Indonesia Delays Target for “Green Diesel” to 2026

Plans to produce fuel made entirely from palm oil in Indonesia have been pushed back by three years, according to a Reuters report this week.  The government intially had planned to start producing the so-called ‘green diesel’ in 2023 but it was moving the target to 2026, according to a document presented by chief economic minister Airlangga Hartarto at a media briefing, Reuters said.  The target has been revised after research and investment plans were disrupted by the Covid-19 pandemic, said Musdhalifah Machmud, deputy minister at the country’s Coordinating Ministry of Economic Affairs.

Presently, the country uses biodiesel, known as B30, which is a blend of palm oil fatty acid methyl ester (FAME) (30%) and fossil diesel fuel (70%).  Moreover, Indonesia had set a target to raise the content of FAME in biodiesel mandate from 30% to 40% in 2021,  but had to delay it by a year due to low crude oil prices.  The country is also building refineries to process palm oil directly to fuel.  Making fuel from palm oil is part of Indonesia’s plan to maximise the use of palm oil domestically to absorb excess supply and reduce expensive fuel imports. 

In February 2019, Indonesian state-owned energy company PT Pertamina had signed an agreement with Italian oil company ENI SpA to develop a green refinery in Indonesia and to process a palm oil-based fuel mixture in Italy.  Pertamina said that it had signed a joint venture agreement to produce fuel completely derived from crude palm oil (CPO) in the Indonesian facility.