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Asian Viewpoints

Concerns about use of biodiesel due to high palm oil prices in Indonesia

The Indonesian government seems to have abandoned the originally planned introduction of biodiesel fuel (B40) with a bio-based component of 40% by the end of the year. The current ratio is 30% (B30). The Indonesian government may have decided that switching from B30 to B40 would be a burden to the people. There is widespread belief that the introduction of the B40 has been postponed almost indefinitely. Indonesia is obliged to mix bio-based materials with transportation diesel fuel, and originally planned to raise the mixing ratio to 40% in the middle of this year. Despite a rapid recovery in fuel demand, crude palm oil (CPO) prices continue to soar, and B40 production costs are well above initial estimates. International prices for CPO have risen to 5,160 Malaysian Ringgits ($1,237) per ton as of mid-October, up 73% year-on-year. Indonesian market players have low hopes that B40 will be introduced in 2022 as well. However, biodiesel fuel has become established as one of the main fuels in Indonesia. The number of gas stations providing B30 has increased to 5,518 by the October-December period of this year. In addition, state-owned Pertamina, a major producer of biodiesel fuel, reportedly supplied 13.3 mil kl of biodiesel in 2020.

Singapore : Energy Desk  Satoshi Hagimoto   +81-3-3552-2411Copyright © RIM Intelligence Co. ALL RIGHTS RESERVED.