The Indonesian Spirit and Ethanol Producers Association (APSENDO) has identified a significant opportunity for biofuel production, pointing to an untapped “free stock” of one million tons of molasses. By 2025, Indonesia is projected to produce approximately 1.9 million tons of molasses, or sugarcane drops, yet only about 900,000 tons are currently being utilized.
“Crucially, every four kilograms of sugarcane molasses can generate one liter of ethanol. This translates to a potential 250,000 kiloliters of ethanol that remains unoptimized, excluding its applications in food,” stated Izmirta Rachman, Chairman of APSENDO, during the ‘Bloomberg Technoz Ecoverse 2025’ discussion held on Thursday (20/11).
Izmirta also highlighted Indonesia’s consistently low molasses export performance. This challenge stems from the absence of a structured molasses trading system in the country. Consequently, an undesirable surplus of molasses has accumulated at both the farmer and sugar factory levels.
Another significant hurdle is the concentration of molasses-processing plants predominantly on Java Island. This geographic imbalance makes it difficult for sugar factories and farmers located outside Java to efficiently distribute their excess molasses, creating a bottleneck in the supply chain.
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Request to Abolish Bioethanol Excise Tax
Izmirta revealed that with an abundance of raw materials, stagnant exports, and low energy and non-energy absorption, molasses is ideally positioned for biofuel production. To facilitate this, APSENDO is proposing the abolition of the excise tax for fuel-grade bioethanol.
“Currently, the excise tax is IDR 20,000 per liter, which adds IDR 1,000 to the price of Pertamax Green,” he explained. According to Rachman, removing this excise duty would significantly boost public uptake of bioethanol and provide considerable relief and operational flexibility for the industry.
Caution Regarding Deforestation
Putra Adhiguna, Managing Director of the Energy Shift Institute, noted various complexities in the utilization of sugarcane molasses. These range from the mentioned oversupply to instances of imports, and critically, the potential for deforestation that could arise from expanded production.
Adhiguna emphasized that the oversupply identified by APSENDO should be the immediate priority. He argued that since the product already exists, the focus must be on finding effective methods for its utilization. “First, utilize what is already available, then discuss other options,” Putra urged.
His remarks serve as a vital reminder that the pursuit of biofuel utilization must not compromise food security or exacerbate deforestation rates in Indonesia. A thoughtful and sustainable approach is essential to harness this potential without unintended negative consequences.
Summary
The Indonesian Spirit and Ethanol Producers Association (APSENDO) has identified a significant opportunity for bioethanol production from an untapped one million tons of molasses. Indonesia is projected to produce 1.9 million tons of molasses by 2025, but only 900,000 tons are currently utilized, leaving substantial potential for ethanol. Challenges include low export performance due to a lack of a structured trading system and the concentration of processing plants predominantly on Java, hindering efficient distribution.
To facilitate bioethanol production, APSENDO proposes abolishing the IDR 20,000 per liter excise tax for fuel-grade bioethanol, which currently adds IDR 1,000 to Pertamax Green. This removal aims to boost public uptake and provide industry relief. Experts, however, caution to prioritize the utilization of existing molasses oversupply and ensure that expanded production avoids deforestation and safeguards food security.
