The 5-percent increase in biodiesel is expected to save US$1 billion in oil imports a year, in addition to supporting clean energy.

Energy and Mineral Resources Minister Ignasius Jonan said his office was in the process of drafting the regulation and dealing with biodiesel mix technicalities.

With the B25 regulation, the ratio of biodiesel to petroleum diesel will be 25 percent to 75 percent. 

“We are currently discussing the regulation and the technicalities. This is aimed to make Indonesia [adopt] clean energy,” Jonan told The Jakarta Post in Helsinki on Tuesday during a visit to Europe. 

Jonan said given the current oil price, a five-percent increase in palm oil-based biodiesel in the diesel mix would cut the state’s expenditure by up to $1 billion a year from total oil imports. 

To support the new regulation, Jonan called on biodiesel makers to encourage diesel-engine manufacturers to support the policy. He said the use of biodiesel, which had been implemented in railway engines and heavy machinery in the mining industry, could take place due to support from engine manufacturers. 

“If they give their support technically, we can immediately run the policy,” said Jonan. 

The minister said the government alone could not enforce the B25 regulation if engine manufacturers in the country did not make adjustments to their products in line with the policy.

Therefore, he suggested that biodiesel producers immediately hold a meeting with diesel-engine manufacturers to come to an agreement over the B25 regulation. 

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When the new policy is implemented, diesel fuel distributed by state-owned energy giant Pertamina and AKR Corporindo, a distributor of basic chemicals and petroleum products, can be mixed directly with palm oil.

“Aside from reducing carbon emissions, the purpose of this policy is to reduce oil imports,” Jonan said, adding that the government would increase the biodiesel mix to 30 percent in the near future.

Meanwhile, the chairman of the Biofuel Producers Association (APROBI), MP Tumanggor, said he fully supported the government’s decision to implement the B25 policy.

“In fact, the faster it is implemented, the better,” he said. 

The policy alone is in line with Indonesia’s goal to reduce carbon emissions and fight global warming, as was agreed upon at the United Nations Climate Change Conference, COP21 in Paris in 2015.

The regulation is also expected to help in the production of crude palm oil (CPO) for the domestic market. Indonesia produced 34 million tons of CPO in 2016.

“So we do not have to worry about the obstacles that the EU put in place to export CPO”, he said, referring to the EU’s plan to phase out biodiesel use by 2021. 

Tumanggor said he believed there would be a balance between supply and demand in the market and that, within two or three years time, CPO production would reach 40 million tons per year.

According to APROBI, the capacity of domestic biofuel production is currently at 11 million kiloliters. Meanwhile, with the B25 policy, five million kiloliters could be absorbed by the domestic market, which could result in an increase in CPO prices. 

“If the CPO prices increase, the farmers’ and the country’s revenues will also increase,” he said. 

Moreover, regarding the readiness of engine manufacturers in adopting the B25 policy, Tumanggor expressed optimism. 

“Engine producers such as Hino, for example, have passed the test for B30 biodiesel. So we expect other producers, such as Toyota and others, to do the same,” he said, adding that he hoped Industry Minister Airlangga Hartarto could convince domestic automotive manufacturers to support the B25 policy. 

“We have to save our palm oil commodity. We have to remember that there are 16 million people who are employed in this sector.” (roi)

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