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B30 biodiesel addresses more than EU palm oil policy
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Buoyed by the success of the B20 program, the government decided to increase CPO content in biodiesel to 30 percent. Called B30, this biofuel will be introduced in early 2020. (JP/Budi Sutrisno)
T
ariff and nontariff barriers have continued to hinder the growth of Indonesia’s crude palm oil (CPO) exports, especially to Europe and the United States, since the 1990s when the country became a major player in the palm oil industry.
Facing such rising trade protectionism, President Joko"Jokowi" Widodo realized the urgent need for strategic steps not only to solve the problem of CPO exports but also to strengthen the structure of the palm oil industry alongside the economy as a whole.
One of the programs was the launch of B20 biodiesel, which contains 80 percent diesel fuel and 20 percent fatty acid methyl ester (FAME). The B20 program has not only significantly expanded the domestic CPO market but has also reduced the current account deficit due to a decrease in fossil fuel imports.
Buoyed by the success of the B20 program, the government decided to increase CPO content in biodiesel to 30 percent. Called B30, this biofuel will be introduced in early 2020.
The B20 and B30 programs will certainly further expand the domestic demand for CPO and will solve the export problems caused by two European Union policies.
The first, introduced last March, restricts the volume of palm oil biofuels and totally phases out palm oil-based products from the renewable energy program starting in 2030. The second policy, adopted last August, increases tariffs, ranging from 8 to 18 percent, on palm oil imports which the group said were subsidized.
The target of CPO consumption for the B20 program was 6.2 million tons this year, not including CPO for food consumption, but our estimate is that the target will most likely be overshot as the demand for biodiesel has steadily increased.
