TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Cooking up opportunities: Used cooking oil can be a ‘sizzling success’ for Indonesia
Globally, between 11 and 12 million tonnes of UCO was collected in 2022, making Indonesia’s around 227 KTPA a small but significant 2 percent of the global total.
Change Size
In this undated photo file, a street food vendor uses cooking oil to fry snacks in Jakarta. (The Jakarta Post/Umair )
I
n the bustling kitchens of Indonesia, stretching from the sprawling metropolis of Jakarta to the tranquil coasts of Bali, a remarkable untapped resource is being generated – used cooking oil (UCO).
Once considered a waste product, UCO is a potential green goldmine in the burgeoning biofuel market. This valuable resource is cooked up in the sizzling frying pans and bubbling pots of households, restaurants, hotels and commercial hospitality premises across the nation.
UCO is a vital resource in the efforts to meet the growing global thirst for renewable diesel (RD) and sustainable aviation fuel (SAF), both important fuels for a more sustainable future. For example, with deepening net-zero targets and expanding sustainability regulations, airlines are increasingly looking to SAF to reduce their carbon footprint. The SAF market was valued at around US$600 million in 2022 and is projected to grow to $15 billion by 2030. UCO is a second-generation feedstock and one of the most prized inputs for SAF, driving huge global demand.
With growing recognition of the value of UCO, we want to explore the ingredients that could unlock the latent potential in Indonesia. Serving up this opportunity will require effective collection and conversion of UCO, but the result could deliver a welcome boost to the nation’s economy, as well as pave the way for a more sustainable future in Indonesia and beyond.
Ingredients for Indonesia’s UCO ecosystem
Indonesia has a rich culinary tradition and one which generates a significant UCO footprint. The nation consumed around 8 million tonnes of cooking oil in 2022, primarily derived from oil palm. After losses due to absorption and evaporation, around 700,000-900,000 tonnes are practicably and economically collectable as UCO. However, only around 227,000 tonnes per year (KTPA) of UCO was collected in 2022.
Globally, between 11 million and 12 million tonnes of UCO were collected in 2022, making Indonesia’s around 227 KTPA a small but significant 2 percent of the global total. The Asia Pacific (APAC) region generates the greatest share of global UCO resources, almost half (47 percent) of global supply, with Indonesia as one of the top three exporters as of 2022.
Despite its acknowledged potential, the vast majority of UCO is either underutilized or not collected efficiently, missing out on an important economic and environmental opportunity. Of the share of UCO that is collected, around 95 percent is exported, primarily to developed countries like the Netherlands, Spain and Singapore to meet their RD and SAF production needs.
The true, untapped economic potential for UCO in Indonesia is significant. The global market is already on track to be worth billions of dollars, with demand driven by this expanding desire for more sustainable fuels of the future.
Indonesia is well-positioned to capture value from this demand, with projections indicating up to 281 KTPA of UCO could be collected by 2030 under current conditions, potentially reaching up to 270-430 KTPA with government support and improvements to the supply chain.
This growth is more than just a number; it can translate into real economic value for Indonesia. An optimized UCO ecosystem could increase export revenue opportunities, enhance job creation in collection and processing and help spur the development of a domestic biofuel industry.
Understanding the UCO value chain
The environmental benefits of UCO-based biofuels offer a compelling case for growing global demand. UCO-based biofuels are 75 percent less carbon-intensive than regular diesel, making such fuels highly desirable commodities in the global race to reduce carbon emissions. UCO-based biofuels also fetch a much higher price in the export market compared with similar biofuels developed from other sources.
Converting UCO to biofuel also inherently tackles waste-management issues of oils once treated as troublesome waste products. This reduces the environmental challenges of improper disposal, instead transitioning it into an attractive opportunity.
Creating the right ecosystem to effectively harness this resource means Indonesia not only moves toward meeting its environmental ambitions but also contributes significantly to global sustainability efforts.
Delivering an optimized UCO ecosystem is not without its challenges. One of the most significant hurdles to tap this potential is creating an effective collection process. Collection rates for UCO in Indonesia currently hover between 23 to 37 percent of all available, collectable UCO, with the greatest share of collection seen in industrial segments and the lowest in household settings.
Increasing these rates will require a more robust and efficient collection infrastructure. This must be backed by campaigns to increase awareness in the general population as to the value and benefits of UCO.
Indonesia does not currently have a consistent landscape to catalyze UCO collections, with no national-level regulation in place. However, local governments such as those in Jakarta and Bogor have implemented regulations to promote UCO collection and processing.
The Indonesian government plays a crucial role in raising awareness, providing incentives and implementing a robust regulatory framework that encourages the collection and proper utilization of UCO.
Learnings from other countries show that government initiatives, even something as simple as providing UCO containers for households alongside incentivizing businesses, can significantly boost collection rates.
A recipe for success in Indonesia
If Indonesia is to realize the true value of its UCO resources, a multifaceted approach will be required.
- Establishing clear regulations and policies. A national framework for UCO collection and processing would provide much-needed direction and impetus for all stakeholders.
- Building infrastructure. Investment in collection networks, processing facilities and logistics would streamline the UCO value chain.
- Public awareness campaigns. Educating the public about the benefits of UCO recycling and how they can contribute is critical.
- Collaboration with the private sector. Partnerships with biofuel companies and industries can create a market-driven approach to UCO collection and utilization.
- Research and innovation. Developing advanced technologies for efficient UCO processing can enhance the economic viability of this sector.
- Domestic UCO processing. Establish SAF and RD production plants in Indonesia to domestically process UCO and avoid export. This will capture more value within the biofuel value chain by leveraging Indonesia's abundant UCO resources. Establishing these production plants will contribute to global efforts to reduce carbon emissions while also promoting local economic growth and energy security.
With these measures in place, Indonesia stands on the cusp of an eco-friendly revolution. UCO represents a catalyst to unlock this value, as the nation taps into this underutilized resource to create a sustainable cycle of economic growth and improved environmental conservation.
The journey from frying pans to fuel tanks is not just a metaphor but a viable pathway to a greener and more prosperous Indonesia. As this untapped resource gets the attention it deserves, it holds the promise of transforming the nation's energy landscape while contributing to the global fight against climate change.
-- Haikal Siregar is a managing director and partner, head of Boston Consulting Group in Indonesia. Behram Irani is a consultant at Boston Consulting Group.
