Biodiesel in Indonesia comes from palm oil. Palm oil has become the pioneering vegetable fuel used in Indonesia compared to other vegetable fuels such as jatropha, waste oil, castor oil, or candlenut oil. Due to its renewable nature, vegetable-based fuels like palm oil must be preserved to ensure sustainability. The transformation from fossil fuel to biodiesel in Indonesia requires adaptation. This process is supported by a government program known as the mandatory biodiesel policy. It stipulates that the use of biofuel blends with diesel (solar) will be gradually increased.
When the diesel blend contains 35% biofuels, it is called B35 (biodiesel with 35% vegetable fuel content). The B35 program has been mandatory in Indonesia since February 2023 and will be fully implemented in August 2023. The following program, B40, is currently undergoing testing and is expected to yield results in January 2023.
According to infosawit.com, substituting fossil fuels with biodiesel is a strategic effort to promote renewable energy use in Indonesia. It aims to reduce foreign exchange expenditures resulting from decreased diesel oil imports, increase the value-added of crude palm oil (CPO), create job opportunities, and reduce greenhouse gas emissions. The B35 program is projected to provide employment for approximately 1,653,974 people and reduce greenhouse gas emissions by about 34.9 million tons of CO2e.
These aspirations can be projected through biodiesel usage data in Indonesia for 2023. As of June 25, Indonesia has consumed 5.2 million kiloliters of biodiesel out of the allocated 13.15 million kiloliters for the year. To maintain these strategic achievements, palm oil production must be increased. The increase in palm oil production in Indonesia is necessary to prevent potential supply shortages caused by adverse weather conditions associated with early signs of the El Niño phenomenon. Failure to increase palm oil output will result in a global decline in its supply, leading to increased prices this year.
Additional information: The price of palm oil in Indonesia ranged from $747.23/t from July 1-15, an increase from the previous price of $723.45/t. Malaysia also experienced an increase in the price of palm oil, reaching $804.45/t. To maintain price stability, Malaysia reduced palm oil exports by 4.5% from June 1-25, while Intertek Testing Services reported an 8.7% decrease compared to the corresponding period in May.