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Bioenergy no 2 - March 2015

FEATURE: BIOMASS TO LIQUIDS Indonesia’s National Energy Policy, Presidential Regulation No. 5/2006 (“Regulation 5”), was enacted in early 2006. It formalised the development of biofuels, ethanol and biodiesel in Indonesia and established a five percent biofuel mandate by 2025. – The purpose of Regulation 5 was to stimulate biofuel development along with alternative and renewable energies to diversify and secure energy supplies and support sustainable economic development, said Dr Dadan Kusdiana, Ministry of Energy and Mineral Resources (MEMR). MEMR also issued Regulation No. 32/2008 in conjunction with Regulation 5. Regulation 32 establishes a progressive set of targeted biofuel mandates during the 2008-2025 timeframe. Rapid growth in transportation – Biodiesel consumption in the transportation Public Service Obligation (PSO) sector is expected to increase from a minimum of one percent 12 Bioenergy International No 78 , 2-2015 of total fuel consumption in the sector in 2008 to a minimum of 20 percent by 2025, said Kusdiana, explaining that the PSO sector has subsidised fuels. Figures presented by Kusdiana show that the requirements in Regulation 32 are being implemented, particularly in the transportation sector. The share of biodiesel in the total diesel fuel usage in the transportation sector has increased significantly, from 0.06 percent in 2006 to 5.57 percent in 2013. Although Biodiesel consumption in the power utility and industrial sectors remained almost non-existent over the period. More ambitious targets Indonesian fuel imports by volume are increasing as consumption outpaces Indonesian production, contributing to a widening trade deficit and weaker currency value. – The government believes that enhancing the consumption of locally produced biofuels can help maintain fuel imports at manageable levels, thereby narrowing the trade deficit and stabilising the exchange rate, said Kusdiana. In a bid to accelerate the biofuel mandatory program with more ambitious targets the government amended Regulation 32 by enacting MEMR Regulation No. 25/2013 in 2013. Regulation 25 sets a more ambitious target for biofuel use. The first measure was to increase the blending rate of biodiesel from 7.5 percent to 10 percent in September 2013. This measure alone more than doubled the average monthly biodiesel use, from 62 million litres (Jan-Aug 2013) to 140 million litres (Sept-Dec 2013). Average monthly biodiesel use at a 10 percent blending rate suggests that Indonesia will hit the 1.644 billion litre target for 2014. The Indonesian transportation sector is estimated to consume 20.61 billion litres of diesel fuel in 2015 of which 10 percent or 2.061 billion litres is to be biodiesel. – This target is achievable, an additional 420 million litres of biodiesel compared to 2014’s consumption is required to hit the 2015, 10 percent biodiesel share. Pertamina’s ongoing programme to expand biodiesel distribution to Kalimantan and Sulawesi will make this achievable, remarked Dr Dadan Kusdiana. Industrial diesel oil use is predicted to grow at a slower pace as industrial fuel use is diversified and includes coal, gas, biomass, and briquette. Strong growth in the Indonesian air transportation sector, driven by new low-cost air carriers, is projected to increase jet fuel consumption to 9.14 billion litres by 2020. Picking up the pace The Indonesian ethanol programme ended in 2010. According to Pertamina, the state-owned oil, gas and petrochemical refiner, distributor and retailer, ethanol distribution ended due to inconsistent supply and price volatility. Fuel ethanol (FE) producers on the other hand blame Pertamina’s uneconomical set purchase price. In contrast the Indonesian biodiesel sector maintained healthy growth in 2013 and 2014. Production increased from 2.2 billion litres in 2012 to an estimated 3.65 billion litres in 2014 and is attributed to the Regulation 25 biofuels programme. It is expected to continue driving Indonesian biodiesel production through 2015 to a forecasted 4.15 billion litres, despite current unfavourable biodiesel markets overseas. INDONESIAN ETHANOL AND BIODIESEL DEVELOPMENTS Dr Mohd Emir Mavani Abdullah, CEO of Felda Global Ventures Holdings Berhad. As the world’s single largest Crude Palm Oil producer, FGV has a competitive advantage in biofuels by leveraging existing capabilities in production and feedstock supply chain in Malaysia. Once Asia’s largest diesel importer, Indonesia has slipped to the third place as the government pushes for biodiesel in transport, power and marine sectors. CMT’s Bio-Markets Asia held in Jakarta at the end of January was a timely conference that highlighted the expected impacts of recent regulatory reforms.


Bioenergy no 2 - March 2015
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