Stories: Biofuel

“People often think biofuel is just about ‘green energy’, but there’s more to it than that. For countries like Indonesia, it’s about energy security, about using what we have – our palm oil, our infrastructure – to build something sustainable and strategic,” says Hariyadi Imam Santoso, our General Manager for Biodiesel Commercial at GAR.

As climate concerns mount and the world seeks alternative to fossil fuels, biofuel – especially palm-based biofuel – is gaining attention. It’s renewable, scalable, and already widely adopted in Indonesia through national blending mandates like B40.

So, how exactly is biofuel made from palm oil? What makes it different from fossil fuel – and what challenges remain? Let’s break it down.

What is biofuel? Understanding renewable energy solutions

Biofuel is a type of fuel made from organic materials – typically crops, agricultural waste, or used cooking oil. “Unlike fossil fuels, which are finite and take millions of years to form, biofuels can be produced, refined, and used on a sustainable cycle,” explains Hariyadi.

Palm oil plays a central role in first-generation biofuels due to its high oil yield per hectare, making it more land-efficient compared to other crops.

How is palm oil used to produce biofuel?

“Making biodiesel is a bit like refining cooking oil, but with different chemistry involved. We use a process called transesterification,” says Hariyadi. This chemical reaction involves mixing CPO with an alcohol (typically methanol) in the presence of a catalyst. This results in Fatty Acid Methyl Esters (FAME) – the chemical name for biodiesel – and glycerin as a byproduct.

Simply put: Vegetable oil/animal waste + alcohols (methanol/ethanol) = Biodiesel and Glycerin.

Watch the following video to gain a visual understanding and step-by-step journey from palm oil to biodiesel:

The benefits of palm-based biofuel

Palm biofuel offers several advantages – both environmental and economic.

• Emissions
• Yield
• Scalability
• Waste-to-energy potential
• Energy Security
• Economic Opportunities

Lower net greenhouse gas emissions

While combustion emissions are similar to fossil fuel, the palm biofuel generates lower net greenhouse gas emissions when considering its full lifecycle – from cultivation, processing, to transport and use. When produced from sustainable plantations, it can reduce lifecycle emissions up to 60% compared to conventional fossil fuels.

High energy efficiency

Palm oil has one of the highest energy yields per hectare, which makes it a scalable feedstock for countries with limited land.

Readily deployable renewable fuels

Palm-based biofuel is already being produced and adopted at scale. Thanks to well-adopted infrastructure and an established supply chain, palm oil-based biofuels are among the most readily deployable renewable fuels on the market.

Supporting circular economy

Palm oil-based biofuels support a circular economy model where every part of the palm fruit is used – lowering waste, generating rural income, and creating additional energy sources beyond biodiesel itself like Palm Kernel Shell (PKS) biomass.

Less dependence on fossil fuels

Locally produced biofuel reduces dependence on imported fossil fuels. It diversifies the national energy mix and provides resilience in times of global supply disruption – a strategic advantage for any energy-importing countries.

Strengthening local economies

Biofuel production creates jobs across the value chain – from agriculture and harvesting to transportation and processing. It stimulates rural development, supports smallholder farmers, and strengthens local economies.

Debunking the challenges: Is palm biofuel truly sustainable?

Despite its advantages, palm-based biofuel continues to raise tough questions about land use, food security, and environmental impact. As Hariyadi explains, navigating the balance between energy demand and responsible production takes more than good intentions; it takes systems, policies and consistent on-the-ground action.

Q: What are the biggest challenges in producing sustainable biofuel?

Hariyadi: One of the biggest challenges is balancing the demand for renewable energy with the need to protect forests and food systems. Biofuel production – if not managed well – can lead to deforestation, land use change, and pressure on agricultural land. There are also challenges in maintaining traceability, smallholder inclusion, and meeting evolving sustainability standards.

At GAR, we address these risks by enforcing a strict No Deforestation, No Peat, and No Exploitation (NDPE) policy and supporting certification schemes like ISPO and ISCC. We also work closely with smallholders to improve yields on existing land without expanding into forested areas.

Q: How does GAR address the food vs fuel debate?

Hariyadi: The oil used in biofuel is often surplus oil not suitable for food. In addition, waste-to-energy solutions like using Palm Kernel Shells reduce the reliance on edible oil entirely. The real challenge is balancing land use effectively – something GAR works on closely with farmers.

Q: Isn’t fossil fuel still more efficient and easier to produce?

Hariyadi: While fossil fuels have been dominant for decades, they come at a high environmental cost. Today, palm-based biofuel is not only commercially viable, but increasingly supported by national energy strategies. Take Indonesia’s B40 mandate, for example – it requires all diesel sold in the country to contain 40% biodiesel, most of which is palm-based. This kind of policy support is accelerating production efficiency, boosting demand, and proving that renewable alternatives can scale – responsibly and effectively.

Q: How does GAR ensure transparency and traceability in its biofuel supply chain?

Hariyadi: GAR has implemented industry-leading traceability systems, allowing us to track palm oil back to the mill and plantation level. At GAR, we’ve introduced SmartTrace, our blockchain-based traceability system, which provides visibility into every stage of the supply chain, from plantation to processing to delivery. This level of traceability helps us build trust, meet sustainability standards, and prove that our biofuel is sourced ethically, responsibly, and without deforestation.

The future of biofuel

As countries seek to reduce on fossil fuels and lower carbon emissions, biofuel is proving critical across sectors – from transport and industry to power generation and building energy use. It also helps balance electricity grids increasingly powered by solar and wind, stepping in where these sources fluctuate.

Importantly, biofuel offers one of the most realistic pathways for decarbonising hard-to-abate sectors, like long-haul freight, aviation, and heavy industries such as steel, cement, and chemicals, where electrification alone isn’t yet feasible.

At GAR, we believe palm-based biofuel has a vital role to play in this global energy transition. With robust policies like Indonesia’s B40 mandate, new technologies, and systems like SmartTrace supporting full supply chain transparency, the industry is evolving fast – and responsibly.

We believe palm oil is a powerful enabler of renewable energy. That’s why we produce palm-based bioenergy as part of our commitment to a more sustainable energy future. Read more about our initiatives here.