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B30 biodiesel policy to stay despite cooking oil shortage
Palm oil smallholders had called for a scaling-back of the policy.
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President Joko "Jokowi" Widodo (right) speaks with Coordinating Economic Minister Airlangga Hartarto before leading a limited Cabinet meeting in Jakarta on Feb. 17, 2020. (Antara/Hafidz Mubarak)
T
he government will uphold the mandatory mix of 30 percent palm oil in biodiesel (B30) despite calls from palm oil smallholders to scale back the policy.
Coordinating Economic Minister Airlangga Hartarto said on Tuesday that lowering the mandatory blending requirement from 30 percent to 20 percent (B20) – as requested by the smallholders – would mean increasing oil imports, which would strain the state budget through greater subsidy spending.
“Today, importing oil is not wise because today that commodity is at its highest price,” Airlangga told The Jakarta Post during an exclusive interview.
Crude oil prices shot to a near 14-year high of US$140 per barrel in early March as rising energy demand amid a global economic recovery was escalated by fears surrounding the Russia-Ukraine war.
The Palm Oil Smallholders Union (SPKS) and Indonesian Farmers Union (SPI) had called on the government to reduce the B30 policy as an alternative to raising palm oil export levies to ensure sufficient domestic cooking oil supplies.
Read also: Indonesia raises palm oil export levies
The unions reasoned that reducing the B30 policy would mean lowering spending on biodiesel subsidies, which is sourced from the Crude Palm Oil Support Fund (BPDKS), a fund that is also being used to subsidize cooking oil and help for palm oil farmers.
