Indonesian palm oil exports hit 2.92 million tons in July, 15.87 percent higher than the previous month - Photo: GAPKI

JAKARTA (TheInsiderStories) – Entering September, Indonesian government set a monthly biodiesel price of Rp6,929 (US$0.49) a liter from a month ago Rp6,795 per liter, said the ministry of energy and mineral resources (EMR). the Biodiesel Market Index prices have risen in line with the soaring market price of crude palm oil (CPO).

According to the directorate general at the EMR ministry, the decision was motivated by an increase in the average CPO price to $0.46 a kilograms from $0.45 per kilogram in August. While, bio ethanol price Rp10,091 a liter from August at Rp10,200 per liter.

This index price will also be used for the implementation of mandatory 20 percent biodiesel blends on solar oil (B20). The ministry reported, since the implementation of the B20 mandatory in 2018, biodiesel production has continued to rise.

In 2018, B20 production reached 6.01 million kiloliters, up 82.12 percent compared to 2014 of 3.30 million kiloliters. The biodiesel production target in 2018 is 5.70 million kiloliters, meaning that it will be 105.4 percent of the target.

According to EMR ministry data, the use of domestic biodiesel in 2018 of 4.02 million kiloliters was able to save foreign exchange of $2.01 billion. While, B30 production in 2020 is targeted to reach up to 9 million kiloliters.

When multiplied by the solar market price index price of $0.63 per liters, the value of saving on diesel imports or efforts to save foreign exchange in 2020 can reach $6 billion.

The total value of palm oil products in 2018 amounted to $17.89 billion and contributed 3.5 percent to the Gross Domestic Product. The palm oil industry is able to absorb up to 4.2 million workers directly and 14.3 million of indirect labor, while oil palm plantations managed by independent smallholders are able to absorb 4.6 million people.

The government has implemented an Indonesian Sustainable Palm Oil (ISPO) system since 2011. The ISPO is designed to ensure that oil palm Indonesia is managed by the Good Agricultural Practices in accordance with the principles of social, economic, and environmental sustainability.

Indonesia now faced the European Commission‘ regulation of derivatives (Delegated Act) Renewable Energy Directive II. This regulation classifies palm oil as a commodity biofuel are not sustainable and high-risk ILUC (Indirect Land Use Change). Another challenge is the imposition of anti-subsidy duties on palm oil-based biodiesel to Europe.

US$1: Rp14,200

Written by Marcel Gual, Email: theinsiderstories@gmail.com