Palm oil has become a staple ingredient in countless everyday products, from food to cosmetics, yet the waste it generates is often a hidden environmental burden. In North Sumatra, Indonesia, a new initiative is showing how this waste can be transformed into clean energy.

At the heart of this effort is Pertamina New & Renewable Energy, a division of Pertamina, Indonesia’s state-owned energy company. Pertamina is the country’s largest oil and gas enterprise, founded in the 1950s, and today it is expanding into renewable energy projects to reduce reliance on fossil fuels.

In the Sei Mangkei Special Economic Zone, an industrial hub designed to attract manufacturing and investment, Pertamina has built a biogas power plant that takes palm oil mill effluent—a liquid byproduct that typically pollutes rivers and releases methane—and converts it into electricity. Since 2020, the facility has processed hundreds of cubic meters of waste daily, producing tens of thousands of megawatt hours of power and preventing hundreds of thousands of tons of carbon emissions.

The zone itself has grown rapidly, with factories increasing from just a handful to more than thirty. Energy demand has surged, and renewable sources currently meet only a small portion of that need. Pertamina has set a goal of supplying one fifth of the zone’s electricity through clean energy, adding solar installations alongside the biogas plant. Rooftop and ground-mounted solar projects are already underway to expand capacity.

Financially, the project has proven viable. The biogas facility generates steady monthly revenue, while solar units add additional income streams. Pertamina’s investment model allows costs to be recovered quickly, showing that sustainability can align with profitability. This combination of environmental benefit and economic return is reshaping how industrial zones can operate, turning waste into a resource rather than a liability.