energy issue, only as sugar's cousin

It is possible for a renewable fuel to be both visible and invisible. In Indonesia, ethanol has potential, but not in narrative.

In Indonesia, ethanol is widely perceived as a derivative of the sugar industry rather than as a strategic renewable fuel.  Initiatives like the B35 programme have successfully positioned biodiesel as a national achievement, in stark contrast to the perception of ethanol. Biodiesel is recognised as an energy source. Ethanol, however, remains seen as "sugar's cousin" a secondary output rather than a primary contributor to energy security.  Invisibility limits ethanol's political influence, budget allocation, and relevance in public discussions about energy transition.

Public perception matters because visibility drives funding and policy priorities. Biodiesel has benefited from strong government messaging, industry alignment, and a narrative that connects it to national pride and economic independence. Ethanol never received the same narrative infrastructure. Its identity is tied to sugarcane mills, molasses markets, and agricultural pricing disputes rather than clean energy targets or national decarbonisation efforts. As a result, ethanol struggles to gain the political capital necessary to advance beyond pilot-scale and intermittent production.

 The institutional divide between the Ministry of Energy and the Ministry of Agriculture further reinforces perception. The Ministry of Energy focuses on blending mandates and energy diversification, while the Ministry of Agriculture manages feedstock policies and farmer livelihoods. When ethanol is framed as an agricultural commodity rather than a fuel, its development remains overshadowed by the more visible biodiesel sector, which benefits from palm oil's strong domestic industry and lobbying power. Without linked goals, aligned data systems, and coordinated investment strategies, ethanol remains trapped in a supporting role.

The lack of a unified public narrative also undermines investment confidence. When the public does not recognise ethanol as part of the nation's energy future, the private sector sees a signal of uncertainty. Research, infrastructure expansion, and conversion technologies require long-term stability, but stability cannot form without shared belief in ethanol's strategic relevance. Public trust, corporate commitment, and policy momentum are intertwined.

Ethanol's greatest challenge is not chemistry or technology, but identity. Until Indonesia chooses to tell a story in which ethanol is energy, not sugar's byproduct, the fuel will remain underused and undervalued. The future of ethanol depends not only on what the country can produce but also on what it chooses to believe about it.

11.     Academia and research are advanced but disconnected from policy rollout

Innovation does not pose a challenge. Indonesia has the science, the laboratories, and the prototypes. What is missing is the bridge that carries ideas from research rooms into real fields and factories.

Indonesia's bioethanol sector reveals a striking gap between sophisticated academic research and its practical implementation in agricultural and industrial systems. Institutions such as BPPT, LIPI, and P3GI have developed technologies ranging from hydrolysis enzymes to improved distillation systems and vinasse treatment methods. However, these breakthroughs rarely progress beyond pilot facilities. Many pilot plants serve as isolated demonstrations rather than as starting points for industrial expansion, mainly because funding cycles are short and inconsistent, unable to sustain the long-term processes required to translate laboratory success into scalable production (Rivai, 2022; Sajida, 2022).

The core issue is not innovation capacity but the absence of institutional continuity. Research programs frequently begin with promising momentum only to lose support before they mature into commercially viable applications. Lack of longevity in funding structures leads to institutional memory fading and a failure to transfer lessons learnt into ongoing industrial or policy planning.  creates a cycle where Indonesia repeatedly rediscovers solutions it has already invented, rather than implementing and scaling them (Kusumawardani et al., 2021; Haryatie et al., 2023).

Policy fragmentation exacerbates these challenges. Research that could inform feedstock strategies, refinery upgrading, or energy diversification remains siloed because agricultural and energy authorities operate under separate mandates. Without a common platform that forces shared planning, promising innovations remain disconnected from real market ecosystems. As a result, research outcomes do not meaningfully influence the design of industrial policy, investment priorities, or procurement standards (Nurhasan et al., 2021; Ardiansyah et al., 2024).

 Disconnect is not inevitable. Countries that have successfully integrated biofuel research with industrial rollout such as Brazil have done so through stable funding systems, cross-ministerial coordination, and strong public-private partnerships. Indonesia could adopt similar approaches. Long-term funding frameworks, multi-stakeholder research consortia, and shared evaluation metrics would strengthen continuity. If research institutions built structured partnerships with mills, smallholders, and technology developers, bioethanol innovation could shift from isolated prototypes to interconnected value chains (Sajida, 2022; Miryanti et al., 2023).

Indonesia's research capacity is not a barrier. The science is in place. The question is whether the country will create a system that allows knowledge to move steadily, deliberately from laboratories into landscapes. Indonesia's ability to sustain, coordinate, and scale bioethanol production will determine its future.

 

12.     The ethanol dream keeps being recycled every decade

Every ten years, a nation repeats the same dream, recycling not only ambition but also the same unresolved problems.

Indonesia's bioethanol development history reveals a recurring cycle of enthusiasm, policy launches, and eventual stagnation. The 2006 Biofuel Presidential Decree, the 2010 E3/E5 pilot programme, the 2015 Bioenergy Grand Strategy, and the 2023 E5 Relaunch each emerged with optimism and national rhetoric about energy independence. However, each initiative encountered the same structural constraints: uncertain feedstock availability, volatile pricing, and fragmented coordination between agriculture and energy institutions. The pattern suggests not a failure of technological innovation, but a deeper institutional inertia that continues to limit the sector's progress.

Despite advances in bioethanol conversion efficiency, such as improvements in hydrolysis enzymes, fermentation optimisations, and distillation technologies, these innovations have not translated into stable industrial production (Kusumawardhani et al., 2022). Instead, each new policy cycle introduces revised slogans and technical strategies without confronting the systemic issues that have persisted across decades. The result is a repeated relaunching of bioethanol as if it were a new idea, rather than an unfulfilled one.

Feedstock dependence is at the centre of repeated stagnation. Reliance on sugarcane and molasses ties ethanol output to agricultural fluctuation, price competition, and mill-level priorities, which are themselves unstable (Agustian et al., 2021). When sugar supply tightens, molasses disappears from domestic ethanol channels. When prices rise, mills prioritise their exports. These recurring bottlenecks re-emerge with each policy cycle, stalling momentum just as progress begins to form.

Institutional misalignment compounds the issue. Energy policies are formulated independently from agricultural policies, and the absence of a cross-sector authority allows each ministry to pursue its own logic. Without integrated governance, the capabilities of one sector routinely fail to support the goals of the other (Kusumawardhani et al., 2022). On paper, efforts may progress, yet they stagnate in practice due to the implementation system's lack of structural design for coordination.

Public perception further shapes the cycle. Biodiesel has secured national narrative visibility through campaigns like B35, whereas ethanol remains obscure in public discourse. With low recognition comes low political investment. Without political investment, funding remains limited. Moreover, without sustained funding, programmes fade from view—until they are revived again a decade later (Tjahjono et al., 2021). The cycle repeats because no single cycle builds lasting institutional memory.

Indonesia does not lack the science, the policy blueprints, or the ambition to scale bioethanol. What it lacks is continuity, coordination, and narrative ownership. The next generation of ethanol will not succeed by launching yet another program. It will succeed only when the country decides to stop returning to the same starting point and instead builds a system capable of carrying momentum forward. The real question is whether Indonesia is ready to break the cycle or repeat it once more in the next decade.

 

Rich Land, Unreached Hands

The story of ethanol in Indonesia is not simply a matter of production capacity or technological readiness. It is a window into deeper structural patterns that shape how agriculture, industry, and energy policy interact or fail to interact.

The challenges faced by ethanol producers are not rooted in a lack of appropriate technology. Boilers, fermentation agents, and distillation systems are widely understood and available. The difficulty lies in the ecosystem surrounding them. Farmers, mill operators, and policymakers each operate within different incentive structures, time horizons, and risk perceptions. These differences create misalignment, making it challenging to coordinate a stable, long-term bioethanol strategy.

Indonesia's history with ethanol reflects a pattern of misalignment. National initiatives have appeared repeatedly, roughly once every decade: the 2006 Biofuel Presidential Decree, the 2010 E3/E5 Bioethanol Pilot Program, the 2015 Bioenergy Grand Strategy, and most recently, the 2023 E5 Relaunch. Each policy cycle began with optimism but ended with familiar obstacles. Feedstock uncertainties, volatile pricing, and fragmented governance prevented sustained implementation.  Repetition reveals a deeper issue: the barriers are structural, not technical. Policies shifted, but the system surrounding ethanol did not.

Smallholder farmers illustrate tension clearly. Many operate with thin margins and limited cash flow, prioritising short-term survival over long-term investment in feedstock systems aligned with energy goals. Meanwhile, mills respond to global and domestic price signals rather than national energy narratives. Policymakers, working within ministry-specific mandates, set targets that do not always correspond to conditions on the ground. These differing realities create a persistent gap between strategy and practice.

Moving forward requires reframing sugarcane agriculture, molasses allocation, and renewable energy planning as interdependent rather than separate domains. A cohesive approach would align incentives across the value chain, promoting cooperation rather than competition. Establishing a cross-ministerial bioethanol authority could help harmonise policies, coordinate budgets, and standardise data sharing. Strengthening communication channels between farmers and mills would also help ensure that shared goals rather than isolated interests guide feedstock decisions.

The future of Indonesia's ethanol sector will depend on tackling structural fragmentation as seriously as technical optimisation. Sustainable progress requires long-term policy continuity, integrated governance, stable market commitments, and shared incentives that link agricultural livelihoods with energy security.

 

Indonesia has never lacked the vision to pursue bioethanol. What it has lacked is a system capable of carrying that vision forward. If the country can finally integrate the pieces of the ecosystem farmers, feedstocks, mills, and ministries then the ethanol dream will no longer need to be recycled every decade. It can, instead, become reality.

 

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4.      Diagnostics of the efficiency and assessment of the possibilities of bioethanol production at sugar beet industry enterprises and distilleries in Ukraine 10.33223/epj/135586 Grygorii Kaletnik, Natalia Pryshliak, Yana Palamarenko Polityka Energetyczna – Energy Policy Journal Polityka Energetyczna – Energy Policy Journal Instytut Gospodarki Surowcami Mineralnymi i Energia Polskiej Akademii Nauk 137-156

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