The development of ethanol supply in Indonesia in recent years has shown complex dynamics. On one hand, ethanol is increasingly viewed as a strategic commodity due to its potential role as both an industrial raw material and a renewable fuel. The Indonesian government has begun promoting the use of bioethanol as a gasoline blending component to reduce dependence on imported fossil fuels and support the transition toward cleaner energy. Plans have even been discussed to introduce gasoline blended with 10% bioethanol (E10) in the coming years as part of the country’s strategy to strengthen energy security. However, the implementation of this program has been delayed mainly due to limited domestic ethanol supply.
Despite growing demand, the development of ethanol supply in Indonesia is still constrained by limited production capacity. Currently, Indonesia has around 13 bioethanol producers located across several regions, with a total production capacity of about 365 thousand kiloliters per year. However, only a small number of these producers are able to manufacture fuel-grade ethanol, which is required for gasoline blending. In fact, only a few companies are capable of producing fuel-grade ethanol at around 40 thousand kiloliters annually, while most other producers focus on supplying ethanol for industrial uses such as food, pharmaceuticals, and chemicals.
Another important factor affecting ethanol supply is the availability of raw materials. In Indonesia, ethanol production largely depends on molasses, a by-product of the sugar industry. Although the country produces significant quantities of molasses, its utilization for ethanol production remains limited. For example, Indonesia produced about 1.9 million tons of molasses in 2025, yet only around 900,000 tons were absorbed by industry, leaving roughly 1 million tons unused. This surplus could potentially produce up to 250,000 kiloliters of ethanol, indicating that Indonesia still has considerable untapped potential in expanding ethanol production.
In response to these challenges, the government and industry stakeholders have started to encourage the expansion of the domestic bioethanol industry. Strategies include diversifying feedstocks beyond sugarcane molasses, such as cassava, corn, and other agricultural biomass, and promoting investment in new ethanol plants and biorefineries. If these initiatives are successfully implemented, Indonesia could significantly increase its ethanol supply, reduce reliance on imports, and strengthen the development of its renewable energy and bio-based chemical industries in the coming years.
For a deeper understanding of ethanol supply development in Indonesia, please visit the link below.
https://cciid.gumroad.com/l/MARKETPROSPECTOFETHANOLININDONESIA