Indonesia to push back B40 rollout to 2025: MEMR

Indonesia is likely to implement 40pc biodiesel blending (B40) partially across some regions in 2025, with higher domestic hydrotreated vegetable oil (HVO) and distilled palm methyl ester (DPME) capacity needed to transition to nationwide B40 in later years.

Technical trials carried out between the country's Ministry of Energy and Mineral Resources (MEMR) and automotive industry have confirmed that more work will be needed before moving to higher biodiesel blend rates from the current 30pc (B30) mandate, said the ministry's director of renewable energy, Dadan Kusdiana, at the 17th Indonesian Palm Oil Conference (IPOC 21).

Scientists recommend marketed B40 should comprise a mix of either 30pc fatty acid methyl ester (FAME) biodiesel and 10pc HVO, or 30pc FAME and 10pc DPME — a drop-in biofuel produced by distilling methyl ester biodiesel. Pure 40pc FAME blends fell short of recommended fuel quality limits during recent testing, as water content, acid content and precipitation residuals rose significantly after 30 days of storage compared with 30pc FAME-blended biodiesel (B30), potentially causing risks to engines.

This change in composition will delay the rollout of B40, which had been hoped for the end of next year. Though Indonesia's installed palm methyl ester (PME) capacity already exceeds the volume needed to meet a pure biodiesel B40 mandate, neither HVO nor DPME are on track to make up 10pc of the diesel pool in the coming years, said Kusdiana.

State oil company Pertamina is set to produce 1.15mn kl of HVO by 2024 between four units at Plaju, Cilacap and Dumai according to Kusdiana, but this remains short of the 4mn kl of drop-in blendstock needed to achieve nationwide B40 by 2025 under a B30+10 pathway. And crude palm oil (CPO) feedstock availability in the country is currently inadequate for producing 4mn kl of DPME.

As a result, Kusdiana suggested that some regions such as Java and Bali may partially implement B40 in 2025 while the country prepares to expand its HVO and DPME industries.

The government's next steps will be to publish a B40 mandate to give certainty to HVO investors, and conduct regional studies into the feasibility of boosting feedstock supply to raise DPME capacity. But there are currently no plans for a domestic used cooking oil (UCO) feedstock or biodiesel strategy, Kusdiana said, with Indonesia's feedstock focus still on CPO "to accommodate the surplus of feedstock and increase the downstream utilisation of CPO".

The MEMR sees that Indonesian FAME biodiesel production capacity will outstrip demand by 4.06mn kl in 2025 at a 30pc blend, down from 7.94mn kl excess production in 2021, assuming an annual increase in the diesel pool brought about by 5.5pc growth in GDP year-on-year (see table).

By Lauren Moffitt