Indonesia Sets Out 2021 Biodiesel Allocations

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Indonesia, the world’s largest palm oil producer and exporter, sets out to lower its palm oil biofuel allocation for 2021 as the government adopted a more cautious fuel consumption outlook for the year 2021. 

Indonesia has allocated 9.2 millions kiloliter (KL) of biodiesel across 20 producers to hit its 30% biodiesel mandate (B30). This number is slightly down compared to the initial forecasts of 9.6 millions KL per year under the B30 programme with transport fuel demand still expected to feel the impact from the COVID-19 pandemic. Under its B30 mandate, Indonesia blends 30% palm-oil based fuel into its biodiesel to lower its fuel imports and boost domestic production of palm oil. 

The pivot to biofuels comes amid swelling demand, which in 2018 mandated the use of 20% biodiesel in diesel autos and ships, as well as construction fields. The required proportion of biofuels content has increased to 30% and was to become 40% this year. But the Indonesian government has run into difficulties this year funding its biodiesel mandate, but is still pushing ahead to add production capacity to prepare for an increase to a B40 mandate by 2022. The implementation date has been pushed to 2022 due to record-high palm oil prices and lower fuel consumption.

Despite the lower 2021 allocation outlook, the government maintains that between 2020-2025 demand for the biodiesel is estimated to increase by 2.9% per year on average. Biodiesel consumption is projected to increase by 7% over the coming decade; Indonesia accounting for two-thirds of additional consumption.


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