Indonesia's Palm Biomass Fuels Japan's Green Energy Ambitions

TOKYO, JAPAN – March 31, 2026 – As Japan accelerates its transition away from fossil fuels, Indonesia is solidifying its position as a critical partner, supplying vast quantities of palm-based biomass to power the island nation's energy grid. Indonesian exports of Palm Kernel Shells (PKS), a byproduct of palm oil production, have now surpassed 5 million tons annually, fueling a growing demand for renewable energy sources.

This burgeoning trade was showcased at the recent International Biomass Expo 2026 in Tokyo, where the Indonesian Palm Kernel Shell Entrepreneurs Association (APCASI) highlighted its expanding role in the global energy market. Supported by Indonesian government agencies, the event underscored a strategic push not only to maintain the strong PKS market but also to introduce new, value-added products like Empty Fruit Bunch (EFB) pellets, signaling a new chapter in the bilateral energy relationship.

Powering Japan's Decarbonization Drive

Japan's commitment to achieving carbon neutrality by 2050 has created a significant and sustained demand for biomass. Under its "Green Transformation (GX)" policy, renewable energy is being promoted as a primary power source, and biomass has emerged as a surprisingly robust contributor. In 2023, biomass accounted for 5.7% of Japan's energy mix, already exceeding the government's 2030 target of 5%.

PKS has become a cornerstone of this strategy. Its abundance and cost-effectiveness have made it an attractive fuel for Japanese power utilities, many of which utilize co-firing technology in their plants. Major energy producers like JERA and specialized biomass operators such as the Erex Group are significant consumers, relying on a stable supply from Southeast Asia, with Indonesia as the dominant supplier.

At a business forum held during the expo, APCASI Chairman Dikki Akhmar emphasized the stability of this trade. "PKS has maintained a stable market in Japan over the past three years," he stated, reflecting the consistent demand. This stability is crucial for Japanese energy companies that have invested heavily in biomass infrastructure under the country's Feed-in Tariff (FIT) program, which has incentivized the switch to renewables.

The Sustainability Equation

While the growth in biomass trade presents clear economic and energy security benefits, it is not without scrutiny. The environmental sustainability of large-scale biomass imports is a growing concern in Japan. Critics point to the carbon footprint associated with transporting fuel across oceans and the potential for imported biomass to inadvertently drive deforestation or unsustainable land-use practices abroad.

In response, Japan's Ministry of Economy, Trade and Industry (METI) is tightening its regulations. Beginning in April 2024, sustainability certifications became mandatory for PKS under the FIT program, with recognized standards including the International Sustainability and Carbon Certification (ISCC) and the Roundtable on Sustainable Biomaterials (RSB). Furthermore, in a significant policy shift, METI plans to exclude new power plants relying primarily on imported woody biomass from its FIT and Feed-in Premium (FIP) support schemes starting in fiscal year 2026, signaling a desire to manage the environmental risks of over-reliance on imports.

Anticipating these evolving standards, the Indonesian industry is taking proactive steps. PT Sucofindo President Director Sandry Pasambuna highlighted a key cooperation with Japan Quality Assurance aimed at "strengthen[ing] the credibility of Indonesian biomass certification." This move is designed to build trust and ensure that Indonesian products continue to meet Japan's stringent import requirements, securing market access for the long term.

A New Economic Engine Beyond Palm Oil

For Indonesia, the palm biomass sector represents a significant economic opportunity, allowing the country to diversify its export portfolio and capture more value from its massive palm oil industry. The total potential of Indonesia's palm biomass is estimated at a staggering 232 million metric tons annually, which could translate to nearly 38,760 MW of power generation capacity.

This moves the industry beyond simply exporting raw commodities. Fajarini Puntodewi, Director General of National Export Development, noted that palm biomass is "a key export commodity with strong potential for foreign exchange earnings." The focus is increasingly on value-added products that transform agricultural waste into high-grade energy sources.

The primary focus of this new push is the development of Empty Fruit Bunch (EFB) pellets. EFB, the fibrous residue left after palm fruit is processed, has historically been a low-value byproduct. By processing it into dense, uniform pellets, it becomes a viable and efficient fuel. APCASI is championing this evolution. "Moving forward, we aim to accelerate EFB pellet development as a promising alternative energy source," said Dikki Akhmar, pointing to a future where Indonesia supplies a diversified portfolio of biomass fuels.

A Strategic Bilateral Partnership

The flourishing biomass trade is built on a foundation of strong diplomatic and economic ties between Indonesia and Japan. The high-level Indonesian delegation at the Tokyo expo, including the inauguration by Ambassador H.E. Nurmala Kartini Pandjaitan Sjahrir, signaled the strategic importance of this partnership.

Indonesian government bodies are providing crucial support. Lupi Hartono, a director at the Oil Palm Plantation Fund Management Agency (BPDP), reaffirmed the agency's commitment to both promotion and research to enhance the value of palm products. This coordinated effort between industry and government is designed to ensure Indonesia can reliably meet Japanese demand while navigating the complexities of international markets.

Deputy Ambassador Maria Renata Hutagalung noted that the trade "contributes positively to Indonesia–Japan trade relations," and affirmed that the embassy would continue to support market access for Indonesian businesses. This mutual interest—Japan's quest for energy security and Indonesia's drive for economic development—cements palm biomass as a key pillar of their bilateral relationship.

As global demand for clean energy continues to rise, Indonesia is strategically positioning itself to be a leader in the renewable energy supply chain. "With rising global demand for renewable energy, Indonesian palm biomass is well-positioned to strengthen its role as a sustainable and competitive energy source in the international market," concluded Fajarini Puntodewi.