Revving up: in Indonesia
Jakarta makes biofuels mandatory
Indonesia has issued a ministerial decree that will make the use of biofuel mandatory from 2009, Energy Minister Purnomo Yusgiantoro said today.
The resource-rich nation has been pushing for the use of biofuels to cut the use of costly petroleum products and to help ensure the survival of its fledging biodiesel industry.
"Food prices have eased, so we can use biofuel to meet energy demand. The use of mandatory biofuel will be effective from January 2009," Yusgiantoro told Reuters.
Rising prices for palm oil had led some biofuel producers to temporarily scale back output because it no longer provided a cheap alternative to diesel.
State oil producer Pertamina, which has been selling biodiesel since 2006, cut the blend in its diesel fuel from an initial 5% to 2.5%, citing rising palm oil prices and the lack of a mandatory policy.
The decree states that for biodiesel, transportation must use a blend of 1% palm-based biodiesel and 99% diesel oil, while industry and power plants must use a blend containing 2.5% and 0.25% palm-based biodiesel respectively.
By 2010, the palm-biodiesel content will be increased to between 2.5% to 3% for transport, 5% for industry, and 1% for power plants.
For bioethanol, the use of a 1% to 5% blend of bioethanol and 99% to 95% of gasoline for transport will become mandatory in 2009.
Industry will have to use a 5% blend of bioethanol - which is made from cane molasses and cassava feedstock - and 95% gasoline next year, increasing to 7% by 2010.
Evita Legowo, director general of oil and gas at the energy ministry, said that the government would start trials for the blends from 1 October.
Indonesia's combined capacity for biofuel using palm oil as a feedstock is 2 million kilolitres per year, but it is running at 20% of capacity, data from the national biofuel development team shows.
With the introduction of the mandatory policy, biodiesel capacity would rise to 5 million kilolitres a year by 2010, the government said recently, although it could also push up the price for palm oil.
Indonesia produced 17.18 million tonnes of crude palm oil in 2007, of which 3.8 million tonnes was used in the domestic market, mostly for food. Production this year is expected to rise to 18.6 million tonnes.
The grain and oilseed-based biofuel sector has come under attack from green groups for accelerating the destruction of forests, while some analysts blame it for contributing to soaring world food prices by diverting crops that could be used for food, but biofuel industry officials deny this.