Biofuel Policies in Indonesia : Good For Reducing Emissions?

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The Indonesian government has decided to delay their plans to raise bio-content in palm oil-based biodiesel to 40%. The policies are aimed at keeping B30 going until 2021, while the plan to increase the bio-content to 40% (B40) will likely be delayed to 2022 due to disruption to world fuel demand caused by the coronavirus pandemic.

Currently, the government is developing more strategies for biodiesel development through mandatory B30 and B40. These policies are intended to encourage the expansion of biodiesel use in order to reduce fossil fuels and contribute more in producing renewable energy. But is it really the case? Will the policies make a great contribution in reducing gas emissions, or the contrary?

From an environmental perspective, switching energy use to biodiesel will reduce the significant amount of fossil fuel usage which makes a good contribution in reducing greenhouse gas emissions, only if managed sustainably and the emissions from land conversion and palm oil mills are minimized. There are several challenges that must be considered, such as environmental standardization for low-emission biodiesel production, as well as transparency and traceability of palm oil origins to maintain sustainability. In addition, it is also necessary to provide Terminal Bahan Bakar Minyak (TBBM).

Not only is it useful for the environment, the implementation of these biodiesel policies will also contribute to reducing diesel imports, saving foreign exchange, and increasing the added value of the downstream industry. Based on the latest data, as per the year of 2020, biodiesel utilization for domestic needs has reached 8.46 million kiloliters. With the calculations using an average MOPS Solar 2020 of US$50/BBL with a currency exchange rate of Rp14,400 per US$1, biodiesel succeeded to save Rp38.31 trillions of foreign exchange.

With all these advantages, APROBI is certainly ready to support the government’s biofuel programs, given the thought that it has been proven to reduce carbon emissions and made great contributions to save foreign exchange. In particular, APROBI appreciates President Jokowi who is fully committed to implementing the B30 program as an effort to build national energy security.