Indonesia’s Plan to Expand Biodiesel Output Delayed by Covid-19

One of the world’s most ambitious plans to replace fossil fuels with a greener alternative may come to a grinding halt due to a coronavirus-linked roadblock.

Indonesia, the world’s biggest grower of palm oil, aims to increase the amount of palm it uses in biofuel in 2022. To do that, it had scheduled to expand its biofuel production capacity by about 30% this year.

Indonesia’s Plan to Expand Biodiesel Output Delayed by Covid-19

However, the capacity expansion plan is being delayed because experts in processing machines, computer systems and testing are based in Europe and Malaysia, and the pandemic has meant Indonesia hasn’t been able to fly them in, according to the Indonesia Biofuel Producers Association.

“We are trying to get them here, but we don’t see how to do that yet,” said Paulus Tjakrawan, vice chairman of the association.

Indonesia’s Plan to Expand Biodiesel Output Delayed by Covid-19

Indonesia has been gradually raising its reliance on palm oil for fuel to absorb growing supplies while also lowering its dependence on fossil fuel imports. Biofuels now consist of 30% refined palm oil and 70% diesel, and it aims to raise the palm portion to 40% in 2022.

The plan was set to add 3.6 million kiloliters of production capacity this year from 11.6 million now, so it can prepare for the 2022 program, known as B40, Tjakrawan said.

The association had hoped to also export the fuel to China, India and Pakistan. Last year, Indonesia had shipped 1.3 million kiloliters of biodiesel. This year, it’s only managed 2,000 kiloliters so far, according to association data.

For the country to move forward with B40, the government needs to announce the technical specifications for the biofuel as early as the third quarter so producers can make facility adjustments if needed, and ensure they can meet carmakers’ quality demands, Tjakrawan said.

“We wouldn’t have a problem with the development plan if it weren’t for this pandemic,” said Tjakrawan.

©2020 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.