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he Agency for the Assessment and Application of Technology (BPPT) has urged the government to maximize the production of biodiesel by increasing the export tax on crude palm oil (CPO) and opening oil palm plantations to exclusively produce biodiesel.

By increasing its biodiesel productivity, Indonesia could save more than half of its diesel fuel imports, according to BPPT deputy for information technology, energy and material, Unggul Priyanto.

Indonesia consumed over 31 million kiloliters (kl) of diesel per year, including for industrial use. Meanwhile, the production of CPO reached 23 million tons or equal to 25 million kl, said Unggul.

'€œIf food takes up around 8 million kl, then the remaining 17 million kl can be used for biodiesel. It'€™s more than half [of the total consumption],'€ Unggul said at a public discussion on how to reduce fuel imports.

At present, most palm oil producers chose to export their CPO due to higher global prices, he said.

Thus, the BPPT has suggested that the government impose higher export tax on producers in the hope that palm oil business players will process it into biodiesel.

'€œWe have the capacity to produce 4.6 million kl of biodiesel [per year], but only 2.2 million kl of capacity was used,'€ said Unggul.

Out of 2.2 million kl of biodiesel, the country only used 750,000 kl and exported the rest due to the minimum demand from the domestic market, he said.

Another suggestion by the BPPT was for the government to introduce so-called '€œenergy plantations'€ or oil palm plantations that produced CPO for biodiesel only, said Unggul.

'€œ[The government] can do this through its state-owned companies,'€ he added.

Being a tropical country with lots of rain, Indonesia has huge potential for oil palm plantations, '€œespecially in those regions on the equator, like Kalimantan and Sumatra,'€ Unggul said.

Indonesia had more than 45 million hectares of land suitable for oil palm plantations, outside conservation forests, according to Unggul. Only around 9 million hectares of land has so far been used, he added.

A 2013 Energy and Mineral Resources Ministerial Decree stipulates that diesel should be mixed with biodiesel to a composition ratio of 90 percent to 10 percent.

With that obligation, consumption of biodiesel grew to 3.5 million kl per year, he said.

Biodiesel is not a new issue for Indonesia. In 2008, the high price of fuel caused the government to mix biodiesel with fuel to reduce fuel consumption. However, as the price of CPO also increased, the policy was changed, causing companies to cancel their development plans for biodiesel. (nai)