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new ministerial regulation on the supply and use of biodiesel may help boost consumption of diesel containing 20 percent biofuel next year.

The regulation, issued last week by the Energy and Mineral Resources Ministry, makes it mandatory for non-subsidized diesel fuel to also contain a 20 percent mix of biofuel. A penalty of Rp 6,000 (46 US cents) per liter will be imposed on those who violate the regulation.

The regulation also stipulates that biofuel producers must register with the government to provide supplies for fuel businesses. A team set up by the Energy and Mineral Resources Ministry, with members representing the ministry, the Indonesian Oil Palm Estate Fund (BPDP) and fuel businesses, will later assess their applications and decide who makes the final cut.

The Biofuels Producers Association (Aprobi) has applauded the regulation and claims that the new regulation will help promote the consumption of environmentally friendly fuel and particularly boost the consumption of diesel fuel containing 20 percent biofuel to almost 6 million kiloliters by the end of 2017.

“We support this regulation because it will help boost the amount of biodiesel used in our country,” Aprobi chairman Paulus Tjakrawan told reporters on Thursday.

The mandatory biodiesel mix is part of the government’s policy to encourage the use of non-fossil fuels. Under the program, biofuel — mostly made of palm oil — is expected to replace diesel fuel as part of the effort to reduce carbon emissions and the country’s dependency on petroleum-based fuel. The program also aims to jack up the commodity’s price, which has been under pressure amid a global economic slowdown.

The mandatory diesel/biofuel blend increased from 10 percent in 2013 to 15 percent in 2015 and to 20 percent this year.

Although the government has set a target of 3 million kiloliters of diesel containing biofuel this year, Paulus said he was pessimistic about the target as he estimated that national production would only reach 2.6 million kiloliters by year-end.

BPDP director Dadan Kusdiana also acknowledged the slow adoption of the diesel/biofuel blend policy.

“We are expecting to meet the target. However, as I understand it, the realization of the mandatory blend of non-subsidized diesel fuel is very low to date,” he said earlier this year.

Even though Aprobi appreciated the new regulation issued as it levelled the playing field between subsidized and non-subsidized biodiesel, Paulus said the government still needed to clear up some details in the policy to ensure business certainty.

Among the unclear stipulations is the detailed mechanism on how the evaluation team will approve of biofuel producers registered to provide supplies to fuel businesses.

“There needs to be a detailed account, either through a supporting regulation issued by the director general or guidance on the implementation of the ministerial regulation regarding the selection and appointment of biofuel producers,” Paulus said.

The Energy and Mineral Resources Ministry’s Directorate General of Renewable Energy and Energy Conservation, which will supervise the implementation of the mixture policy, could not be immediately reached for comment regarding the implementation of the new regulation.

Furthermore, the association called on the government to clarify the subsidy payment mechanism as most producers remained confused regarding the subject.

While the mandatory biodiesel program in previous years was funded through the state budget, the government has used the crude palm oil (CPO) fund sourced from levies on CPO exports since July last year. The BPDP has been assigned to manage the fund.
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