Detail

Indonesia

Biofuels

Biodiesel

01/03/2018

Renewable energy

Biofuel policy

Considered widening the scope of the country’s biodiesel support policy by channelling subsidies not only to stateowned petrol companies but also to small private outlets, as part of ambitious plans to expand domestic consumption of palm-biodiesel.

To date, government subsidies for mandatory sales of biodiesel (i.e. diesel blends containing 20 percent of palm oil-based biodiesel) have only been made available to the energy sector and for transport fuels sold to the public through state-owned company Pertamina, also known as Public Service Obligation (PSO) sales. According to local media reports, the Government is now considering to expand the scope of its biodiesel subsidies to the country’s mining industry and to the non-PSO sector, i.e. fuels sold through private sector outlets. The move would be part of ambitious plans to further expand domestic consumption of palm-biodiesel. While, for PSO sales, the Government would continue to fully cover the price gap between conventional diesel and biodiesel, the subsidy for non-PSO distributors could be capped at IDR 4 000 per liter (USD 0.29). Reportedly, the Government is also considering to reinstate biodiesel blends in the country’s locomotive sector, where mandatory blending had been suspended last year following cases of engine failure. Based on recent positive performance tests, low-concentration blends (containing up to 5 percent of biodiesel) may be introduced in mid-2018.