By Dominikus
Indonesia is setting its sights on building a 20 million tons per year biomass supply chain to support a large-scale industrial fuel switch in the nickel sector, as detailed in the Indonesia Nickel Industry Decarbonization Roadmap published by the Ministry of National Development Planning (Bappenas). The program is designed to replace high-emission coal-based reductants used in nickel smelting with low-carbon, bio-based alternatives.
Currently, the nickel industry relies heavily on anthracite coal for the calcine reduction process, which accounts for approximately 26 percent of total emissions from the sector. With the national nickel production expected to rise significantly through 2045, Bappenas warns that emissions will continue to surge unless the industry adopts cleaner process fuels. Biomass is positioned as a technically viable and scalable solution.
To meet decarbonization targets by 2045, the roadmap projects that 9.6 million tons of biomass per year will be needed specifically for bioreductant applications in smelters. When factoring in additional demand from other industrial processes, the total biomass requirement could exceed 20 million tons per year, making it one of the largest bioenergy supply chain initiatives in Southeast Asia.
One of the key feedstocks for this shift is palm kernel shell (PKS), which is already exported in large quantities. In 2022, Indonesia exported 4.65 million tons of PKS, mainly to Japan and South Korea. Bappenas aims to redirect a portion of this export volume to domestic industry by introducing a benchmark price of US$140 per ton, compared to the 2023 export range of US$127–133 per ton
To support this transition, Bappenas outlines several strategic actions. These include establishing a National Biomass Strategy, creating technical standards and sustainability safeguards, and developing domestic biochar and pyrolysis facilities to produce high-grade bioreductants. The government also plans to introduce a safeguard mechanism to prevent deforestation associated with uncontrolled biomass extraction.
Read also : Indonesia launches roadmap to decarbonize nickel sector
Financing will be a key enabler. The roadmap recommends reallocating a portion of palm oil export levies to support biomass infrastructure and proposes blended financing models involving commercial loans and green investment funds. The program also anticipates that bioreductant producers will emerge as anchor players in the domestic biomass value chain, supported by guaranteed off-take agreements with nickel smelters.
From a policy perspective, the roadmap calls for fiscal and non-fiscal incentives, such as VAT exemptions for biomass transactions, accelerated permitting for processing plants, and inclusion of biomass-related activities in Indonesia’s green taxonomy. These measures aim to de-risk investment and ensure supply chain viability.
The biomass initiative is led by the same team behind the national decarbonization strategy: Leonardo A.A.T. Sambodo, Deputy for Food, Natural Resources, and Environment, and Togu Pardede, Director of Energy, Mineral, and Mining Resources at Bappenas. Together, they frame the program as essential to reducing coal dependency while unlocking a new bioenergy economy in rural Indonesia.
If executed as planned, the 20-million-ton biomass program could transform Indonesia into a regional leader in sustainable mineral processing, supplying low-carbon nickel to global electric vehicle and stainless steel markets while creating new investment and employment opportunities in the bioenergy sector.
Editing by Reiner Simanjuntak
