The biggest mistake in the energy transition is trying to export technologies when what countries should really be exporting are the institutions that made them possible.

Whenever war threatens one of the world's main oil shipping routes, governments are reminded of an old truth: energy security is never just another policy issue—it is a strategic imperative. It was true after the 1973 Arab oil embargo, and it is true again amid instability in the Strait of Hormuz. For countries heavily dependent on imported fuels, every geopolitical crisis revives the same question: how can this vulnerability be reduced before the next shock arrives?

Indonesia is now trying to answer that question. The government has accelerated its biodiesel programme, increased its mandatory blending mandate to B50 and is exploring new ways to increase its energy security. The country most often cited as its inspiration is Brazil—the nation that turned ethanol into a global symbol of the energy transition.

But that comparison is based on a fundamental misunderstanding of Brazil's experience. The success of Brazil's Proálcool programme was never simply a story about ethanol. It was, above all, a story about institution-building. Created in response to the 1973 oil crisis, the programme took decades to mature. Throughout that period, Brazil coordinated agricultural policy, public finance, scientific research, industrial development and long-term energy planning.

First, Embrapa, the country's public agricultural research corporation, developed increasingly productive sugarcane varieties. Petrobras, the state-owned oil company, built the logistics needed to distribute ethanol nationwide. The government introduced mandatory ethanol blending requirements, and the automotive industry invested in ethanol powered engines, and then, years later, flex-fuel vehicles capable of running on either gasoline or ethanol. Public banks provided long-term financing for producers along this process. None of these pieces would have succeeded in isolation.

Over time, the programme also created a political coalition capable of surviving changes in government, economic crises and fluctuations in oil prices. Farmers, ethanol producers, automakers, researchers, state governments and parts of Brazilian industry all developed a direct stake in its success. It was this institutional architecture that transformed an emergency response to the oil crisis into a long-term competitive advantage.

Today, numerous studies show that this strategy has delivered lasting benefits. Biofuels reduced fossil fuel imports, stimulated technological innovation, created jobs and helped lower emissions from transport. Most importantly, they made sense under Brazil's particular conditions. Sugarcane is exceptionally productive, and its agricultural potential is concentrated outside the country's major tropical forest regions, with expansion occurring largely on land that had already been converted for agriculture or pasture. Brazil also benefited from abundant agricultural land, strong public research institutions and a domestic market large enough to sustain this transformation.

This is precisely where the comparison with Indonesia begins to break down.

The Indonesian experience does not start as a mitigation to a global crisis, but from an abundance of crude palm oil, where the country aims to blend diesel with palm-based Fatty Acid Methyl Ester (FAME). The programme began modestly in 2006 with a B01 mandate, reflecting both the early stage of the industry and a cautious policy approach. Over the following two decades, Indonesia steadily expanded the mandate and created dedicated public funding mechanisms to support palm-based biodiesel production. Today, the country is implementing the B50 mandate, one of the world's most ambitious blending requirements. These policies have successfully increased domestic biodiesel consumption. Unlike Brazil's Proálcool programme, however, they have not been accompanied by the same degree of coordination between agricultural research, industrial policy, automakers, long-term energy planning and technological innovation.

The comparison also begins with a fundamental difference in feedstocks. While Brazil is rich in sugarcane, Indonesia primary feedstock for biofuel is palm oil, a commodity whose expansion has been closely linked to deforestation and biodiversity loss. The push for palm-oil based biofuel possesses a serious threat due to Indonesia’s limited available land. President Prabowo is simultaneously pushing for Indonesia’s food sovereignty, citing it as one the core pillars of the Archipelago’s effort in strengthening its national energy security. Indonesia cannot afford to choose between expanding its agricultural land for food or energy.

We could see that Indonesia has not done what Brazil has successfully done with Proálcool, which is to sit different stakeholders such as automakers to discuss the redesign of the engines for biofuel use. Indonesia also faces growing international pressure to eliminate deforestation from supply chains and must compete in markets with increasingly stringent sustainability standards.

At the same time, Indonesia possesses assets Brazil did not have when it launched its own transition: vast nickel reserves, enormous renewable energy potential (reaching up to 3.716 GW) and a strategic position in the future global value chains for batteries and electrification.

It would therefore be a mistake for Indonesia to replicate Brazil's ethanol strategy instead of building a transition around its own comparative advantages. We saw that Indonesia is already establishing its supply chain of electric vehicles (EVs) and batteries with rising national brands such as Polytron, Gesits, and MAKA Motors. What Indonesia should do is to learn what Brazil did with its ethanol strategy –tight coordination between relevant stakeholders and reinforcing systems across the industry– and apply it for EVs and batteries. Forcing B50 forward with the modalities that Indonesia have in the EVs and batteries ecosystem will create a mixed signal for the automotive industry. A mature battery industry will also aid Indonesia in its pursuit to grow the green industry, because it will ease the intermittency constraints of renewable energy while laying the groundwork to broaden the green industry across the archipelago.

Does it make sense to devote increasing public resources to expanding biodiesel for passenger vehicles just as the rest of the world accelerates the electrification of road transport? Or would those resources be better directed towards electric vehicles, public transport, renewable energy battery manufacturing and industries linked to critical minerals?

Biofuels themselves are also evolving. As cars and buses become increasingly electrified, their greatest value will shift towards sectors where electrification remains far more difficult—notably aviation, shipping and the chemical industry. It is precisely in these markets—particularly Sustainable Aviation Fuel (SAF)—that the sector's greatest economic opportunities are likely to emerge over the coming decades. But access to these markets will depend on much more than producing biomass. It will require demonstrating sustainability, traceability and low emissions throughout the entire supply chain.

That may be Brazil's most important lesson. Brazil has exported biofuels, but what it should have exported was the institutional architecture that made them successful: public research, coordination between government and industry, industrial policy, long-term investment incentives and political coalitions capable of sustaining this strategy over decades.

The next oil shock will inevitably come. The countries best prepared for it will not necessarily be those that copied yesterday's most successful technologies. They will be the ones that have already built the institutions capable of turning their own comparative advantages into a long-term development strategy.

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Cinthia Leone is the Climate Diplomacy Lead at the Climainfo Institute, where she works on international climate policy. She holds a PhD in Environmental Science from the University of São Paulo, bringing rigorous academic grounding to her work at the intersection of climate science and diplomacy.

Wicaksono Gitawan is the Program and Policy Manager at CERAH, focusing on energy transition and the decarbonization of the electricity sector. He holds a Masters in International Security from the University of Groningen.

The views expressed in this article are those of the author(s).

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