Government Committed To Continuing Biodiesel Program

JAKARTA –  The mandatory program of biodiesel has been implemented by the government during the last few years and it has given positive contribution economically, socially and environmentally. The government will continue the biodiesel program in the long run based on its roadmap.

Dadan Kusdiana, director general of new and renewable energy and energy conservation at the ministry of energy and mineral resources (MEMR), said on Wednesday that the use of palm oil and its wastes as the source of energy has contributed to the achievement of renewable energy target. Besides, it can also increase the national energy resilience based on natural resources available at home.

“Environmentally speaking, the B30 program is part of our commitment to the implementation of Paris Agreement to reach the target of reducing greenhouse gas emissions,” he told the participants of the webinar on the future of Indonesian biodiesel program which was organized by Majalah Sawit Indonesia on Wednesday, 16 December 2020.

Addressing the webinar were the National Energy Council (DEN) Secretary General  Dr Ir Djoko Siswanto MBA, the economic research institution INDEF Researcher Dr Fadhil Hasan, Dr Tatang  Hernas of the Indonesian Bioenergy Experts Association, and Dr Petrus Gunarso of the Indonesian Forestry Scholars Association’s Think Tank.

Dadan Kusdiana said that the government will ensure that the palm oil will not only support the biodiesel program, but also other bioenergy products, such as biogas by using effluent that has been tested as BioCNG.

The government will also ensure the quality of biodiesel from its blending process up to distribution among consumers. “The ministry of energy and mineral resources will implement the sustainability principles,” he said.

He noted that the specification of biofuel will be adjusted to the need of consumers based on the principles of sustainability. That way, the energy use is ensured to reduce the greenhouse gas emissions

“The renewable energy is inevitable. The contribution of renewable energy in primary energy mix during the first semester 2020 was 10.90%. Of the 10.90%, around 34% was contributed by biodiesel 30 percent (B30),” said Dadan.

DEN Secretary General Djoko Siswanto said that Indonesia’s index of energy resilience reached 6.57, which is categorized as good, as the supply of renewable energy sources, including biodiesel, is quite abundant.

He pointed out that the mandatory biodiesel program had reduced the consumption of diesel fuel at around 7.2 million kiloliters in 2019, and save the foreign exchange at US$2.0 billion or around Rp28 trillion. “This year the B30 program is projected to save foreign exchange at US$8.0 billion,” said Djoko.

According to him, the challenge facing the biodiesel program is its economic problem, as the price of crude palm oil (CPO) is higher than that of diesel fuel. As a result, it needs incentive to compensate the price spread.

The Indonesian Bioenergy Experts Association Chairman Tatang Hernas Soerawidjaja said that the biodiesel has a bright future if its quality is continually improved. “It’s promising, and all raw materials to produce it are locally available,” said Tatang.

He said that Indonesia is still in shortage of oil fuels (BBM) supply. The biofuel innovation is badly needed to solve the problem of oil supply deficit. “But the raw materials for biodiesel production should not be necessarily dependent on the palm oil alone, but also from other raw materials, such as fruits of Nyamplung (Calophyllum inophyllum), and moringa (Moringa oleifera), and others,” he added.

Fadhil Hasan of INDEF said that the mandatory biodiesel program has given economic and environmental benefits to Indonesia as it creates multiplier effect and reduces greenhouse gas emissions. “Therefore, the palm oil export tariff adjustment should be implemented to support the biodiesel program. Besides, the continuation of biodiesel program is also very dependent on the commitment to review the policy on oil price,” he said.

Fadhil said that in maintaining the continuation of B30 program, the government has increased the income of the oil palm plantation fund management board (BPDPKS) through the system of progressive export tariff of palm oil. “It should be appreciated as it will increase its income at around Rp28.1 trillion from the total Rp45.52 trillion,” he said.

Based on three scenarios, the government can increase the market index price (HIP) of diesel fuel at 30 percent of Rp4,385 per liter to Rp6,000 per liter.

In addition to that, the export tariff increase should be also analyzed to find out its impacts to the stakeholders and calculation on its net social benefit, and the whole benefits of the program to the country.

On environment and forestry, Petrus Gunarso stated that it is incorrect to attribute the issue of deforestation in Indonesia to the fast development of oil palm plantations during the last 30 years. The fact is that Indonesia has continued its moratorium policy that delays the new oil palm licenses, but paying less attention to the forest improvement.

“There has been failure in terms of sustainable forest management. This should be improved. The forest designation process that is not followed by implementation has resulted in prolonged forest problems,” he said.

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