JAKARTA (Reuters) - Indonesia’s biodiesel consumption is seen soaring to 7.9 million kilolitres next year from 1.1-1.2 kilolitres in 2015, an industry body said, adding that increased demand was crucial for the country’s to meet its commitments on cutting greenhouse gas emissions.
Indonesia, the world’s top palm oil producer, is pushing greater biodiesel usage to reduce its oil import bill and to create more demand for the tropical oil.
This year Indonesia increased biodiesel subsidies and raised the minimum bio content in diesel fuel to 15 percent from 10 percent. It will rise to 20 percent in 2016 and 30 percent in 2020.
Ahead of the U.N. Paris climate conference next month, Southeast Asia’s biggest economy has also promised to curb its rising greenhouse gas emissions by 2030.
“This year our biodiesel use will be less than 1.5 million kilolitres,” Paulus Tjakrawan, chairman at the Indonesian Biofuel Producers Association told Reuters on Monday.
“If the government is really strict with the 20 percent (blend), it will become 7.9 next year,” added Tjakrawan, whose group was established in 2006 and has 23 members. “It could also reduce emissions.”
Indonesia is the fifth biggest greenhouse gas emitter if forest losses are taken into account, and is under international pressure to curb the destruction of carbon-rich peatlands and forests which cause choking smoke to spread across much of Southeast Asia each year.
Last year, Indonesia’s biodiesel usage contributed 11.8 percent of the nation’s energy and transportation sector’s emission savings, and this would climb to 47 percent next year, said Tjakrawan.
Indonesia missed last year’s biodiesel targets due to logistical and infrastructure problems, coupled with a failure to enforce its mandate, but Tjakrawan said the government may look to bring forward its 30 percent blend requirement.
“We will see B20 first — if B20 is ok and tests are ok — maybe within two or three years,” added Tjakrawan, who is also a commissioner at PT Multi Biofuels Indonesia.
Any increased in biodiesel use would also be positive for benchmark palm prices which hit 6-1/2 year lows earlier this year.
Major palm companies with a biodiesel footprint in Indonesia include Wilmar International, the world’s largest palm oil processor, and unlisted Musim Mas.
Reporting by Michael Taylor; Editing by Michael Perry