The study, published in the Indonesian Journal of Advanced Research (IJAR), examines the role of Law No. 11 of 2020 on Job Creation in simplifying regulations and encouraging investment in biomass-based electricity generation, particularly through wood chip co-firing in coal-fired power plants. According to the researchers, the policy offers Indonesia a faster and more affordable path toward energy diversification at a time of global economic uncertainty.
Global recession concerns, rising energy prices, inflation, and geopolitical tensions have increased pressure on many developing economies. Indonesia, despite being one of the world’s largest coal producers, remains vulnerable to fluctuations in international energy markets.
The energy crisis between 2021 and 2023 underscored this vulnerability. Coal prices surged beyond USD300 per ton, creating significant pressure on domestic energy systems and exposing the risks of relying heavily on fossil fuels.
Against this backdrop, biomass co-firing has emerged as a practical transition strategy. Rather than replacing coal power plants entirely, the technology mixes biomass—particularly wood chips and forestry residues—into existing coal combustion systems, typically at levels ranging from 5 to 20 percent.
The advantage is straightforward: Indonesia can increase renewable energy use without building entirely new power plants.
The researchers from Dharmawangsa University Medan explain that Indonesia possesses abundant biomass potential, especially in Sumatra, Kalimantan, Sulawesi, and Papua. Biomass feedstock can be sourced from forestry residues, timber industry waste, and dedicated energy plantations.
Before the Job Creation Law took effect, however, biomass projects often faced severe bureaucratic barriers.
Investors had to secure multiple permits separately, including environmental approval, forestry utilization permits, industrial licenses, and land-use permissions. These procedures frequently took two to three years and involved overlapping regulations between energy, forestry, and environmental institutions.
The research used a normative legal analysis method, reviewing laws, government regulations, energy policies, and electricity planning documents to compare regulatory conditions before and after the implementation of the Job Creation Law.
The findings show that the law significantly changed the regulatory landscape through risk-based licensing, environmental approval integration, and stronger coordination between forestry and energy regulations.
According to the study, several reforms have played a major role:
- Risk-based licensing through the OSS-RBA system
- Simplified environmental approvals
- Easier forestry permitting for biomass supply chains
- Greater legal certainty for renewable energy investors
- Faster licensing timelines for biomass infrastructure projects
The study notes that these reforms made biomass projects more attractive and financially feasible for both domestic and private investors.
One of the most ambitious targets identified in the research involves expanding biomass co-firing to 52 coal-fired power plants nationwide. Government and PLN projections estimate biomass demand could reach approximately 10.2 million tons annually.
That figure translates to an average requirement of nearly 196,000 tons of biomass per power plant every year.
Several power plants have already entered pilot or development stages, including Paiton, Ciranjang, Ketapang, Sanggau, Pacitan, Anggrek, Rembang, and Pelabuhan Ratu.
Beyond energy diversification, the researchers argue that biomass development carries wider economic implications.
Their analysis identifies several potential benefits:
- Reduced dependence on volatile fossil fuel markets
- Increased renewable energy contribution without new power plant construction
- Greater electricity supply stability
- Job creation in forestry and rural sectors
- Stronger regional economies through wood chip production and distribution
- Expanded access to green financing and sustainable investment
Kusbianto and his colleagues describe domestically sourced biomass as an economic “buffer” capable of stabilizing energy systems during periods of global disruption.
The study also stresses that biomass development supports local economic participation. Forestry communities, cooperatives, village-owned enterprises, and small-scale suppliers may become important actors in the biomass supply chain.
Yet the researchers caution that implementation challenges remain substantial.
Biomass logistics and supply chains are still fragmented. Quality standards for wood chips vary widely, and institutional coordination between ministries and regional governments remains inconsistent.
Environmental concerns also remain central to the debate.
Large-scale biomass demand could create unintended risks if supply comes from unsustainable logging or forest conversion. The researchers warn that biomass policy must prioritize forestry residues and energy plantations rather than primary forest exploitation.
To address these concerns, the study proposes several policy solutions:
- Establishing a National Biomass Task Force
- Creating digital traceability systems for biomass sourcing
- Strengthening supplier certification systems
- Harmonizing technical regulations across ministries
- Developing long-term supply agreements between suppliers and PLN
- Introducing fiscal incentives and green financing mechanisms
According to the authors, transparent monitoring and sustainability safeguards are essential if biomass co-firing is to achieve both energy and environmental goals.
The research ultimately frames biomass not merely as an energy policy issue, but as a national economic strategy.
As recession risks continue to shape global policymaking, Indonesia’s ability to diversify energy sources using domestic resources may become increasingly important for maintaining industrial stability and protecting long-term economic growth.
Author Profile
Kusbianto is an academic at Dharmawangsa University Medan whose work focuses on law and development policy. This study was conducted together with Dody Syafnul, Ahmad Braja Wahyu, Arie Satria, and Ali Bakti, researchers affiliated with Dharmawangsa University Medan specializing in legal studies, public policy, and national development.
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