Indonesia aims to boost palm oil-based biodiesel use to 40%

Indonesia, the globe's leading palm oil producer, has disclosed plans to increase its obligatory palm oil-based biodiesel blending to 40% in the coming years. However, for the time being, the mandate will remain fixed at 35%, as stated by the country's Energy Minister, Arifin Tasrif.

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In February, the country raised its mandatory blending from 30% to 35%, yet the implementation of this increase has been patchy across different regions. “At present, we will continue with the B35 policy, and simultaneously work towards preparing for the B40. Once we are assured of our readiness, we will launch the initiative,” the Energy Minister elucidated during an interview with Reuters on the sidelines of the Energy Asia conference.

The strategy behind this move is the nation’s ambition to maximise the utilisation of its domestic resources and curtail its dependence on crude oil. The minister further revealed that pertinent research and road tests for the B40 have already been concluded.

Indonesia’s Crude Palm Oil (CPO) Fund Agency CEO, Eddy Abdurrachman, whose organisation is responsible for the provision of biodiesel subsidies, confirmed that the full implementation of the B35 mandate has been somewhat hindered. This delay is due to issues with certain blending facilities that need to be enhanced.

The Indonesian Ministry of Energy is actively pushing for the B35 mandate to be fully implemented by August 1st of this year. Energy ministry official, Edi Wibowo, revealed that as of June 25th, biodiesel consumption in the country stood at 5.2 million kilolitres, out of the 13.15 million kilolitres allocated for the year.

The new biodiesel policy, coupled with the potential re-emergence of the El Nino weather pattern, may exert additional pressure on global inventories of the world’s most consumed cooking oil. This could potentially lead to an increase in palm oil prices this year, as per insights shared by industry leaders and analysts.

Indonesia’s strategic move towards the wider adoption of biodiesel aims to capitalise on the country’s rich palm oil resources, while concurrently making strides towards sustainable energy practices. However, it’s clear that careful planning, research, and infrastructure development will be crucial in ensuring a successful transition.

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