Green Energy in the Palm Oil Industry: Towards a More Sustainable Future

16 Min Read Posted by alwepo

alwepo.com, The palm oil industry is one of the largest and most important agricultural sectors in Southeast Asia, particularly in countries like Indonesia and Malaysia. While palm oil contributes significantly to economic growth, it has also faced global criticism due to environmental concerns such as deforestation, carbon emissions, and waste management challenges.

Table of Contents

To address these issues, the industry is increasingly turning toward green energy—renewable, low-carbon, and sustainable energy solutions—to support eco-friendly production while maintaining operational efficiency.
This article explains how green energy works in the palm oil industry, the technologies involved, and the benefits it brings to both companies and the environment.

What Is Green Energy in the Palm Oil Sector?

Green Energy in the Palm Oil Industry: Towards a More Sustainable Future
Green Energy in the Palm Oil Industry – alwepo.com
The Growth of Autonomous Mobile Robots (AMRs) in Warehouses
The Growth of Autonomous Mobile Robots (AMRs) in WarehousesRead more

Green energy refers to energy produced from renewable, low-emission, and environmentally sustainable sources. In the palm oil industry, green energy focuses on using available natural resources and production waste to generate clean power.

Key types of green energy used in palm oil mills include:

These solutions help reduce dependence on fossil fuels while improving sustainability performance.

1. Biomass Energy from Palm Oil Waste

One of the biggest advantages of the palm oil industry is the large volume of biomass generated during processing. This biomass can be converted into renewable energy.

Sources of biomass include:

  • Empty Fruit Bunches (EFB)

  • Mesocarp Fiber

  • Palm Kernel Shells

  • Palm Trunk and Fronds (from replanting)

How It Works

Palm oil mills typically burn mesocarp fiber and kernel shells to generate steam, which powers:

  • Boilers

  • Steam turbines

  • Electricity generation systems

This allows mills to be self-sufficient in energy, and in some cases, able to export excess electricity to the grid.

Benefits

  • Reduces waste

  • Lowers fossil fuel use

  • Cuts greenhouse gas emissions

  • Provides a stable source of renewable power

Biomass energy is currently the most widely used green energy source in the palm oil industry.

2. Biogas from POME (Palm Oil Mill Effluent)

POME, if left untreated, produces methane — a greenhouse gas 28 times more potent than CO₂.
However, with biogas technology, POME becomes a valuable renewable energy source.

Biogas Production Process:

  1. POME is collected in anaerobic digesters

  2. Microbial activity breaks down the waste

  3. Methane-rich biogas is produced

  4. Biogas is captured and used as fuel or electricity

Uses of Biogas in Palm Oil Mills

  • Powering electricity generators

  • Fuel for boilers

  • Upgrading to biomethane for industrial use

  • Supplying gas to nearby communities

Environmental Impact

  • Reduces methane emissions

  • Prevents water pollution

  • Converts waste into usable energy

Many Indonesian mills are now installing covered lagoon systems, continuous stirred tank reactors (CSTR), and biogas gensets to maximize energy output.

3. Solar Energy for Mills and Plantations

Solar power is steadily gaining popularity in palm oil estates due to:

  • Indonesia and Malaysia’s high solar irradiation

  • Lower cost of solar panels

  • Rising electricity prices

Applications of Solar Energy

  • Rooftop solar systems at mills

  • Solar street lighting in plantations

  • Solar-powered water pumps for irrigation

  • Hybrid systems combining solar + diesel generation

Although biomass and biogas remain the main energy sources, solar acts as a clean supplement that reduces overall emissions.

4. Small Hydropower (Micro-Hydro) in Plantation Areas

Some palm oil plantations located near rivers or hilly terrain utilize micro-hydro systems, especially in remote estates.

Benefits of Micro-Hydro

  • Continuous energy supply

  • Low-carbon and reliable

  • Suitable for off-grid operations

While not as common as biomass or biogas, micro-hydro is highly effective in areas with strong water flow.

5. Biofuel and Biodiesel Production

Palm oil is a key raw material for biodiesel, which is blended with petroleum diesel to reduce transportation emissions.
Countries like Indonesia implement B30 and B35 mandates, requiring vehicles to use 30–35% biodiesel.

Advantages

  • Reduces fossil fuel consumption

  • Promotes energy independence

  • Supports the circular economy within the sector

This makes palm oil a strategic contributor to national renewable energy targets.

Benefits of Green Energy in the Palm Oil Industry

Implementing green energy offers wide-ranging benefits, such as:

Environmental Benefits

  • Significant reduction in carbon emissions

  • Lower methane and greenhouse gas output

  • Improved waste management processes

  • Reduced reliance on fossil fuels

Economic Benefits

  • Lower operational energy costs

  • Opportunity to sell surplus electricity

  • Increased revenue from carbon credits

  • Energy self-sufficiency for remote plantations

Social Benefits

  • Cleaner air and improved worker health

  • Job opportunities in renewable energy projects

  • Better corporate image and sustainability credentials

Challenges in Implementing Green Energy

Although green energy offers significant environmental and economic benefits, its implementation—especially in developing regions or industrial sectors such as palm oil mills—comes with several obstacles. These challenges must be understood and addressed to accelerate the transition to sustainable energy.

1. High Initial Investment Costs

One of the biggest challenges is the large upfront capital required to install green energy systems such as solar panels, biogas reactors, biomass boilers, or energy-efficient machinery.

Why This Is a Problem

  • Renewable energy technologies often require high installation and infrastructure costs.

  • Many mills operate with tight budgets and may not have access to long-term financing.

  • Investors may hesitate because returns on investment (ROI) take time—often 5 to 10 years.

  • Purchasing modern equipment such as high-efficiency turbines or solar inverters can be expensive.

Impact

Even though operational costs are lower in the long term, the initial financial barrier often slows or stops green energy adoption.

2. Limited Technical Knowledge in Some Mills

Some palm oil mills—especially in remote or developing regions—may lack the necessary technical expertise to operate, maintain, and optimize green energy systems.

Challenges Include

  • Insufficient knowledge about renewable technologies (solar, biogas, biomass, etc.)

  • Lack of trained personnel to manage systems like methane capture or CHP (Combined Heat and Power) units

  • Difficulty troubleshooting advanced equipment without local experts

  • Dependence on foreign contractors, which increases costs

Impact

Without proper expertise, mills may avoid adopting green technologies due to fear of breakdowns, inefficiency, or misuse.

3. Maintenance Challenges

Green energy systems require consistent and specialized maintenance to ensure long-term performance and safety.

Common Issues

  • Solar panels require regular cleaning in dusty or humid environments.

  • Biogas digesters need careful monitoring to maintain gas quality and prevent leaks.

  • Biomass boilers require controlled feeding and ash management.

  • Spare parts for renewable systems may not be available locally.

  • Delays in repair can stop the entire production process.

Impact

Poor maintenance can lead to system failures, reduced efficiency, and higher operational costs, discouraging mills from investing in green technology.

4. Inconsistent Government Incentives

Government support plays a crucial role in accelerating green energy adoption. However, in many countries—including Indonesia—policies and incentives can be inconsistent.

Problems Include

  • Frequent policy changes create uncertainty.

  • Subsidies may be limited, delayed, or unevenly distributed.

  • Feed-in tariff (FIT) programs may not offer competitive prices.

  • Bureaucratic procedures for obtaining licenses or permits are often slow.

  • Lack of clear long-term roadmaps for renewable energy.

Impact

Industries hesitate to invest when government commitment is unclear. Stable incentives are essential to encourage private-sector participation.

5. Difficulty Connecting to National Grids in Rural Areas

Many industries—especially palm oil mills—are located in remote rural areas, where access to national electricity grids is limited or unreliable.

Challenges

  • Infrastructure is often underdeveloped or outdated.

  • Long distances make grid extension expensive.

  • Voltage instability or frequent blackouts disrupt operations.

  • Renewable energy systems (e.g., biogas power) may not be easily synchronized with local grids.

  • Regulatory barriers may restrict mills from selling excess energy to the grid.

Impact

Without grid integration, mills must rely on standalone energy systems, making adoption more complex and sometimes less economically attractive.

The Future of Green Energy in the Palm Oil Sector

As global demand for sustainable production increases, the palm oil industry is entering a new era. Green energy is becoming a central strategy for lowering emissions, improving efficiency, and meeting international sustainability standards. Below is a detailed breakdown of the key future trends shaping green energy in the palm oil sector.

1. More Mills Are Installing Advanced Biogas Systems

Palm oil mills produce large quantities of Palm Oil Mill Effluent (POME), which naturally releases methane — a greenhouse gas 28 times more potent than CO₂. In the past, this methane was often released into the atmosphere, contributing to climate change.

Today, modern mills are investing heavily in advanced biogas capture systems.

Why This Is the Future

  • Methane capture significantly reduces greenhouse gas emissions

  • Captured methane can be converted into electricity, steam, or heat

  • Excess energy can potentially be sold to the national grid

  • Reduces operational costs by replacing diesel or fossil fuel usage

  • Helps mills comply with mandatory methane reduction regulations

Advanced Technologies Being Adopted

  • Covered lagoons with high-efficiency gas capture

  • Continuous stirred tank reactors (CSTR)

  • Biogas cleaning systems to produce biomethane

  • Cogeneration (CHP) units that maximize energy conversion

As carbon regulations tighten globally, biogas systems will become a standard requirement rather than an optional investment.

2. Biomass Co-Firing and Pellet Production Are Rising

Palm oil mills generate abundant biomass waste: empty fruit bunches (EFB), palm kernel shells (PKS), and mesocarp fibre. Traditionally, this waste was burned inefficiently or left unused.

The future is different — biomass is now recognized as a valuable renewable fuel.

Biomass Co-Firing

Co-firing involves blending biomass with coal in existing power plants. This reduces coal consumption and lowers carbon emissions.

Biomass Pellet Production

EFB and PKS can be processed into high-density pellets, which:

  • Are easier to transport and store

  • Have high calorific value

  • Are exported as renewable fuel to Japan, Korea, and EU markets

Why This Trend Is Rising

  • Growing global demand for renewable biomass fuel

  • Government targets for replacing coal with biomass

  • Additional revenue streams for palm oil companies

  • Reduces waste and supports circular economy principles

In the near future, biomass fuel will become one of the largest green energy contributions from the palm oil industry.

3. AI and Digital Monitoring Improve Energy Performance

Digitalization and artificial intelligence (AI) are transforming how mills manage energy. Modern systems use sensors, IoT, and machine learning to optimize efficiency in real time.

How AI Improves Green Energy Systems

  • Predicts biogas production levels

  • Optimizes combustion efficiency in biomass boilers

  • Minimizes energy wastage during peak processing periods

  • Detects leaks in methane capture systems before major losses occur

  • Tracks carbon emissions and energy usage automatically

  • Enables predictive maintenance for turbines, boilers, and generators

Benefits for the Palm Oil Mills

  • Lower operational costs

  • Less downtime

  • Higher energy production from the same biomass or biogas

  • Better compliance with RSPO and ESG reporting standards

AI-assisted green energy systems are becoming the new benchmark for efficient and sustainable palm oil processing.

4. Carbon-Neutral Palm Oil Is Becoming a Global Market Trend

The international market — especially Europe, Japan, the U.S., and major global brands — is pushing for carbon-neutral products. This trend is rapidly influencing the palm oil sector.

What “Carbon-Neutral Palm Oil” Means

  • Emissions from cultivation, harvesting, transport, and milling are fully offset or reduced

  • Renewable energy is used throughout production

  • Carbon credits may be generated from biogas or reforestation

  • The final product has zero net carbon footprint

Why This Trend Is Changing the Industry

  • Buyers prefer sustainable, traceable palm oil

  • RSPO, ISPO, and ESG frameworks demand lower emissions

  • Large FMCG companies commit to net-zero supply chains

  • Investors prioritize environmentally responsible enterprises

Companies that produce carbon-neutral palm oil gain access to premium markets, better pricing, and stronger brand reputation.

5. Green Energy Will Become a Core Pillar of Sustainable Palm Oil Production

With increasing global scrutiny, the palm oil industry must comply with international certifications and environmental frameworks. Green energy is now recognized as a non-negotiable component of sustainable operations.

Compatible With Global Standards

  • RSPO (Roundtable on Sustainable Palm Oil):
    Requires reduction of emissions, methane capture, and responsible waste management.

  • ISPO (Indonesian Sustainable Palm Oil):
    Encourages renewable energy usage and environmental protection.

  • ESG (Environmental, Social, Governance):
    Investors evaluate energy responsibility and carbon intensity before funding.

Why Green Energy Will Be Central

  • Reduces carbon leakage

  • Converts waste into valuable energy resources

  • Enhances global market competitiveness

  • Supports national goals for Net Zero Emissions

  • Strengthens long-term financial resilience

Green energy is no longer an optional upgrade — it is the future foundation of a modern, responsible, and globally competitive palm oil sector.

Conclusion

Green energy plays a crucial role in transforming the palm oil industry toward a more sustainable, efficient, and environmentally responsible sector. Through biomass, biogas, solar, micro-hydro, and biodiesel, palm oil mills can reduce emissions, lower energy costs, and contribute to national renewable energy goals.

As global demand for sustainable products grows, adopting green energy is no longer optional — it is a key strategy for the long-term success and competitiveness of the palm oil industry.