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B20 biodiesel mandate a lifeline for Indonesia’s palm oil sector

Posted: Feb 18, 2019 2 minute read Yafet Sanjaya

In a bid to increase domestic palm oil consumption, the Indonesian government’s usage of biodiesel entered the B20 phase in September 2018. What is B20? B20 refers to a fuel mixture consisting of 20 percent vegetable oil and 80 percent petroleum. The figure 20 in “B20” indicates the proportion of vegetable oil contained in the biodiesel mixture.

At present, many national governments have adopted biodiesel mandates, e.g. Argentina (B10), Brazil (B2), European Union (B7), Norway (B3.5), Australia (B2), India (B5), Malaysia (B10), Philippines (B2), South Korea (B2-B3), South Africa (B5), Costa Rica (B20), Minnesota (B20), Indonesia (B20), etc.

At Sinar Mas Agribusiness and Food, we have been staying in step with the Indonesian Government’s move towards biodiesel, equipping ourselves with biodiesel production capabilities in South Kalimantan and Jakarta. We believe sustainably produced palm oil should play a role in sustainable energy provision, both in providing domestic fuel security in producing countries like Indonesia, and helping consuming countries to transition to low carbon fuel options.

Production of biodiesel sourced from palm oil in one of our company mills.

Development of biodiesel mandates in Indonesia
Over the last decade, Indonesia has steadily increased its use of biodiesel thanks to a series of relevant mandates issued by the President.

  • 2009 : B1
  • 2010-2012 : B2.5
  • 2013-2014 : B10 mandate issued 1 September 2013
  • 2015 : B15
  • 2016 : B20 regulation issued in 2016, and was implemented in phases for different sectors, eventually only taking nationwide effect 1 September 2018
  • 2020 : B30 targeted to be implemented across sectors by 2020, but the government anticipates this to be accelerated to 2019
Sector April 2015 January 2016 January 2020 January 2025 Remarks
Household Not established yet
Micro Business, Fisheries, Agriculture, Transportation and Public Services (PSO) 15% 20% 30% 30% In proportion to the total needs
Non-PSO Transportation 15% 20% 30% 30% In proportion to the total needs
Industry and Commerce 15% 20% 30% 30% In proportion to the total needs
Power Generation 25% 30% 30% 30% In proportion to the total needs

Phasing in the Minimum Requirements for Biodiesel (B100) Use in Fuel Mix in Indonesia
(Source: Regulation of the Minister of Energy and Mineral Resources No. 12 of 2015)

Why mandatory biodiesel use benefits Indonesia
Domestically, biodiesel use makes more sense economically as it not only boosts the demand of locally-produced raw material like crude palm oil, it also reduces the cost of importing fuel. From August 2015 to April 2018, the country has saved an estimated IDR 30 trillion because of reduced diesel imports by almost 5.88 million kilolitres.

In addition, emissions produced by burning biodiesel are smaller compared to those generated from burning conventional diesel, thereby reducing greenhouse gas (GHG) emissions into the atmosphere. Emissions that are produced from burning biodiesel also contain zero sulphur, which prevents the occurrence of acid rain.

Type of gas Biodiesel (b) Diesel (s)
SO2 (ppm) 0 78
CO (ppm) 10 40
NO (ppm) 37 64
NO2 (ppm) 1 1
O2 (%-b) 6 6.6
Total Particulates (mg/Nm3) 0.25 5.6
Benzene (mg/Nm3) 0.3 5.01
Toluene (mg/Nm3) 0.57 2.31
Xylene (mg/Nm3) 0.73 1.57
Ethyl benzene (mg/Nm3) 0.3 0.73

Comparison of emissions produced by biodiesel and diesel
(Source: Internasional Biodiesel, 2001)

Biodiesel uses raw materials that are renewable (such as animal fat and vegetable oil), which are better options for sustainability as compared to petroleum-based diesels (fossil fuels) which are in less abundant and steady supply. In addition, such a mandate can increase the income of independent smallholders. As the most productive vegetable oil producing crop, palm oil is able to provide support for the supply of raw materials needed for this alternative energy source, while still playing an equally important role in feeding Indonesia and the world.

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