Ministry of ESDM Prepares for B40 Biodiesel Implementation as Renewable Energy Push Intensifies

ESDM Will Increase the B40 Biodiesel Quota to 15 Million Kilo Liters (ANTARA FOTO/Akbar Nugroho Gumay)

The Ministry of Energy and Mineral Resources (ESDM) is currently in the process of finalizing preparations and conducting extensive studies in order to effectively implement the B40 biodiesel program. This program involves blending 40 percent of palm oil-based vegetable oil (BBN) with traditional diesel fuel, aiming to promote the use of renewable energy sources and reduce dependency on fossil fuels.

Dadan Kusdiana, the Director-General of New and Renewable Energy and Energy Conservation (EBTKE), has announced that the ministry is gearing up to proceed with the B40 field trial, focusing on various sectors such as heavy machinery, marine vessels, agricultural equipment, and railway systems. This trial is crucial for evaluating the performance and compatibility of B40 biodiesel in these specific areas.

“In continuation of the B40 road trial, we are now moving forward with the B40 field trial for heavy machinery, marine vessels, agricultural equipment, and railway systems,” stated Dadan during an interview on Sunday (9/7/2023).

This demonstrates the government’s commitment to thoroughly testing the viability and effectiveness of B40 biodiesel across different sectors.

To ensure the successful implementation of the program, the Ministry of ESDM is actively assessing several factors. This includes evaluating the readiness of biodiesel producers, ensuring the adequacy of incentives to encourage participation, and addressing the supply of crude palm oil (CPO) as the primary raw material for B40 biodiesel production.

As CPO is a crucial component, it is important to strike a balance between the demand for biodiesel production and its availability for the domestic food industry.

“The demand for CPO in the B35 program, which has an allocation of 13.15 million kiloliters (kl), is approximately 11.95 million tons of CPO. The requirement will naturally be higher for the B40 program,” added Dadan.

This emphasizes the need for a sustainable and consistent supply of CPO to support the expanded biodiesel initiative.

Regarding the progress of the B35 biodiesel distribution, it has achieved a significant milestone, with a realization of 5.6 million kl by July 6, 2023. This translates to 42.58 percent of the total allocation for the mandatory B35 biodiesel program, which stands at 13.15 million kl. This indicates a positive response and increasing utilization of biodiesel among various sectors in the country.

Furthermore, the current biodiesel allocation has witnessed a notable increase of 19 percent compared to the previous year’s quota of 11.02 million kl. This demonstrates the government’s commitment to expanding the usage of biodiesel and promoting a more sustainable and eco-friendly energy landscape.

However, challenges have emerged in the form of declining subsidy distribution for B35 biodiesel during the first half of the year. Achmad Maulizal Sutawijaya, representing the Indonesian Oil Palm Plantation Fund Management Agency (BPDPKS), highlighted that the total incentive given to suppliers experienced a significant decrease of 82.72 percent, amounting to IDR 4.04 trillion.

This decline is attributed to various factors, including the downward trend in CPO prices influenced by other global vegetable oil markets, such as soybeans.

Moreover, concerns have been raised in the market due to the potential impact of increased palm oil production from Indonesia and Malaysia on the overall supply dynamics. BPDPKS records indicate that the collection of CPO export levies until June 23, 2023, reached an impressive IDR 15.55 trillion, reflecting the robustness of the palm oil industry despite prevailing challenges.

It is worth noting that the recent decline in the Indonesian Crude Price (ICP) for June 2023 further complicates the landscape. The ICP dipped to US$69.36 per barrel, representing a decrease of US$0.76 per barrel compared to the previous month.

This decline is primarily influenced by market concerns about the global economic situation, particularly in Europe and the United States, as reflected in the decline of their respective Purchasing Managers’ Index (PMI) figures.