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Indonesia Gearing towards Bio-ethanol – Next Generation Energy Fuel and its
Challenges?
Ratneswary Balasingam, Research Analyst
Chemical, Materials and Food11 November 2008
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Focus Points
4
5
3
1
2 Cassava & Molasses : Sustainable Feedstock
Benchmarking Indonesian Bio-ethanol :Market Size and Projections
Key Drivers , Trends & Initiatives
Key Challenges
Conclusion: Achieving the Ultimatum
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Benchmarking Indonesian Bio-ethanol
Market Size and Projections
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BIOETHANOL Next Generation Energy Fuel…
� The idea of using bio-ethanol or ethyl alcohol, based on starch and
sugar, to power cars and other vehicles is not new to the market. As predicted by Henry Ford in 1925, "the fuel of the future is going to come from fruit like sumac...or from apples, weeds, sawdust - almost anything. There is fuel in every bit of vegetable matter that can be fermented. There's enough alcohol in one year's yield of an acre of potatoes to drive the machinery necessary to cultivate the field for a hundred years."
� Nowadays with the uncertainty in price of crude oil, increasing concern for the environment and global warming, and the likelihood that exploitable oil reserves will come to an end.
BIOETHANOL Next Generation Energy Fuel…
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Indonesia Gearing towards Bio-ethanol
� Effects of high petroleum and natural gas prices, decline in production of crude
fossil oil due to aging oil fields has led Indonesia to seek opportunities in bio-
fuel production (bio-ethanol and bio- diesel).
� "Mandatory Bio-fuel Policy" which states the use of a 1-5 percent blend of bio-
ethanol and 99-95 percent of gasoline for transportation will become
mandatory in 2010.The program started in 2006 developed in stages.
� This study cover the 3 main categories/grades
� Bio-ethanol (hydrous ethanol) – technical/raw spirit/industrial grade.
� Bio-ethanol (hydrous ethanol) – high quality food and beverages
grade.
� Bio-ethanol (anhydrous ethanol/ dry ethanol) – fuel grade ethanol
(FGE)
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Indonesia Gearing towards Bio-ethanol
� Over 10 factories have invested in bio-ethanol production in 2008.However:
� In-sufficient to meet the requirement at 5% of FGE in 2010 under current
production methods.
� Investment to setup a 8 kilo liter per day bio-ethanol plant is estimated
around USD7.38 million in 2007. ( small holders)
� Looking into technologies based on cellulose derived from crop residues
or bio-mass (baggase, rice straw etc). Bio-ethanol is mostly derived using
C molasses method in Indonesia.
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Market Revenue and Projection
Market Size by Revenue (2005Market Size by Revenue (2005--2010)2010)
► Bio-ethanol Market is valued at USD160.5 million in 2008
• Competitive Market with an average of 10 active market players.
• Market Revenue is estimated at USD160.5 million in 2008 and is
expected to grow to USD 244.8 million in 2010.
• CAGR from 2008 to 2010 is estimated to be 23.51%, compared to CAGR
from 2005 to 2008 is 6.97%.
• Competitive Market with an average of 10 active market players.
• Market Revenue is estimated at USD160.5 million in 2008 and is
expected to grow to USD 244.8 million in 2010.
• CAGR from 2008 to 2010 is estimated to be 23.51%, compared to CAGR
from 2005 to 2008 is 6.97%.
Va
lue
(U
SD
Mill
ion
)
Year-
50
100
150
200
250
300
2005 2008 2010
Increase in CAGR is
estimated, as
production for fuel
grade bio-ethanol
increases
CAGR : 23.5%
CAGR : 6.97%
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Market Volume & Projection
Market Size by Volume (2005Market Size by Volume (2005--2010)2010)
► Bio-ethanol Market is volume at 205,753 tones in 2008
Vo
lum
e (
MT
‘000
)
Year-
50
100
150
200
250
300
350
2005 2008 2010
• Market Volume is estimated at 205,753 tones in 2008 and is expected to
grow to 330,851 tonnes in 2010.
• CAGR from 2008 to 2010 is estimated 26.8 % compared to CAGR from
2005 to 2008 is 7.4%.
• Market Volume is estimated at 205,753 tones in 2008 and is expected to
grow to 330,851 tonnes in 2010.
• CAGR from 2008 to 2010 is estimated 26.8 % compared to CAGR from
2005 to 2008 is 7.4%.
Production is
expected to rise by
~125,000 tonnes,
charge up mainly by
the Mandatory Bio-
fuel Policy.
CAGR : 26.8%
CAGR : 7.4%
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Key Industry Participants
Industry
Grade
55%
Fuel Grade
18%
Beverages
Grade
27%
PT Indo
Lampung
Distillery
20%
Others
37%
PT Molindo
Raya Industrial
24%
PT Indo
Acidatama
Chemical
19%
Market Share by Top 3 Players (2008)Market Share by Top 3 Players (2008)
Share by End Use Share by End Use
Application (2008)Application (2008)
Source: Frost & Sullivan,2008
Note :Others include :PT Rhodia Manyar,PT Medco Energi
Internasional Tbk,PT Madu Baru,PT Perkebunan
Nusantara XI, PT Basis Indah,B2TP,BPPT ,PT. Medco
Etanol Lampung
Note :
Industry grade (Ethanol 95-96% (hydrous ethanol) -technical/raw spirit used as spirits,
disinfectants and solvents - other industrial grade used as chemical solvents
Beverages Grade (Ethanol 95-96% (hydrous ethanol) -high quality beverages
Fuel Grade Ethanol (FGE) (Ethanol >99.5% (anhydrous ethanol/ dry ethanol) – fuel
grade and pharmaceuticals.
► Bio-ethanol Market is valued at 205,753 tones in 2008
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Cassava & Molasses
Sustaining Feedstock
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Introduction
� Feedstock used for producing bio-ethanol in Indonesia
�Sugar Cane
�Cassava
� Sugar Cane is a primary feedstock for sugar production in Indonesia.
Bio-ethanol is derived from molasses a by product of sugar product.
Indonesia is yet to be self sufficient in sugar production.
�Cassava is relatively new to be used as a feedstock in Indonesia.
Currently, focused feedstock for bio-ethanol production for rural areas in
Java.
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Planted Areas
Java>60% of Sugar Cane planted
Indonesia (2006)Sugar Cane: ~344,000 ha Cassava : ~ 650,000 ha
Sugar Cane- around 40 per cent of sugar cane in Java is grown on wet land so yields are low;- 50% of cane producers are small holders ,the average size is less than half a hectare- inefficient management practices and sugar mills are small and use outdated technology
Lampung>25% of Sugar Cane plantedOwned by sugar factory , new plant
Indonesia (2010)Sugar Cane: 750,000 ha Cassava : 1,500,000 ha
Cassava-2nd staple food, beyond SSL rate-Potential FGE production in 2007 - Producers are mainly small holders producing cassava chips while bigger players producer starch.- Currently yield level is 15-18 tons/ha, new variety will be introduced ,IDB Superior Cassava (ISC) yield level 150 tons/ha, introduced to Java.
Java~ 50% of cassava plantedIDB Superior Cassava (ISC) yield level 150 tons/ha, will be introduce to cover 90,000 ha
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Processing Routes (Molasses)
Molasses is a thick, dark syrup produced by reducing juice from sugar cane. Bio-ethanol is
produced from molasses, however it can be produced through bagasses and sugar cane also.
Bio-ethanol Production from Molasses
Bagasses Sugar MolassesFilter Cake
Sugar Cane
Power Plant
Electricity
Bio- Compost/Feed Plant
Compost/ Feed
Fermentation
Distillation
Dehydration
Ethanol 99.5%
GASOHOL
24% 8% 63% 5%
Spent Wash
Ethanol is made from sugar cane
through the molasses method, the
sugar production of is not disrupted
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Processing Routes (Cassava)
Cassava chips are produced by local smallholders.
Bio-ethanol Production from Cassava.
Cassava Chips Starch
Cassava Roots
Pellet /
Consumption
Modified Starch
Milling
Liquefaction by
alpha amylase
Saccharification &
Fermentation (Baker’s Yeast)
Filtration & Distillation Ethanol 99.5% GASOHOL
Sand Separation
+ CaO (calsium oxide)
*Total bio-ethanol produced from cassava is 16,986
tons in 2008.
*DME program produces 400 bio-ethanol liters per
day. 55 areas detected for smallholder production in
2006. Estimated >7,000 tons of bio-ethanol produced.
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Sugar & Molasses : Availability
North SumatraSugar : 4,600ton/year
Molasses: 2,300 ton/year
Central JavaSugar : 2,288,300 ton/yearMolasses : 1,144,150 ton/year
West JavaSugar : 104,555 ton/year
Molasses : 52,300 ton/year
South SulawesiSugar : 490 ton/year
Molasses: 245 ton/year
West SumatraSugar : 17,670 ton/year
Molasses: 8,835 ton/year
LampungSugar :28,340 ton/yearMolasses : 14,170 ton/year
North SulawesiSugar : 460 ton/year
Molasses: 230 ton/year
East JavaSugar : 911,430 ton/year
Molasses :455,700 ton/year
Sugar & Molasses
Frost & Sullivan,2008IndonesiaSugar : 3,355,845 ton/yearMolasses : 1,677,920 ton/year
The current total annual domestic sugar
consumption is 3.8 million tonnes (per capita
consumption is 15kg), yet annual domestic production is estimated 3.3 million tonnes and
1.41 million tonnes from imports for 2008.
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Cassava : Availability
North SumatraCassava: 412,000 ton/year
Central JavaCassava: 4,235,210 ton/year
West JavaCassava: 2,044,674ton/year
South SulawesiCassava: 607,000 ton/year
West SumatraCassava: 243,000 ton/year
LampungCassava:5,473,283 ton/year
PapuaCassava: 41,000ton/year
East JavaCassava: 4,769,662 ton/year
Cassava
Frost & Sullivan,2008Indonesia
Cassava: 20,794,929 ton/year
OthersCassava: 2,969,100 ton/year
The current total annual domestic food consumption is 13.9 million tonnes (per capita
consumption is 55.7kg), and annual domestic
production is estimated 20.8 million tonnes for
2008.
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Cassava & Molasses : Conversion Ratio
1.3-1.2:1760-83010-20Bagasse
*Calculations are made for every 1000 kg of the raw material
4:1250450-520Molasses
15:167110Sugar Cane
12:190120-160Sago
2.5:1400600-700Corn
6.5:1167240-300Cassava
Conversion Ratio : Raw Material: Bio ethanolBio ethanol (L)Sugar Content (kg)Raw Material*
Cassava: 20,794,929 ton/year X0.5%
Molasses : 1,677,930 ton/year x 45% Bio-ethanol:188,767 ton/year
45% of molasses is used for Bio-ethanol production ,others goes into amino acid (glutamic acid & lysine) production and animal feed
Bio-ethanol:16,986 ton/year
Indonesia Bio-ethanol:
205,735ton/year in 2008
Rough Estimates For All Grades
Industry
Grade
55%
Fuel Grade
18%
Food/
Beverages
Grade
27%
Frost & Sullivan,2008
4:1
~0.5% of cassava is used for Bio-ethanol production, mainly for direct consumption and food
processing6.5:1
FGE Bio-ethanol:37,032 ton/year
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Cassava & Molasses : For Fuel Supply
19,204,9002008
35,107,000 2015
22,348,6062010
17,459,0002005
Consumption for Transportation Gasoline (tones)Year
(2015) Fuel grade(99.5%):3,510,700ton/year
(2010)Fuel grade (99.5%):162,178 ton/year
(2008)Fuel grade (99.5%): 37,032 ton/year
(2008)19,167,868 ton/year
Bio-ethanol Blend (%)
Rough Estimates For Fuel Grade Supply
(2010) 22,153,526 ton/year
(2015) 31,596,300 ton/year
Crude Oil Bio-ethanol
Frost & Sullivan,2008
0.2%
0.7%
10%
GAP of ~1 million tons to achieve 5%
6Surabaya
14Jakarta
5BioPremium
E-3/ E-5
BioPertamaxE-3/E-5
Pertamina
Malang
No. Fuel Pump (2007)
BioethanolBlendsPrincipalRetail Area
* CAGR of 9% from 2008-2015
Production can go up to 1.25 million tons derived from raw materials of bagasse and sugar cane
Source; PT Pertamina(Persero),2008
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Key Drivers, Trends & Initiatives
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Key Drivers
MediumHighRural Development and Diversification
of Rural Economy (DME program) -funding by government and local financial institution.
3
HighHighMeeting Euro Bio-fuel Standards2
HighHighEnergy Security Issues ,Policies and
Government Incentives
1
3 - 4 Years1 - 2 YearsDriverRank
Source: Frost & Sullivan,2008
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Key Drivers
Source: Frost & Sullivan
Policy and Regulations• President Decree No : 5/2006, January 25, 2006.– Policy Of National Energy• President Decree, No : 1/2006, January 25,2006.– Supply and uses of Biofuels for alternative fuel• President Decree No 10/2006, July, 24,2006– Establishment of Biofuel’s NationalCommittee for acceleration of poverty removal and reduction of unemployment
Product Standards• Minister of Energy and Mineral Resources Decree No: 3674 K/24/DJM/2006, March,17, 2006– Standard and Quality ( Specification) Gasoline Fuel which marketed locally.– Usage of ethanol enable up to maximum 10% volume• Minister of Energy and Mineral Resources Decree No; 3675 K/24/DJM/2006, March,17, 2006– Standard and Quality ( Specification) Diesel Fuel which marketed locally– Usage Of FAME enable up to maximum 10% volume• Minister of Energy and Mineral Resources Decree No: 13483 K/24/DJM/2006, September,26, 2006– Standard and Quality ( Specification) Biodiesel as Alternate Fuel which marketed locally.• Minister of Energy and Mineral Resources Decree No: 051/2006, October,10, 2006– Procedures for Commercial Trading of Biofuel as Alternate Fuel.– Article 9.1 : Security of Supply of Biofuels for domestic demand.– Exporting and or Importing Biofuels have to get recommendation from The Minister of Energy
Source: Minister of Energy and Mineral Resources, Indonesia, 2008
Coal
33%
Gas
30%
Oil
20%
Others
7%
Biofuels
5%
Geo
thermal
5%
Targeted Energy MIX (2025)Targeted Energy MIX (2025)
Others include: Nuclear, Biomass, Hydro, Solar, Wind, Liq. Coal
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Trends & Initiatives
Option of ‘C’ and ‘B-Heavy’ molasses routes, SSF?
Use Cassava (150 ton/ha // 14-17 ton//ha)
Need to achieve SSL for Sugar production
Lack of raw material hampers amount produce
4
Developing and improving output / technology
Example: RNI// PT Choi Biofuel Indonesia,RNI// PT PSA Aotu-matika, Mitsubishi Corp // Medco EnergiInternasional.
Liaison with foreign company and technology transfer
3
Utilization bio-fuel to reduce import.
Implementation of policies.
Policy and meeting international standards (2006- 2025) plan, refer slide 21
2
Carbon emission reduction?, bio-ethanol replacing fossil fuel
Improving ABGC* linkage, waste management, increasing yield, agronomy practices
Global warming and environment issues
1
InitiativesTrendsRank
Source: Frost & Sullivan,2008
*ABGC- Academician, Businessman, Government and Community
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Indonesian Bio- Ethanol Production Stages
Source: Minister of Energy and Mineral Resources, Indonesia, 2006
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Key Challenges
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Major Challenges
HighHigh/MediumDriving home industry producers to
supply bio-ethanol
3
HighMediumImplementation of Cellulosic production
of ethanol - SSF technology
2
HighHighMeeting Raw Material Requirement1
3 - 4 Years1 - 2 YearsChallengesRank
Source: Frost & Sullivan,2008
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Conclusion: Achieving the Ultimatum
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Conclusion: Achieving the Ultimatum
�Indonesia wants to see bio- ethanol replace 5 % of its fossil fuel transport
consumption by 2010. To achieve this target, Indonesia may have to look into
the potential of utilizing bio-mass (bagasse & other crop waste) as a feedstock to
produce bio-ethanol.
�In 2008, Bio-ethanol in Indonesia has an annual production of 205,753 tonnes.
With current price of bio- ethanol of USD 0.7-0.9 per liter, revenues are
estimated at USD 160.5 millions.
� Liaisons with foreign player and technology sharing will boost production for
bio-ethanol.
�Government plans and policies will help boost the market for bio- ethanol.
Government funding and incentives to the industry is seen as a driver for
producers.
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