The Indonesian government’s introduction of a new B35 blending is expected to increase the country’s biodiesel consumption by 25% to 13bn litres this year, according to a report by the United States Department of Agriculture (USDA).
The increase in consumption was also due to growth in diesel demand, the USDA’s Foreign Agricultural Service (FAS) Indonesia: Biofuels Annual said.
B35 reached nationwide coverage in August and the Indonesian government is preparing to increase the blending rate beyond 35%, according to the 29 September report.
Following a series of road tests for trucks and passenger cars last December, the government had been carrying out a test specifically designed for heavy machinery in the mining sector in May, the USDA said.
Two blend types were used in the road test: fuel with 40% fatty acid methyl ester (FAME) and fuel with 30% FAME plus 10% hydrogenation derived renewable diesel (HDRD). Higher compositions of HDRD were used in heavy machinery testing.
The government continued to support the biodiesel blending mandate programme by maintaining a financial support system put in place since 2015, the USDA said.
As part of the system, funds collected from the government’s palm oil exports levy, which is managed by the crude palm oil (CPO) fund agency, are allowed to subsidise the price difference between biodiesel and fossil diesel.
Last year, funds collected from the export levy totalled US$2.3bn, equal to the cost of the biodiesel subsidy. The levy collected in 2022 was 33% lower than in the previous year due to lower global palm oil prices and adjustments to the export levy structure.
Meanwhile, the Indonesian government continued to carry out tests for HDRD and sustainable aviation fuel (SAF), the report said.
Following the completion of a flight test for military aircraft last year, state-owned company Pertamina conducted another test of SAF in July for commercial aircraft jet engines.