BALI, Indonesia: Biodiesel producers in Indonesia are planning to ramp up output capacity next year by almost a fifth to 8 million kilolitres to meet higher mandates, a senior industry official said.
Indonesia has been pushing for greater local use of edible oil-based biodiesel to cut its fossil fuel import bill and create more demand for palm oil, of which it is the world's biggest producer and exporter followed by Malaysia.
"Right now our capacity is 6.8 million kilolitres for biofuel, the next year our expectation is 8 million kilolitres," Paulus Tjakrawan, chairman of the Indonesian Biofuel Producers Association, said at an industry conference in Bali on Thursday.
"It will be enough to support B15 and B20 next year, this is for sure," Tjakrawan said, referring to the country's biodiesel program that requires a minimum bio content in diesel fuel of 15 percent, which will rise to 20 percent in 2016.
Benchmark Malaysian palm oil prices should get a boost if Indonesia soaks up more of its crude palm oil for blending into biodiesel as the country moves to B20, leaving less of the tropical oil available for exports.
The country's automobile association is gearing up to ensure that vehicles are able to use 20 percent biodiesel.
"Based on our road test, we are confident to process B20," said Abdul Rochim, member of Indonesia Automotive Industries Association. "We cannot avoid (going up to B20), we have to follow, but what we need is an improvement in specifications", so it is not bad for the engines, he added.
Tjakrawan said biodiesel producers were working to improve the quality standards.
Higher biodiesel consumption is seen as crucial for Indonesia to meet its commitments on cutting greenhouse gas emissions. Last year, biodiesel usage contributed 11.8 percent of the nation's energy and transportation sector's emission savings, Tjakrawan said earlier this week.
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.
Ahead of the U.N. Paris climate conference next month, Southeast Asia's biggest economy promised it would curb its rising greenhouse gas emissions by 2030. - Reuters
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