A number of business players on Wednesday (05/11/2025) admitted that they prefer to export wood pellets and other biomass products because they are constrained by uncompetitive domestic prices.
This has hampered the development of biomass energy in Indonesia amidst huge biomass export opportunities in countries such as Japan, South Korea, Italy and the UK.
Chairman of the Indonesian Biomass Energy Society (MEBI) Milton Pakpahan said the price of domestic biomass has not been able to compete due to high production costs and no policy that makes the price more competitive with subsidized fuel.
In addition, the price of biomass is strongly influenced by the price of coal as a substitute, when coal prices rise, biomass becomes more competitive because the cost of alternative energy is higher, while when coal prices fall, biomass becomes less attractive and difficult to compete on price.
Biomass prices for the domestic market are lower, at IDR 550,000 per ton - IDR 600,000 per ton, compared to export prices of IDR 900,000 per ton - IDR 1,000,000 per ton.
"Many biomass producers or business players choose to export derivative products such as wood pellets because they are more promising and the price is more competitive," he said during the Forum Group Discussion "Association of Indonesian Biomass Energy Producers (APREBI) at the Ministry of Forestry office, in Jakarta (5/11).
He said the main markets for biomass exports are Japan and the European Union because they offer more attractive and clearer prices.
Wood pellets are an environmentally friendly alternative fuel, made from sawdust or wood scraps that are compacted into small cylindrical shapes. The manufacturing process involves drying, grinding, and compressing the sawdust at high temperatures.
Wood pellets are used as fuel for space heating, stoves, and various other energy purposes.
Milton said that a solution is needed to develop biomass energy in the country, including the indexation of biomass prices so that it is more economical, measurable, and can become a market reference.
Collaboration between PLN, businesses and the government is needed to maintain the supply chain, it is important to ensure technical standards such as the Indonesian National Standard (SNI) are met to maintain quality and competitiveness.
"There needs to be a stronger renewable energy policy to support the green energy transition," he said.
Wood pellet favorite
On the same occasion, APREBI Secretary General Dikki Akhmar said that Indonesia's biomass derivative products, namelypalm kernel shell (PKS) and wood pellets, earned Rp1.04 trillion in transactions at a trade mission organized by the Ministry of Trade (Kemendag) in Osaka, Japan in June 2025.
Japanese companies signed a commitment to import 640 thousand tons of PKS and wood pellets that will be used for energy sources in Japan.
"Japan has set a target of selling new passenger vehicles to electric vehicles by 2035 to achieve the goal of net zero emission by 2050. Thus, the automobile industry in Japan must shift to renewable energy to support the transition to electric vehicles and reduce greenhouse gas emissions," he said.
Renewable energy products that are derived from palm oil include PKS,empty fruit bunch (EFB), andoil palm trunk.
There are also other renewable energy sources such as wood pellets. These products have very low gas emissions. In fact, every ton of PKS used as fuel in the mill can contribute to reducing CO2 by 0.94 tons.
Domestic demand is currently small, so exports are still a more profitable option. PKS production currently reaches around 14 million tons, and exports account for 35 percent of domestic PKS availability.
MCC exports to Japan currently reach 4.5 million tons per year. Japan's biomass market demand in 2025-2026 is expected to increase to 7 million tons per year, with PKS and wood pellets being the mainstay of Japan's needs.
MCC can also be used as a thermal power generation fuel with lower carbon dioxide emissions, making it suitable for industry.
In addition, PKS is also used as a high-performance activated charcoal that can be used to clean the air, and purify water.
Licensed
The Ministry of Forestry ensures that wood pellet products from Indonesia if exported accompanied by a V-Legal document / FLEGT License have fulfilled the Legality and Sustainability Verification System (SVLK). That means, the wood pellet products are guaranteed to come from legal, sustainable sources, and fully comply with Indonesian law.
Director of Forest Product Processing and Marketing (BPPHH) of the Ministry of Forestry Erwan Sudaryanto said the Ministry of Forestry has a big commitment to continue implementing the SVLK. By fulfilling the SVLK, the Government guarantees that wood products come from legal and sustainable places.
"The government has a commitment to maintain that forest products come from legal permits and not deforestation through SVLK," he said.
The government has released regulations regarding SVLK since 2009. There are six SVLK sustainability frameworks. First, legality, ensuring that all wood products and their derivatives come from legal sources according to Indonesian regulations.
Second, transparency and traceability by implementing a documentation system that ensures the origin of timber can be traced to its source.
Third, international standards compliance. SVLK is internationally recognized through ISO 17065:2012, ISO 19011:2018, and FLEGT VPA standards with the European Union.
Fourth, multi-stakeholder involvement, by building the participation of government, business actors, certification bodies, independent monitors, and civil society.
Fifth, supporting environmental sustainability, SVLK reduces the risk of illegal deforestation, supports conservation, and ensures forests remain productive and sustainable.
Sixth, global competitiveness. SVLK is the main instrument to address green trade issues, EUDR, and strengthen international market access.
In addition to regulating the SVLK, the Ministry of Forestry has also developed forest utilization management. Of Indonesia's land area of 191.4 million hectares, the forest area reaches 125.7 million hectares. From the forest area, the Ministry of Forestry divides it into several forest functions, including conservation forests, protected forests, and production forests.
