As part of its energy transition roadmap, Indonesia is embracing biomass co-firing as a key decarbonization strategy. With ambitions to reach 23% renewable energy by 2025 and achieve net-zero emissions by 2060, the government is transforming over 100 coal-fired power plants to integrate biomass. By 2045, this initiative aims to replace 9 million tons of coal and reduce 53 GW of installed coal capacity.
Biomass co-firing offers a practical, cost-effective way to reduce carbon emissions while maintaining grid reliability. Recognizing this potential, the government has introduced incentives such as renewable energy certificates and tariff subsidies. However, a fixed biomass price ceiling (tied to subsidized coal) has created pressure on suppliers, highlighting the need for stronger economic support mechanisms.
In terms of infrastructure, significant strides have been made. The Ministry of Energy and Mineral Resources (“MEMR”) has developed pyrolysis technologies that convert agricultural waste into coal-like fuels, improving compatibility in existing boilers. Meanwhile, PLN has promoted community-based models that turn unused land around power plants into hubs for energy crops, supporting both energy resilience and rural livelihoods.
Biomass co-firing holds massive potential as the transitional solution in Indonesia’s energy mix. In an attempt to strengthen the program, Indonesia would benefit from differentiated subsidies that reward the use of locally sourced biomass, reducing reliance on imports. Subsequently, providing funding to upgrade older plants with CFB technology would also allow for more flexible fuel use and better efficiency.
Drawing on lessons from countries like China, could enhance Indonesia’s strategy through better biomass mapping, clearer standards, and integrated supply chain planning. This in result introduces new opportunities for investors to partner with local biomass producers and in EPC contracts for retrofitting projects.
If you, a prospective client, have further inquiries about the topic discussed above, Schinder Law Firm is one of the leading corporate law firms in Indonesia, with extensive experience handling similar matters. Our team of professional corporate and civil lawyers makes us one of the top consulting firms in Indonesia. Feel free to contact us at info@schinderlawfirm.com for further consultation.
Author:
Dewi Susanti