Palm Oil Illustration (Photo: Pixabay)

JAKARTA (TheInsiderStories)–The recent increase in oil prices have brought fresh push to the biodiesel mix mandatory, government targets to increase biodiesel mix to 25 per cent or “B25” by 2019 from the current mix of 20 per cent.

Energy and Mineral Resources Ministry director general for energy conservation and renewable energy Rida Mulyana on Thursday (24/05) said the government optimist to increase the mandatory biodiesel mix to 25 per cent by 2019. This implementation is part of the government ambition to implement biodiesel mix of 30 per cent by 2020.

The implementation of B25 in 2019 will benefit palm oil producers as it could be an alternative to export that is often disturbed by the anti-palm campaign in the international market.

The mandatory biodiesel mix has been launched since 2015. It started with 15 per cent biodiesel mix for small medium enterprises (SMEs), fisheries, agriculture, and transportation in April 2015. Then, 20 per cent mandatory biodiesel mix in January 2016.

The implementation B20 for transportation is relatively easy, but it faced many obstacles in the implementation for industries, especially for the factory machine. The use of B20 in factory machine has increased maintenance cost.

In addition, low oil price trend since 2014 disrupted the implementation of biodiesel mix. Low oil price made biodiesel price less competitive as diesel price are much cheaper. In the low oil price era, the gap between oil price and biodiesel price get bigger, which means higher subsidy by the government.

These obstacles made the National Energy Board proposed for a delay in the implementation of B20 to 2030. In addition, the National Energy Board proposed a standardization through Indonesia National Standard in the B30 implementation.

The National Energy Board member Sony Keraf earlier said the institution needs to discuss with the automotive industry in order to prepare the B30 implementation. Keraf also requested the Ministry of Finance to provide a fiscal incentive for companies who implement biodiesel mix mandatory.

This coordination is important as many automotive manufacturers reject the B20 implementation. They considered B20 biodiesel mandatory policies as counterproductive to the government’s ambition to implement Euro 4 emission standard. The diesel fuel mixed with the 20 per cent palm oil is not in accordance with the designation of motor vehicles Euro 4 standard.

The Ministry of Energy and Mineral Resources calculated the implementation of biodiesel mix could save annual fuel import by Rp30 trillion and reduce emission by 9 million tonnes per year. Biofuel Producers Association targets biodiesel production of 3.5 million kiloliters this year.