The US Department of Agriculture predicts that Indonesian biodiesel exports will remain stifled at just 100mn litres this year as the country concentrates on meeting its ambitious 30pc mixture of renewables in its transport (B30) mandate.
This will be higher from 39mn l last year, but historically lower from the 1.77bn l sold in 2018 and 1.27bn l in 2019.
Nameplate capacity in the country is expected to rise to 12.4bn l/yr from 11.4bn l/yr in 2020, while domestic consumption steps up to 9.2bn l/yr from 8.4bn l/yr.
Biodiesel subsidies — used to offset the price gap between biodiesel and fossil fuel diesel prices — averaged 4,052 rupiah/litre (28¢/l) in 2020 and higher at Rp4,281/l during the first six months of this year as supply tightness sent feedstock palm oil prices soaring to 13-year highs.
Jakarta increased crude palm oil levies at the end of last year to help offset this and fund its B30 mandate, but was forced to bring them down as of this month to help domestic vegetable oil producers become more competitive globally.
This may deplete coffers though as the subsidy requirement to fulfil B30 will amount to around Rp45 trillion, up from the 2020 record high of Rp28 trillion.
Fuel ethanol consumption is expected to remain close to zero as it has been since 2010 while the national ethanol blending (E10) mandate remains largely unenforced.
State-owned oil firm Pertamina removed a ban on ethanol as a component in gasoline tenders last March under pressure from the government to reduce fossil fuel imports and improve current account deficits, but this has not led to a flurry of ethanol purchases so far.
Import duties on ethanol remain high at 30pc, although free trade agreements for product originating from Pakistan and Asean countries wipe these out.
Overall ethanol refinery capacity in the country is just 377mn l/yr of which only 197mn l/yr is predicted to be utilised this year, almost all for non-fuel purposes given increased demand for antiseptic products during the Covid-19 outbreak.
Ethanol imports are expected to increase to 44mn l from 29mn l in 2020, again mostly to fulfil antiseptic demand and primarily from Pakistan, which accounted for 88pc of purchases last year.
