Indonesia will need to boost the bio-content of its palm oil-based biodiesel to 40% by 2024 or become unaccounted for its renewable energy targets. The country already had a mandatory biodiesel programme with 30% palm oil content, commonly known as ‘B30’, which just alone is no longer viable.
Under the ‘B30’ mandate, Indonesia blends 30% palm-oil-based fuel into its biodiesel to lower its fuel imports and boost domestic production of palm oil. This south Asian country is the leading palm oil producer and exporter and has been gradually increasing the bio content of its biodiesel, aiming to absorb growing supplies of palm oil while also trimming costly fuel imports. The record-high palm prices have already delayed the country’s original plan of increasing the content to 40% by 2021.
Dadan Kusdiana, the director-general of the country’s energy ministry said that the ministry will be now preparing for ‘B40’ blending regulations to ensure investment certainty. The energy ministry has projected an increase of 10 million kilolitres of biodiesel consumption for the next year. The goal is to increase renewable energy use to 23% of its total energy consumption by 2025, which requires biodiesel consumption of 13.9 kilolitres a year. The only way to keep up with such demand is by increasing overall biodiesel consumption. Since fuel prices bottomed out amidst the global pandemic, petrol and diesel prices at the pump in Asia and Europe reached near-record peaks in 2021, making palm a more attractive feedstock for biofuels.
Indonesia accumulates taxes and levies to help finance all its palm oil plans, including biodiesel subsidies, as well as smallholder replanting programmes. The country previously increased its crude palm oil levies to record highs in 2021, and is estimated to collect 71 trillion Rupiah (€4.3 billion) this year, affirmed president director of the fund collection agency, Eddy Abdurrachman. Further, he added that the projected spending will be 75% more, on biodiesel alone in 2021, with as much as 49 trillion rupiah ( approx. € 3 billion) compared to 28 trillion rupiah (€ 1.7 billion) last year.
(1 Euro = 16,249.08 Indonesian Rupiah)