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Biofuel becomes strategic protection amid oil price fluctuations

Jakarta (ANTARA) – When global energy prices have recently fluctuated, Indonesia faces the classic challenge of dependence on energy imports amid continuously rising domestic demand.Global oil prices have moved in the range of around 100 US dollars per barrel during the latest period of fluctuation, driven by supply disruptions and rising geopolitical tensions in several regions.Disruptions to global energy distribution routes, including in strategic areas such as the Strait of Hormuz, which channels around one-fifth of the world’s oil supply, once again underscore the sensitivity of energy markets to geopolitical risks amid the dynamics of the Iran-United States conflict.These fluctuations have a direct impact on importing countries such as Indonesia through higher energy import costs, pressure on subsidies, and potential increases in domestic inflation.The gap between national energy demand and production remains a challenge, with domestic oil production at a limited level compared to continuously rising consumption.This condition leaves Indonesia still vulnerable to changes in global energy prices driven by external factors. Biofuel as buffer In this situation, palm oil-based biofuel has become one of the buffering alternatives that can be utilized to mitigate the impact of global energy volatility without waiting for a long-term energy transformation.President Prabowo Subianto has emphasized the importance of strengthening energy sovereignty through accelerating biodiesel implementation as part of the national energy resilience strategy.The policy direction of increasing the biodiesel blend to B50, namely a mixture of 50 percent biodiesel and 50 percent diesel fuel, is seen as a step to reduce dependence on energy imports while strengthening domestic energy resilience.This program is a continuation of the gradual implementation of the national biodiesel policy from B20 to B35, as well as the strengthening of B40, which currently serves as the main basis of the mandatory biodiesel program.In line with this, Minister of Energy and Mineral Resources Bahlil Lahadalia stated that strengthening biodiesel could help reduce diesel imports and support national energy stability.The government has set a biodiesel allocation of around 15.65 million kiloliters in 2026 for the national mandatory biodiesel program.From an implementation perspective, biodiesel is immediately usable because it utilizes existing energy infrastructure, making it one of the policy instruments that can be adopted relatively quickly compared to other energy transitions that require a long time.From the upstream side, strengthening demand for palm oil-based biodiesel may add value to agricultural commodities while improving farmers’ welfare.Indonesia, as one of the world’s largest palm oil producers, has a production base that supports strengthening domestic supply without fully reducing export flexibility, as stated by Minister of Agriculture Andi Amran Sulaiman.The strengthening of demand from the energy sector is also expected to encourage closer integration between the agricultural sector and the national energy industry, especially in the palm oil supply chain.From a fiscal perspective, increasing the energy mix is not only about import substitution but also about balancing budget burdens in the long term, according to Professor at the Bogor Agricultural University, Sudarsono Soedomo.He emphasized that the success of this policy implementation depends on the ability to maintain a sustainable financing scheme. Gradual transition In addition to biodiesel, the government is also developing bioethanol as part of energy diversification to reduce dependence on fossil-based fuels, using raw materials such as sugarcane and cassava. This step expands the domestic energy base while opening opportunities for broader agricultural and downstream industrial sectors, such as the development of local-commodity-based energy. The advantage of biofuels lies in their ability to be directly integrated into existing energy systems, thus providing faster impact compared to other new energy sources. Under global pressure, this flexibility makes biofuels a temporary buffer against external shocks as well as a short-term stabilization tool. Through this approach, Indonesia demonstrates a pragmatic energy transition strategy by utilizing domestic resources to meet urgent needs. Beyond energy aspects, this policy also has implications for macroeconomic stability. With a still significant share of energy imports, fluctuations in global oil prices can affect inflation and public purchasing power.Therefore, strengthening biofuels is seen as one of the external risk mitigation measures that can work in the medium term. However, this program implementation requires infrastructure readiness, consistent feedstock supply, and cross-sector coordination between energy, agriculture, and downstream industries. Without such support, the effectiveness of the policy in dampening global energy price volatility may be reduced.If properly managed, biodiesel can become an important instrument to reduce dependence on energy imports and strengthen national energy resilience.Amid global oil price uncertainty, the availability of domestically based energy is an important factor in maintaining economic stability and reducing the risk of external shocks. For the public, this condition is expected to support energy price stability and purchasing power. For the state, it is part of strengthening long-term economic resilience. Biofuels form part of Indonesia’s adaptation strategy in facing continuously changing global energy dynamics, with an approach that balances short-term needs and long-term sustainability.