Indonesia Becomes World’s Largest Producer Of Biodiesel

JAKARTA – Economic Coordinating Minister Airlangga Hartarto said that Indonesia has become the largest producer of biodiesel in the world with a total production reaching 137,000 barrels per day (bpd), exceeding the production of the US and Germany.

“Indonesia has become the world’s largest producer of biodiesel, with a production capacity of 137,000 bpd. The biodiesel production capacity of the US is 112,000 bpd, Brazil 99,000 bpd, and Germany 62,000 bpd,” Minister Airlangga said during a webinar on the urgency of law on new and renewable energy in Jakarta on Monday.

The minister was quoted by Antara as saying that its success of biodiesel production has positioned Indonesia as the major player in the global biodiesel market.

Biodiesel is a renewable energy source that is produced with a mixture of fatty acid methyl ester (FAME) derived from vegetable oils or animal fats and fossil diesel fuel. Indonesia produced the biodiesel with the mixture of FAME from crude palm oil (CPO) due to its abundant supply as Indonesia is the world’s largest producer of palm oil.

The Indonesian government has been implementing its mandatory biodiesel program to produce biodiesel 30 percent (B30), which consists of 30 percent FAME and the rest is fossil diesel fuel. The mandatory program has increased the local absorption of CPO amid the declining trend of palm oil exports due to the Covid-19 pandemic and problems of tariff and non-tariff barriers at global market. It has also strengthened Indonesia’s energy resilience and self-sufficiency, increased value added in the palm oil industry, reduce consumption of the environmentally-unfriendly fossil fuels, and reduce the greenhouse gas emissions.

“On climate change, Indonesia is committed to reducing greenhouse gas emissions by 29 percent on its own and 41 percent with the international help in 2030,” Minister Airlangga said.

He said that Indonesia’s production of biodiesel has been proceeding for a long time. In 2008, its biodiesel production for commercial reached 630,000 kiloliters with local consumption reaching 23,000 kiloliters and the rest being exported. “Our biodiesel production has been growing positively every year. In 2016, our biodiesel production reached 3.0 million kiloliters, and in 2020 it had increased by 300 percent to 8.5 million kiloliters,” he said.

The Oil Palm Plantation Fund Management Board (BPDP-KS) President Director Eddy Abdurrachman said that the continuing increase of market index price of palm oil has made the price of biodiesel higher than the price of diesel fuel.

“The price of CPO has been continually increasing, causing the biodiesel price higher than the price of diesel fuel,” Eddy said.

The government has projected that additional incentive for the biodiesel mandatory program this year will reach Rp46 trillion due to the big spread between the price of palm oil and the fossil diesel fuel. (*)

Source: IDXChannel