Indonesia to propose 1 percent biofuel mandate, as state oil company halves biofuel blending due to high prices

January 22, 2008

In Indonesia, the National Biofuel Development Committee is expected to propose a 1 percent biofuels mandate in this year’s legislative session. The proposed mandate would increase biofuels consumption from 7 Mgy to 158 Mgy. Meanwhile, the state oil and gas company Pertamina said it was reducing biofuel blends from 5 percent to 2.5 percent in its biosolar and biopremium products owing to losses of $1.8 million resulting from high ethanol and crude palm oil prices.

The secretary of the Indonesian Biofuel Development Team had told the Reuters Global Agriculture and Biofuel Summit earlier this month that Indonesia plans to substitute 10 percent of its fossil fuel usage with biofuels by 2010. The move is reportedly aimed at reducing the size of the government fuel subsidy without raising consumer prices. Cassava and molasses are expected to be the primary feedstocks.

Indonesia said recently that it would return to a B5 standard by 2010, based on projected yields from new palm and jatropha cultivation. The state oil company, Pertamina, reduced blending from B5 to B2.5 owing to a 50 percent increase in palm oil prices. Indonesia will overtake Malaysia in 2007 as the largest producer of palm oil and expects to produce 20 million tonnes by 2010, up from 17 million tonnes in 2007.

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Written by Jim Lane · Filed Under International, Policy, Producer News