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RI may backpedal in biodiesel program
The National Energy Board (DEN) has called on the government to reconsider implementing the 30 percent biodiesel blending (B30) policy in 2020, following mounting complaints from various stakeholders
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he National Energy Board (DEN) has called on the government to reconsider implementing the 30 percent biodiesel blending (B30) policy in 2020, following mounting complaints from various stakeholders.
Indonesia started implementing the 20 percent biodiesel blending (B20) policy in the transportation and industry sectors last year and plans to upgrade it to B30 in 2020 to further cut its greenhouse gas emissions and boost the use of new and renewable energy.
However, DEN member Syamsir Abduh said there had been some technical hurdles in the implementation of the B20 policy, as such biodiesel might not be compatible with engines used in locomotives and heavy mining equipment, among other things.
“Therefore, we recommend that the government review its plan to implement the B30 policy in 2020 in order to prevent further technical problems in the future,” Syamsir said on Thursday.
The Energy and Mineral Resources Ministry has offered relief to state-owned railway operator PT Kereta Api Indonesia (KAI) by exempting the company from having to use the B20 biodiesel from May to October, following sporadic engine failures in its locomotives.
The problem is down to the nature of biodiesel, which can degrade quicker than regular diesel fuel and, as a result, forms sediments that can plug fuel filters in a combustion engine and decrease the power of the locomotive.
“Locomotive engines, such as the ones supplied by General Electric, are only compatible with 5 percent-blended biodiesel. If we increase the percentage, the engine users will subsequently lose their manufacturer’s guarantee,” said DEN member Abadi Poernomo.
He further said that this could happen not only in locomotives, but also in heavy mining equipment and regular cars. “Heavy equipment users have also seen their operational costs rising because they have to replace the fuel filter more often than usual. Hence, they have started to be reluctant to follow the biodiesel blending policy,” Abadi said.
Furthermore, the DEN also acknowledged there had been concerns that B20 biodiesel would degrade the performance of primary defense systems (Alutsista), resulting in further reluctance to support the blending policy.
Hence, the DEN plans to conduct a joint study involving all relevant stakeholders to settle all problems surrounding the implementation of the biodiesel blending policy, as well as to kick off its long-delayed bioethanol blending program.
The government had previously set a target to start in 2016 the 5 percent bioethanol blending (E5) policy for the industrial, commercial and non-public service obligation (PSO) transportation sectors and a 2 percent blending (E2) for the small business, fisheries, agriculture and PSO transportation sectors.
But since 2010, there has been no fuel-grade ethanol production in Indonesia due to price volatility and a lack of demand, forcing the bioethanol blending program to go nowhere.
Therefore, the DEN has proposed an idea to the government to make a swap deal with Thailand, through which Indonesia will be able to exchange its biodiesel for fuel-grade ethanol from its Southeast Asian neighbor.
“We also expect the Finance Minister to consider giving certain incentives for the bioethanol blending program, especially related to the import duty for fuel-grade ethanol,” Syamsir said.
He said the next task was then to ensure that the country’s automotive industry was ready, particularly in terms of the specifications of vehicle engines, to absorb the bioethanol-blended fuel.
Once the industry and the supply are ready, the DEN expects that bioethanol-blended fuel can be distributed under a PSO program with the help of state-owned energy giant Pertamina and chemical distributor PT AKR Corporindo, similar to the current distribution scheme for biodiesel.
“That way, Pertamina, for instance, can blend bioethanol with its gasoline products with a research octane number [RON] of at least 92 and sell it at each of its gas stations nationwide,” Syamsir said. “But we should carefully manage the pricing policy, because if the price of the blended fuel is far above that of regular fuel, customers won’t be attracted and this program will be useless.”
Nonetheless, as the bioethanol index price is currently higher than the price of Pertamina’s RON-92 gasoline called Pertamax, the firm might have to bear some financial burdens to offset a gap of between Rp 1,000 (7 US cents) and Rp 2,000.
