Area
Indonesia
Commodity Group
Biofuels
Commodity
Palm oil-based biodiesel
Date
01/12/2020
Policy Category
Renewable energy
Policy Instrument
Bioenergy policies
Description
Pointed out that the amendment of the countrys palm oil export levy scheme (see above) was aimed at raising additional funds in support of the countrys biodiesel policy. Proceeds from the levys collection would be used primarily to subsidize biodiesel producers whenever production costs of palm oil-based diesel rise above the price of regular diesel. Reportedly, during 2020, outlays for biodiesel subsidies exceeded annual levy proceeds, as the price gap between the two fuels rose significantly.
Notes
INDONESIA biofuel policy: The revision in the structure of Indonesias levy on palm oil exports (see above) was introduced to increase fund raising in support of the countrys ambitious biodiesel policy, which included plans for lifting the countrys mandatory blending rate from 30 percent to 40 percent in 2021 (see also MPPU Sep.20). Proceeds from the levy collection are used to subsidize biodiesel producers when the cost of palm oil-based diesel exceeds that of regular diesel. In 2020, as the price gap between the two fuels increased markedly, Indonesia spent more on biodiesel subsidies than it collected through the export levy (IRP 25.7 trillion versus IRP 1718 trillion, respectively USD 1.83 billion and USD 1.211.28 billion), according to official estimates. Owing to the revision in the levys structure, the Government expects to raise IRP 36 to 45 trillion (USD 2.563.2 billion) in 2021 to fund both the its biodiesel programme and an oil palm replanting scheme for smallholder farmers. Regarding the allocation of biodiesel to the countrys 20 biofuel companies, the Government distributed about 8.5 million tonnes in 2020, compared with the 9.6 million tonnes planned originally. In 2021, the Government expects to allocate 9.2 million tonnes, which points to a postponement of the planned rise in the mandatory blending rate from 30 percent to 40 percent to after 2021. Reportedly, the Governments more cautious approach results from an uncertain fuel consumption outlook due to the COVID-19 pandemic.