Biofuel, a plant-based fuel, has become a crucial component in supporting energy transitions both in Indonesia and globally.
Various initiatives and policies designed to promote sustainable energy transitions and emission reductions through biofuel usage play a vital role in facilitating synergies between companies and governments, distribution processes, and biofuel legality. For example, in Indonesia, PT Pertamina introduced Pertamax Green 95, a fuel blending Pertamax with 5% ethanol derived from sugarcane. Pertamax Green 95 has a Research Octane Number (RON) of 95, emits low exhaust gases, and contributes to environmental protection and preservation. This environmentally friendly fuel embodies compliance with the Ministry of Energy and Mineral Resources (ESDM) Regulation No. 12 of 2015 on the Provision, Utilization, and Trading of Biofuels as Alternative Fuels, as well as a directive from the Directorate General of New, Renewable Energy and Energy Conservation (EBTKE) No. B-1348/EK.05/DJE.B/2023 dated March 30, 2023, on the Implementation of E5 (5% ethanol).

Biofuel policies provide targets, incentives, and mandates aimed at increasing biofuel production, particularly in achieving Net Zero Emissions (NZE) by 2050 or 2060. Each country has developed laws and regulations that serve as benchmarks for biofuel implementation. Internationally, the Global Biofuel Alliance (GBA) was established during the G20 Summit in New Delhi 2023 to promote sustainable biofuel development, set robust standards and certifications, support biofuel technology advancements, foster global collaboration, and ensure affordable biofuel supplies. The alliance consists of 26 countries and 12 international organizations, including the World Economic Forum, World Bank, and Asian Development Bank.
The growing awareness of eco-friendly fuels has become a breath of fresh air for nations committed to NZE. So, how do individual countries design policies and incentives to support biofuel implementation?
Indonesia
Biofuel regulations in Indonesia are governed by several legal frameworks. One prominent example is Ministerial Regulation No. 12 of 2015, which is an amendment to Ministerial Regulation No. 32 of 2008. This regulation establishes biofuel blending targets for transportation, industry, and power generation sectors, aiming for 30% biodiesel and 20% bioethanol by 2025. Furthermore, it mandates the use of 2% biofuel in aviation fuel, effective from January 2016.
Another important policy is Presidential Regulation No. 40 of 2023, which focuses on accelerating national sugar self-sufficiency and bioethanol production as a renewable fuel. The regulation outlines key objectives to boost bioethanol production by 2030, including:
- Increasing sugarcane productivity to 93 tons per hectare;
- Expanding new sugarcane plantation areas by 700,000 hectares;
- Enhancing sugar mill efficiency to achieve a recovery rate of 11.2%;
- Improving farmers’ welfare;
- Producing at least 1.2 million kiloliters of bioethanol from sugarcane.
A critical institution in Indonesia’s biofuel landscape is the BPDP (Plantation Fund Management Agency), formerly known as BPDPKS (Palm Oil Plantation Fund Management Agency), as restructured under Presidential Regulation No. 132 of 2024. BPDP’s mandate has been expanded to manage other plantation commodities such as cocoa and coconut. This agency collects funds through export levies on palm oil and its derivatives. These funds are used to support mandatory biodiesel programs and cover the price gap between biodiesel (FAME) and petroleum-based diesel (solar). This ensures that FAME remains competitive in the domestic market, allowing biodiesel producers to maintain production despite price fluctuations. Additionally, it indirectly stabilizes fresh fruit bunch prices for palm oil farmers.
These initiatives have made Indonesia a global leader in biodiesel blending, achieving a record B35 blending rate in 2024. The blending rate is expected to increase to B40 by 2025, with further possibilities for higher blends using FAME or HVO (Hydrogenated Vegetable Oil) derived from palm oil or other non-edible oil sources.
United States
The United States has implemented specific standards and incentives to promote the use of environmentally friendly fuels. A cornerstone of this effort is the Renewable Fuel Standard (RFS), which requires a minimum volume of renewable fuel to be blended into the national fuel supply. This policy, established under the Energy Policy Act of 2005, was further expanded through the Energy Independence and Security Act of 2007.
Another significant regulation is the Low Carbon Fuel Standard (LCFS), which aims to reduce carbon intensity in transportation fuels and encourage the adoption of low-carbon alternatives such as electricity, hydrogen, and biofuels. The LCFS is most notably implemented in California, where it provides tax credits to companies or producers that successfully reduce the carbon footprint of their fuels. The LCFS also supports the Zero Emission Vehicles (ZEV) program within the Advanced Clean Cars and Trucks initiative, marking a critical step toward phasing out fossil fuels in the transportation sector.
Additionally, the United States offers financial incentives under the Inflation Reduction Act of 2022 (IRA). Notable tax credit provisions include:
- The Biodiesel and Renewable Diesel Blenders Tax Credit (BTC): This credit provides $1 per gallon for blending biodiesel with petroleum-based diesel.
- The Sustainable Aviation Fuel (SAF) Credit: Introduced under the IRA for 2023–2024, this credit offers $1.25–$1.75 per gallon for SAF blends that achieve at least a 50% reduction in greenhouse gas emissions.
These measures collectively demonstrate the U.S. commitment to reducing emissions and promoting sustainable fuel solutions across multiple sectors.

European Union
The European Union (EU) has implemented the Renewable Energy Directive II (RED II), which targets achieving 32% renewable energy by 2030, with a minimum of 14% specifically in the transportation sector. The EU places a strong emphasis on advanced biofuels, which include second- and third-generation biofuels derived from non-food crops or inedible parts of food crops, such as stalks, husks, wood chips, and fruit peels. Third-generation biofuels, derived from algae, are also prioritized.
RED II sets a sub-target of 3.5% for advanced biofuels, with gradual increases from 2022 to 2030. In addition to RED II, the EU has introduced the ReFuelEU Aviation policy, aimed at reducing CO2 emissions in the aviation sector. This policy mandates that aviation fuel suppliers gradually increase the blending of Sustainable Aviation Fuel (SAF)—including synthetic and advanced biofuels derived from waste and residues—into conventional jet fuel used at EU airports.
China
China promotes the production and utilization of biofuels through its Renewable Energy Law. To advance biofuel development, China has outlined specific plans, including the “The 14th Five-Year Plan: Modern Energy System Planning”, which emphasizes the development of non-food bioethanol, such as cellulosic biofuels.
Furthermore, China’s Specialized Green-Development Plan for Civil Aviation, issued under the 14th Five-Year Plan by the Civil Aviation Administration of China, supports breakthroughs in the commercial application of SAF. The plan sets a target of over 20,000 tons of SAF consumption by 2025 and 50,000 tons during the 14th Five-Year Plan period. Overall, China’s biofuel policies focus on E10 ethanol blending and the use of non-food feedstocks for bioethanol production.
Brazil
Brazil has a long history with biofuel development, particularly ethanol, which began with the “Alcool Program” in the 1970s as a response to the global oil crisis. This program became a pioneer in promoting ethanol as an alternative fuel.
Today, Brazil continues its efforts through a unique and iconic program called RenovaBio, a national biofuel policy governed by Law No. 13,576/2017. RenovaBio aims to promote sustainable biofuel production and enhance social inclusion through tax exemptions and special incentives for biodiesel.
Additionally, the program supports the biofuel industry by issuing greenhouse gas emission reduction certificates as part of its climate change mitigation efforts. In practice, Brazil has set an ethanol blending mandate of up to E27 (27% ethanol in gasoline), with ethanol now available at nearly all gas stations in the country.
The biodiesel blending mandate has also steadily increased, from B10 to B12, with a target of reaching B15 by 2026. Through RenovaBio, Brazil reinforces its position as a global leader in the production and utilization of biofuels for a cleaner energy transition.
References:
- Biofuels – Energy – European Commission
- Implementation Agendas: Compare-and-Contrast Transport Biofuels Policies (2021-2023 Update)
- Transport Biofuels – Renewables 2023 – Analysis – IEA
Written by:
Arie Rahmadi, Ph.D. (Senior Researcher at BRIN)
Moh. Rifli Mubarak (Climate & Sustainability Officer at ECADIN)