Indonesia considers mandatory use of biofuel

Indonesia is considering bringing in a mandatory policy for the use of palm-based biodiesel in the domestic market this year according to government officials. “The government is studying a mandatory policy for palm biodiesel mix, for example starting with a 3% mix,” Franky O. Widjaja, chairman of the Indonesian Palm Oil Board said. State oil firm Pertamina has been selling biodiesel since 2006 but rising palm oil prices and the lack of a mandatory policy, as well as incentives, has prompted the firm to cut the blend in its diesel fuel from an initial 5% to 2.5% and then 1%. The combined capacity for biofuel using palm oil as a feedstock in Indonesia is 1.7 million tons per year and the country exported an estimated 300,000 tons in 2007, according to data from the Indonesian Biofuel Producers’ Association. But a lack of domestic demand amid rising palm oil prices has meant that five out of the nine firms in the Indonesian palmoil-based biofuel sector have been using less than 10% of capacity or have stopped operations, the association said. (May 21, 2008)