JAKARTA – The government has been continually pushing for the implementation of biodiesel 35 percent (B35), which is a blending of 35 percent of fatty acid methyl ester (FAME) from palm oil with the fossil diesel fuel.
The B35 program, which has been implemented by the government since February 2023 as an upgrading of the previous mandatory program of biodiesel 30 percent or B30, needs higher supply of crude palm oil (CPO) and causes the increase of domestic consumption of CPO. As a result, it has also reduced the volume of palm oil for exports.
PT Astra Agro Lestari Tbk (AALI) President Director Santosa confirmed the increase of domestic consumption of CPO for the production of B35. “The B35 program needs 12 million tons of CPO per year. The consumption for foods, for consumers and business to business (B2B), is around 9.0 million tons. So, total domestic consumption is around 21 million tons, while Indonesia’s total production is around 51 million tons,” Santosa said during the company’s event of Talk To CEO 2024, on Friday (16/02/2024).
Meanwhile, the government has planned to implement biodiesel 100 percent (B100) for vehicles. The plan is driven by the need for more ecofriendly energy.
Regarding the B100 program, Santosa said that it will be detrimental for business players in Indonesia. It is because the higher the content of biodiesel, then the higher the supply of CPO needed for its production. “The B100 program implementation will reduce the volume of CPO for export,” he said.
He said that with the decrease of CPO portion for export, the fund collected by the oil palm plantation fund management board (BPDPKS) as export levy for biodiesel subsidy will also decrease.
“Then, if there is no export, who will fund it? That’s my calculation. But it’s okay if the price of palm oil significantly drop,” he said.
The plan of B100 was initially adopted by the presidential candidate Prabowo Subianto as part of his political campaigns. Prabowo is optimistic that Indonesia can reach energy self-sufficiency with the B100 for fossil diesel fuel and ethanol 100% (E100) for gasoline.
Currently, Indonesia relies on imports of crude and oil fuels (BBM) to meet the rising local need, as its local production is declining due to natural decline in most of its oil-gas working areas, which are mostly mature, while many new projects with big reserves are not yet onstream. (*)