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Indonesia to Expand Biodiesel Blending to Boost Palm Oil Prices
Indonesia to Expand Biodiesel Blending to Boost Palm Oil Prices
16/03/2015 (Bloomberg) - Indonesia plans to increase blending of palm oil with diesel this year to cut costs of importing fossil fuel and shore up prices of the world’s most-used vegetable oil.
The world’s largest palm oil producer will raise the blending rate to 15 percent this year from 10 percent and subsequently to 20 percent, Coordinating Minister for Economic Affairs Sofyan Djalil said in Jakarta on Friday.
The Energy and Mineral Resources Ministry may notify higher blending rule next week and it will be effective immediately, Djalil said. Increased use of palm oil in biodiesel may reduce supply of the vegetable oil and support prices, he said.
President Joko Widodo’s government, which more than doubled its subsidy for palm biofuels last month, is seeking to contain a persistent current-account deficit and revive flagging economic growth. Palm oil has lost 20 percent in the past year as a slump in crude oil cut demand for biofuel and record global soybean harvest reduced demand for cooking oil from China and and India, the largest consumers.
Indonesia has promoted biofuel usage to help absorb rising supplies of the world’s most-traded edible oil, which is used in foods and cosmetics, and to cut carbon emissions. Biodiesel is blended with regular diesel, produced from crude oil, for use as a transportation and industrial fuel.
The country in 2013 boosted the mandated amount of blending in diesel to 10 percent from 7.5 percent, and in 2014 ordered power plants to mix 20 percent. The government last month increased the subsidy on biodiesel to 4,000 rupiah (30 U.S. cents) a liter from 1,500 rupiah.
The slump in crude oil prices threatens Indonesia’s plan to boost biodiesel consumption to 1.7 million kiloliters this year, Derom Bangun, chairman of the Indonesian Palm Oil Board, said on Feb. 18.
The world’s largest palm oil producer will raise the blending rate to 15 percent this year from 10 percent and subsequently to 20 percent, Coordinating Minister for Economic Affairs Sofyan Djalil said in Jakarta on Friday.
The Energy and Mineral Resources Ministry may notify higher blending rule next week and it will be effective immediately, Djalil said. Increased use of palm oil in biodiesel may reduce supply of the vegetable oil and support prices, he said.
President Joko Widodo’s government, which more than doubled its subsidy for palm biofuels last month, is seeking to contain a persistent current-account deficit and revive flagging economic growth. Palm oil has lost 20 percent in the past year as a slump in crude oil cut demand for biofuel and record global soybean harvest reduced demand for cooking oil from China and and India, the largest consumers.
Indonesia has promoted biofuel usage to help absorb rising supplies of the world’s most-traded edible oil, which is used in foods and cosmetics, and to cut carbon emissions. Biodiesel is blended with regular diesel, produced from crude oil, for use as a transportation and industrial fuel.
The country in 2013 boosted the mandated amount of blending in diesel to 10 percent from 7.5 percent, and in 2014 ordered power plants to mix 20 percent. The government last month increased the subsidy on biodiesel to 4,000 rupiah (30 U.S. cents) a liter from 1,500 rupiah.
The slump in crude oil prices threatens Indonesia’s plan to boost biodiesel consumption to 1.7 million kiloliters this year, Derom Bangun, chairman of the Indonesian Palm Oil Board, said on Feb. 18.