Feedstock and Policy Gaps Put Indonesia’s Bioethanol Targets at Risk
Indonesia has established targets for sugar self-sufficiency and sugarcane-based bioethanol, but domestic feedstock remains insufficient. Low sugar recovery, land constraints, financing risks and continued raw sugar imports complicate plans to support E5–E20 fuel blending.
Bioethanol policy rests on sugar self-sufficiency
Indonesia’s plan to expand bioethanol use is confronting a basic supply problem: the domestic sugarcane industry is not yet producing enough competitive feedstock. Katadata reports that Presidential Regulation No. 40 of 2023 links national sugar self-sufficiency with the provision of bioethanol as a renewable fuel, combining food security, farmer income, industrial supply and energy policy within one framework.
The 2030 roadmap calls for sugarcane productivity of 93 tonnes per hectare, a total planted area of 700,000 hectares and mill recovery of 11.2%. It also targets at least 1.2 million kilolitres of sugarcane-based bioethanol. Consumer sugar self-sufficiency is due by 2028, while industrial sugar requirements and higher bioethanol output are to be addressed by 2030.
These objectives underpin plans for bioethanol blends ranging from E5 to E20, intended to reduce Indonesia’s reliance on imported gasoline. Yet Katadata says the programme continues to face three connected requirements: reliable raw materials, accessible financing and regulatory certainty. Without them, a blending mandate would risk advancing faster than domestic production capacity.
Yields improve while sugar recovery declines
Official plantation data cited by Katadata show sugarcane productivity reaching 69.35 tonnes per hectare in 2025, up from 63.78 tonnes per hectare in 2024. The recovery rate moved in the opposite direction, falling to 6.83% from 7.42%. Both indicators remain well below the 2030 targets, demonstrating that expanding cultivation alone will not deliver the required sugar and ethanol volumes.
The constraints extend across farms and mills. Sugarcane is sometimes harvested before reaching optimal maturity, improved planting material is limited, climate anomalies affect crops and ageing factory infrastructure restricts efficiency. Katadata argues that mechanisation and more transparent recovery measurement, including core-sampler technology, could reduce disputes between farmers and mills while improving operational discipline.
Reaching 700,000 hectares does not require 700,000 hectares of entirely new plantations. According to Katadata, Indonesia needs to add nearly 200,000 hectares to reach the total. The Agriculture Ministry’s expansion plans, however, have not yet received concrete land-procurement support from the Ministry of Agrarian Affairs and Spatial Planning/National Land Agency. Land suitability, spatial planning, environmental safeguards and infrastructure will determine whether new projects can control production costs.
Imports and alternative crops remain necessary
Indonesia is expected to remain heavily dependent on imported raw sugar during the transition. The 2025 Sugarcane Plantation Commodity Outlook projects imports of about 5 million tonnes annually from 2025 through 2028 because domestic output cannot cover consumption. The government nevertheless targets zero raw sugar imports in 2030, when domestic cane mills would be expected to supply the country’s 11 existing sugar refineries.
That policy creates a cost challenge because domestically produced raw sugar is projected to be substantially more expensive than imports. Katadata says incentives will therefore be needed to keep local producers competitive, alongside technical regulatory changes and formal assignments for cane-based mills to manufacture raw sugar. Frequent changes to rules have already increased uncertainty for prospective investors in integrated plantations and processing facilities.
Sugarcane alone may also be unable to supply the 1.2 million kilolitres of ethanol required to support an E10 programme. Based on projected molasses production in 2030, Katadata says Indonesia will need other feedstocks, including cassava, corn and additional biomass sources. Treating sugarcane as the foundation of a broader economy producing sugar, molasses and ethanol could improve plant economics, but it will not eliminate the need for feedstock diversification.
Implementation now depends on coordination among ministries, state-owned companies, private investors, local governments and farmers. The existing rules include Energy and Mineral Resources Regulation No. 4 of 2025 and Industry Regulation No. 47 of 2024, which prioritises domestic raw materials for the sugar industry. Katadata proposes a dedicated coordinating institution modelled on the plantation fund management body to align policy, financing and land provision. The central test is whether Indonesia can expand and modernise its sugar industry quickly enough to meet food and fuel targets without creating an uncompetitive domestic cost base.
