Indonesia Plans to Hike Biodiesel Mandate in Next Few Years

BIODIESEL - JAKARTA. Indonesia plans to raise its mandatory palm oil-based biodiesel blending to 40% in the next few years, but for now will keep it unchanged at 35%, the country's energy minister said on Monday.

The world's biggest palm oil producer raised mandatory blending from 30% to 35% in February, however it has not been fully implemented in some areas.

"Right now we stay with B35, and then we do preparation for B40. When we feel (it is) ready, then we launch," Indonesian Energy Minister Arifin Tasrif told Reuters in an interview on the sidelines of the Energy Asia conference on Monday.

Arifin said Indonesia wants to maximise the use of domestic resources and reduce dependency on crude oil, and authorities have completed research and road tests for B40.

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Eddy Abdurrachman, CEO of Indonesia's CPO fund agency that is in charge of providing biodiesel subsidy, said the B35 mandate had not been fully implemented as there were issues with some blending facilities that need to be upgraded.

The ministry is pushing the B35 mandate to be fully implemented by Aug. 1.

Energy ministry official Edi Wibowo said biodiesel consumption as of June 25 stood at 5.2 million kilolitres, of 13.15 million kilolitres allocated for this year.

Indonesia's biodiesel policy and the likely emergence of the El Nino weather pattern could further strain global inventories of the most used cooking oil, lifting palm oil prices this year, according to leading industry officials and analysts.