PKS (Palm Kernel Shell) Export Business and New Varieties of Superior Palm Oil Seeds

PKS loading for export

The demand for biomass fuels as renewable energy, including PKS (palm kernel shells), is growing in line with the global decarbonization trend. Likewise, the use of biofuels such as biodiesel is also increasing. Biomass fuels like PKS and biofuels like biodiesel are both carbon-neutral bioenergy products. Both can be produced from palm oil trees. Biofuels like biodiesel are primarily used in the transportation sector, while biomass fuels like PKS are used for power generation or industrial boiler fuel. Palm oil produces its primary product namely crude palm oil and crude palm kernel oil (CPO and CPKO), while the PKS are byproducts or waste, such as EFB (empty fruit bunches) and mesocarp fiber.

Over time, the demand for palm oil has also increased, commensurate with population growth, and its use in the energy sector (biofuel) is even greater than in the food sector. To stabilize prices and avoid sharp fluctuations in palm oil prices, the Indonesian government launched the B-50 program, which uses 50% biodiesel from palm oil and 50% diesel from petroleum. With the B-50 program, palm oil demand has increased by approximately 20% over current average production.

This necessitates increasing palm oil productivity. One such effort is the use of superior seeds. By maximizing CPO production from mesocarp fiber, these superior seeds have thick fiber, thin shells (even shellless), and small kernels. The Psifera variety, with its various unique names by seed producers, is an option for this purpose. These superior seeds are even certified to assure consumers of their quality.

The initially thick PKS of the dura variety, which are favored and most sought after by PKS exporters for use in power plants, will gradually decline. However, considering the slow pace of replanting programs and minimal extensification efforts, the transition from dura to psifera PKS will be lengthy. PKS exporters can still safely export thick dura PKS. The less thin tenera PKS, as a transition to psifera, will likely become more common.

If very thin psifera PKS become commonplace, their calorific value will be low and they will be less desirable for energy applications. If this occurs, special treatment is required to make the psifera PKS more technically and economically viable for energy use. This can be achieved through compaction/densification or processing through torrefaction or pyrolysis to produce higher fixed carbon and calorific value. Furthermore, they can be compacted/densified into pellets or briquettes. 

Biochar Needs for the Iron and Steel Industry

As awareness of climate change and global warming grows, along with the Paris Agreement and Net Zero Emissions (NZE) 2050 targets for decarbonization, the use of biomass to produce biocarbon products is increasing. The iron and steel industry, in particular, faces significant demand, while supply remains limited. This has prompted several large companies to invest in large-scale biocarbon production, particularly biochar/biocoke.

Such large-scale production naturally requires abundant biomass feedstock. Specifically, in Indonesia, biocoke/biochar production from palm kernel shells (PKS) reportedly began last year. PKS was chosen because it is a readily available biomass waste product from palm oil mills. PKS and palm oil mill production in Indonesia is estimated to be around 12.5 million tons/year, but because some of the PKS is used as boiler fuel, the estimated usable PKS or remaining boiler fuel is around 6.25 million tons/year. To increase the supply of PKS from palm oil mills, cogeneration of empty fruit bunches (EFB) can be used. For more details, read here.

In addition to the PKS, biocoke/biochar and even black pellets (torrified pellets) are also produced using wood from energy plantations. Energy plantations with short-rotating crops like calliandra and gliricidia have great potential to produce this wood. Currently, wood pellets (white pellets) are being produced from these wood plantations. For more details on whether wood from energy plantations is better for wood pellets (white pellets) or biocoke/biochar/charcoal, read here.

Biocoke, biochar, and charcoal are used in the iron and steel industry as a substitute for coal-based coke in blast furnaces, while wood pellets (white pellets) and torrified pellets (black pellets) are used in power plants using both cofiring and fulfiring. In addition to their higher calorific value (around 20% higher than wood pellets (white pellets)), torrefied pellets (black pellets) are also hydrophobic, allowing them to be stored outdoors, like coal.

In today's era, the use of biocoke / biochar / charcoal to replace coal coke in blast furnaces is becoming important. Biocoke / biochar / charcoal derived from biomass is a renewable material that is sustainable as a reducing agent or fuel in blast furnaces. The chemical reaction will separate oxygen atoms from iron atoms and this will emit CO2. This will convert iron ore (Fe2O3) into crude (pig) iron.

However, the difference lies in the fact that the carbon source used as a reducing agent or fuel in a blast furnace comes from renewable and sustainable sources, making it a carbon-neutral process. Conversely, using coke from coal, as it comes from a fossil source, makes it a carbon-positive process. Similarly, using natural gas, a fossil fuel, as a carbon source for the reducing agent or fuel in a blast furnace, despite its lower carbon intensity, is considered less carbon intensive. 

The Role of Biochar in Increasing Palm Oil Productivity, Among the Use of Superior Seeds and Replanting

Palm oil productivity continues to be pushed to its most optimal point. This is because it is to meet the increasing needs, especially the mandatory B-50 biodiesel program. Of course, efforts to optimize productivity are not easy and instant. Although the key points for its realization have also been mapped, namely by replanting old palm oils, using superior seeds and intensification, the practice also requires the right method or approach and takes time. Replanting old palm oils is still very slow and has many obstacles, while the use of superior seeds has received more attention and continues to be encouraged. The analogy of using superior seeds is like comparing local cattle and superior breeds. So no matter how well the Javanese cow is cared for, its weight will not match that of the Limousin cow. Likewise with palm oil seeds.

Land intensification efforts through optimizing inputs, technology and modern cultivation methods also still need to be developed. Meanwhile, extensification or land expansion should be avoided or slowed down as much as possible, for more details, read here. Biochar can have an important role in this area of ​​intensification. Apart from the application of biochar it will improve soil health, which is an important prerequisite for plants to be able to produce optimally, it is also very environmentally friendly because the raw material for biochar is from renewable sources, namely biomass and increases fertilization efficiency (NUE = Nutrient Use Efficiency). And even the application of biochar is also a climate solution, namely as carbon sequestration. Optimizing productivity can be done by applying biochar plus using superior seeds using modern and environmentally friendly agricultural methods. So basically optimization is a comprehensive and measurable effort.

Indonesia contributes 25% to the world's vegetable oil supply, making it a key actor in the stability of the world's vegetable oil supply. With this position, any changes in production, export policies and Indonesia's domestic dynamics will directly impact prices and international market balance. Indonesia is currently the largest or number one producer of palm oil in the world, but it is not the best or most productive because its productivity is not yet optimal. Compared to neighboring countries, namely Malaysia, it is still inferior and slightly superior to Thailand, even though geographical factors, namely the climate in Indonesia, are much more supportive. Currently, Indonesia's CPO productivity is around 3.3 tons/hectare, while Malaysia's is around 3.8 tons/hectare, while Thailand's is around 3 tons/hectare.

Yield gap, namely the difference or gap between actual production and maximum production potential, is sometimes quite large. Several main factors that trigger yield gaps include non-optimal environmental factors such as drought conditions, to errors in cultivation practices such as errors in land clearing and planting, as well as inaccuracies in diagnosis and fertilizer recommendations. This yield gap must be minimized so that palm oil productivity can be maximized.

Sometimes the role of biochar cannot be found or seen directly in various efforts to increase palm oil productivity, but the application of biochar is very much in line with this goal. For example, the success of an palm oil replanting program depends, among other things, on the quality of seeds, fertilization, plant population and soil health. Soil health and fertilization factors can be closely related to biochar. And related to biofungicides to treat ganoderma fungus disorders, biochar can be used as a carrier formulated with other elements such as humus, amino acids, humates, hormones and so on. And because the only effective way to control the ganoderma fungus is to introduce its natural enemies in the form of biofungicides based on Trichoderma spp and arbuscular mycorrhizal fungi into the soil. However, there are still many parties who do not have adequate knowledge regarding the application of biochar.

Apart from boosting production, implementing best management practices is also important to meet sustainability standards amidst increasing pressure from environmental issues. And the application of biochar is very much in line with that point. In fact, regarding low carbon palm oil technology in the application of biochar, it is very relevant to the CECC (Controlled Emission Composting Chamber) and for more details on the application of biochar for composting, read here. Meanwhile, the trend of fertilization in palm oil plantations with the application of slow release fertilizer is also very relevant to biochar, for more details, read here. 

Indonesia's 2026 Palm Oil Replanting Target and Solutions for Utilizing Palm Oil Trunk Waste

Indonesia's stagnant national palm oil productivity requires an immediate solution. If this situation is not addressed promptly, Indonesian palm oil productivity will decline in the future. This is undesirable given the increasing demand for palm oil as a vegetable oil, including its use in biofuel, namely biodiesel. The launch of the B50 biodiesel program demands increased palm oil productivity. However, the question remains: why palm oil? Aren't there other crops that can produce oil with a comparable yield for biodiesel production? Nyamplung is a strong candidate for this; read more details here.

In palm oil, productivity can be increased through the use of superior seeds, replanting, and land intensification. In terms of land area, replanting palm oil plantations, with an ideal target of 5% per year, is very significant. With Indonesia's current 16.8 million hectares of oil palm plantations, that translates to 0.84 million hectares per year. Besides the high costs, the resulting biomass waste, or palm oil trunks, is also substantial. This clearly holds potential for an environmentally friendly bioeconomy-based industry, or circular economy.

With an area of Indonesia's palm oil plantations of around 16.8 million hectares, 9 million hectares are managed by private companies, 550 thousand hectares are owned by state-owned companies (PTPN), 6.1 million hectares belong to people's plantations or small farmers and the rest have not been verified. And based on data from the Central Statistics Agency (2024), recorded 10 provinces in Indonesia with the largest oil palm plantations in sequence, namely Riau province with 3.49 million ha, Central Kalimantan province with 2.03 million ha, North Sumatra province with 2.01 million ha, West Kalimantan province with 1.82 million ha, South Sumatra province with 1.40 million ha, East Kalimantan province with 1.32 million ha, Jambi province with 1.19 million ha, South Kalimantan province with 497.2 thousand ha, Aceh province with 487.5 thousand ha, and West Sumatra province with 379.6 thousand ha. And a total of 26 provinces in Indonesia as centers of palm oil plantations.

The palm oil industry, as one of the national strategic industries, receives significant government support, including the People's Palm Oil Replanting (PSR), which remains a national strategic program, although its realization has not yet reached the target. South Sumatra, as one of the national palm oil plantation centers, also recorded the highest PSR realization. PSR realization in 2025 is approximately 40,000 hectares, or 33% (one-third) of the target of 120,000 ha. This represents a slight increase compared to 2024, which was only 31% of that year's target. Specifically, South Sumatra has replanted approximately 75,000 ha of smallholder palm oil plantations from 2017 to 2025.

The government is targeting a national PSR of 50,000 ha for 2026, a much more realistic figure than in previous years, with South Sumatra province targeting 5,750 ha. However, given Indonesia's oil palm plantation area, the 2024 and 2025 targets of 120,000 ha are very low, especially for 2026, which is only 50,000 ha. Under these conditions, efforts that can be accelerated to increase national palm oil productivity are through the use of superior seeds and land intensification.

Furthermore, ganoderma can lead to the death of palm oil trees. Ganoderma, caused by the fungus Ganoderma boninense, attacks the palm oil's root system, disrupting nutrient and water transport. The process is very slow and is only detected when the infection is severe, resulting in yellowing leaves, drooping crowns, and even plant death. Waste from ganoderma-infected trunks must be removed or destroyed from the plantation to prevent further spread. Like waste from palm oil trunks from replanting, this waste must also be properly managed.

The issue of biomass waste from palm oil trees, which covers thousands of hectares, also presents a challenge. With such a large volume of old palm oil trees, utilizing them to create value-added products is crucial. With such a large volume, biomass processing plants or industries can be established and operate optimally, without worrying about raw material shortages. Products such as pellets, briquettes, and biochar are made from this waste biomass from old palm oil trunks. Old, dead palm oil trunks, often left unattended on land, should be utilized to create these useful, value-added products.

As shown in the diagram above, the potential for utilizing biomass waste, particularly oil palm trunks, is enormous. In the future, industrializing bioeconomics into various products is highly feasible. Palm oil trunk waste should not only pollute the environment and increase costs for palm oil farmers, but instead, it should become a profitable industrial raw material.