In this file photo from November 19, 2005, a labourer is seen working at a palm plantation on the outskirts of Medan, North Sumatra. — AFP
INDONESIA’S biodiesel programme is widely celebrated as a national success story, a clean-energy solution built on local resources and financed by our own palm-oil industry.
The B35 mandate, which mixes biodiesel into regular diesel, has become a symbol of energy independence.
Few developing countries can claim such scale or self-reliance.
The programme’s financial backbone, the Palm Oil Fund or BPDPKS, collects export levies from palm oil companies and redistributes them as subsidies to biodiesel producers.
According to Reuters, more than 10 trillion rupiah (US$630mil) from the export levies was allocated for biodiesel subsidies this year.
Behind the pride and production numbers lies a deeper question: What kind of transition have we actually built?
Stability has been achieved, yes, but often at the expense of adaptability, fairness and environmental integrity.
Indonesia’s green energy still runs, in many ways, on the same old economic and political rules.
When biofuels first appeared in Indonesia’s national plans in the mid-2000s, they carried a hopeful promise.
The government, supported by international donors, promoted jatropha, cassava and other local crops as “pro-poor” energy sources.
The idea was simple: rural communities could grow biofuel feedstocks, earn extra income and reduce dependence on imported oil. But by the early 2010s, that plural vision had faded.
Palm oil – already a dominant export commodity – quickly became the most practical and politically powerful option.
By 2023, oil palm plantations covered more than 16 million ha, according to the Agriculture Ministry.
The 2015 creation of BPDPKS through Government Regulation 24/2015 made this dominance permanent.
Export levies feed the fund; the fund pays subsidies and subsidies guarantee continuous demand.
It’s an elegant loop that keeps the system running, but also keeps it closed.
Data from the BPDPKS 2022 Annual Report showed that over 80% of its disbursements went to large biodiesel producers, while smallholder replanting and sustainability programmes together received less than 15%.
What began as an inclusive experiment in rural energy has hardened into a top-down industrial regime, where benefits flow upward and accountability flows nowhere.
This stability is not accidental, it is designed into the system.
Over two decades, rules – not technologies – have shaped the direction of Indonesia’s transition.
Regulations, fiscal instruments and political narratives have combined to make palm oil almost synonymous with national pride.
These rules have done three things exceptionally well – they institutionalised biofuel policy through enduring laws and budgets; they coupled energy and finance through a closed fiscal circuit; and they aligned national identity with palm oil expansion.
Together, they built what might be called an architecture of stability, a system efficient on paper but exclusionary in practice.
Procedural participation, indigenous knowledge and ecological repair have become secondary concerns.
The outcome is paradoxical: a renewable-energy programme that sustains production but reproduces inequality.
As Global Forest Watch data showed, Indonesia lost 9.6 million ha of primary forest between 2002 and 2023, much of it in provinces where biodiesel feedstock expansion overlaps with oil palm concessions.
We have, in effect, built a renewable version of the same extractive model we aimed to replace.
Now, the world around us is shifting.
The European Union’s Deforestation-Free Regulation, adopted in 2023, will restrict imports of palm-based fuels linked to forest clearing.
Financial investors guided by enviromental, social and governance standards are questioning the transparency of the palm oil fund, according to a Bloomberg report.
At home, civil-society groups such as Sawit Watch and TuK Indonesia continue to document how smallholders remain excluded from decision-making, even as they bear the social and environmental costs.
These developments are not threats, they are signals.
Furthermore, they tell us that the rules built for stability now need to be rewritten for justice.
Reform does not mean dismantling the biodiesel programme.
It means redirecting its purpose: rewarding ecological restoration, investing in diversified feedstocks and ensuring that farmers, cooperatives and local administrations have a real voice in governance.
Energy sovereignty should not only mean fiscal independence from foreign oil, but also fairness and accountability within our own borders.
After 20 years, one lesson stands out: stability is not transformation. Indonesia has proven that it can design a renewable-energy system that lasts, but endurance is not the same as progress.
A just transition demands more than fuel blending; it requires rethinking who benefits, who decides and how nature is valued.
Reforming the biofuel regime is not a retreat from development.
It is an evolution of it.
If Indonesia can ground its next energy chapter in justice as deeply as it once grounded it in palm oil, it can lead not only in biodiesel production but also in showing how a nation learns from its own achievements and changes its rules before those rules change its future. — The Jakarta Post/ANN
Rahmat Riyadi is a researcher at Utrecht University focusing on sustainability transition and energy justice. The views expressed here are the writer’s own.
