Indonesia's B30 biodiesel plan a boost to domestic palm oil consumption

Indonesia's B30 biodiesel plan a boost to domestic palm oil consumption

Indonesia will roll out B30 biodiesel, a fuel blend with a bio-content of 30 per cent, in January 2020.

B30 biofuel
Indonesia will make B30 biofuel mandatory beginning January 2020. (Photo: Kiki Siregar)

JAKARTA: Mr Rudi pulled up next to a pump in a petrol station in Jakarta. He lifted a grey nozzle and filled up his truck with palm oil-based B20 biodiesel. 

At 5,150 rupiah (US$0.37) a litre, the biodiesel is half the price of the regular diesel available at all petrol stations.

“B20 is more affordable. In my opinion, it is also more energy-efficient,” said Mr Rudi, who like many Indonesians go by one name.

Biodiesel is not a new concept in Indonesia, with the Agency for the Assessment and Application of Technology (BPPT) carrying tests since 2004.

B15 – a fuel blend of 15 per cent palm fatty acid methyl ester and 85 per cent of conventional diesel fuel – was made mandatory in 2015 for diesel-reliant industries.

A year later, B20, which has a bio-content of 20 per cent, was produced to replace B15.

However, it was not until September 2018 that the government made it mandatory for the respective industries.

And now, the government decided that B30 will be made mandatory from January next year. 

B30
Indonesia has conducted road tests for B30 between June and October 2019. (Photo: Kiki Siregar)

Mdm Andriah Feby Misna, director of bioenergy at the Ministry of Energy and Mineral Resources, told CNA that the ministry is now ready to distribute B30 to selected retailers.

"We are going to do a market trial from next week until the end of December in a few selected locations.

“The official implementation will then start on Jan 1, 2020,” she said.

The Indonesian government’s decision came amid slowing global demand for palm oil – the archipelago’s main export commodity – exacerbated by Europe’s anti-palm oil rhetoric.

Experts believe that producing more biofuel will save the palm industry, and at the same time, reduce imports of fuel.

However, the consumption of biofuel has also contributed to the opening of new palm plantations in Indonesia, an unintended effect.

READ: It all begins with a lit match: Long odds in hunt for forest fire culprits in Indonesia

REDUCING FUEL IMPORTS A MAJOR BENEFIT

With an output of 43 million tonnes in 2018, Indonesia is the world’s biggest palm oil producer.

The country needs about 1.7 million barrels of oil every day for its 260 million people, but it only produces about 800,000 barrels, according to ministry data.

Importing fuel is costly and contributes to trade deficit, so the government was determined to find a solution.

“The easiest method is to substitute our diesel consumption with biodiesel. It consists of palm oil and methanol,” said Mr Arie Rahmadi, head of Indonesia’s Center for Fuel Technology and Design Engineering at the BPPT.

B30 test
B15 Biofuel was made mandatory in Indonesia in 2015. (Photo: Kiki Siregar).

The policy to make B30 mandatory in 2020 was decided in August, after the European parliament issued a resolution in 2017 to phase out palm oil in biofuel. The European Union (EU) has insisted that palm industry is the cause of deforestation.

The ban worried Indonesia as the EU is its second-largest palm oil market after India, consuming about 7.5 million tonnes of palm oil yearly.

Mr Rahmadi said the introduction of B30 is a practical solution.

“Our crude palm oil is banned abroad. If the palm oil is not sold, what will happen to our farmers? That’s why we have to use B30,” he said.

Indonesia's palm fruit
A man is resting in front of a stack of palm fruit in Jambi, Indonesia. (Photo: Kiki Siregar)

The use of biodiesel has also created new jobs, as factories were built to process the fuel, he added.

Mr Rahmadi said biofuel is known to be environmentally friendlier than fossil fuel because it has less greenhouse gas emissions.

With B30, the government estimated it can save 60 trillion rupiah from fuel imports in 2020.

If the switch to B30 is successful, President Joko Widodo wanted the country to start planning for B50.

READ: Murder of Indonesia palm oil activists shows growing threat, rights groups say

SLIGHT DECREASE IN FUEL ECONOMY

While it focuses on expanding the biodiesel programme, the Indonesian government also wants to ensure that palm oil-based biofuel is suitable for vehicles.

Mr Rahmadi explained that it will take time for the engines to adapt to biodiesel.

“Vehicle engines are designed to run on mineral oil. If we mix them, the engines can adjust gradually, so blending diesel with palm oil is an effective way to slowly substitute mineral oil,” he said.

biodiesel at petrol station
Biodiesel (right) is mandatory for diesel-reliant industries in Indonesia. (Photo: Kiki Siregar)

He also pointed out that the vehicle oil filters would need to be replaced more often if biodiesel is used.

“At the moment we are enhancing the quality of our biodiesel. But it is still within the standard of the manufacturer,” he added.

Another issue is fuel economy, which will see a 2 per cent decrease if biodiesel is used. This means that consumers will have to be prepared to spend more.

“Scientifically, it is 2 per cent for B20 but one can say it is negligible. The impact is only significant if one has a shipping business,” Mr Rahmadi said.  

Jakarta's traffic
Indonesia needs about 1.7 million barrels of oil daily. (Photo: Kiki Siregar)

To ensure the smooth implementation of B30, the government has carried out road tests between June and October this year.

Trucks of four different makes with carrying capacity of up to 3.5 tonnes hit the road until they hit a mileage of 50,000km.

“The result showed that there is no significant difference between B20 and B30. It (B30) is not better than B20, they are the same,” Mr Rahmadi said.

The Association of Indonesia’s Automotive Industries is supportive of the B30 programme, its president Mr Yohannes Nangoi told CNA.

“We are very supportive because the B20 programme has already been implemented without problems. Based on the B30 tests, everything seemed okay except for minor problems with the water content, but that shouldn’t be a problem,” he said.

“The fact that it is cleaner than fossil fuel makes it a better choice. Palm oil doesn’t contain sulphur,” he added.

READ: India resumes buying Malaysian palm oil as Kuala Lumpur offers discount: Traders

NEW PALM PLANTATIONS ARE DEVELOPED

While Indonesia is getting ready to switch to B30, neighbouring Malaysia will roll out B20 biodiesel next year, starting with Langkawi and Labuan.

On Tuesday (Nov 19), a Malaysian government official said palm oil producers will set up a joint fund to counter critics of the industry.

The fund will be run by the Council of Palm Oil Producing Countries, an industry body set up by Indonesia and Malaysia, Reuters reported.

Mr Dono Boestami, chief executive of the Palm Oil Plantation Fund Management Agency, told CNA that Indonesia’s priority is the livelihood of palm smallholders.

“This is important because it affects 17 million Indonesians who are dependent on this industry,” he said.

Indonesia forest fire
Fire raging in Jambi, Indonesia on Sep 25, 2019. (Photo: Kiki Siregar)

However, as long as lands are cleared using the traditional slash and burn method, biofuel will remain controversial.

The head of Indonesia’s disaster agency Mr Doni Monardo had stated in September that 99 per cent of land and forest fires, which spewed toxic haze across the region, were man-made.

Mr Rahmadi from the Center for Fuel Technology and Design Engineering admitted that the introduction of biodiesel in Indonesia had resulted in the opening of new palm plantations.

“But we have to be careful here. They cannot clear protected forests. That’s what we need to emphasise,” he said.

Source: CNA/ks(tx)

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