Indonesia biofuels initiatives

The Indonesian government is issuing a subsidy for the distribution of biofuels when the biofuel market price is higher than the market price for oil-based fuel.

The subsidy is for the distribution of biofuel ranging between Rp 2,000 and Rp 2,500 (€0.18-0.22) per litre in the 2011 state budget.

Energy and Mineral Resources Minister Darwin Zahedy Saleh says the subsidy is needed to ensure that a fall in prices would not cause financial losses to companies already involved in the production of biofuel in the country.

Indonesia began using biofuel in October 2008 as part of a government programme to reduce the consumption of oil-based fuels. Currently, the country produces bioethanol and biodiesel.

Subsidised premium petrol contains at least 1% bioethanol, while subsidised diesel contains at least 5% biodiesel.

‘We estimate the consumption of biofuel will reach 982,000 kiloliters in 2011,’ Saleh says.

This year, the consumption of biodiesel is estimated to reach 777,075 kiloliters.

Indonesia expects biofuel consumption to make up 5% of its total fuel consumption in

2025.

The revised 2010 state budget allocates the quota for subsidized fuel consumption at 36.5 million kiloliters this year, but the ministry estimates the actual consumption could reach 40.1 million kiloliters. The volume is estimated to further increase to between 36.77 million and 42.56 million kiloliters in 2011.