The government of Indonesia is reviewing options to finance its biodiesel support programme and to increase subsidies, as the fall in global crude oil price has more than doubled the gap between the costs of fatty acid methyl ester (FAME) and diesel between January and May 2020. FAME costs are now IDR8,494/l (US$57c/l), more than twice diesel costs (IDR3,083/l, i.e. US$21c/l), making biodiesel more expensive to subsidise for the government's Estate Crop fund, which subsidises the cost difference between the two fuels.
The Indonesian government is considering diverting other fuel subsidies to the biodiesel programme, granting direct subsidies, or increasing the levy on palm oil exporters (US$50/t when palm price exceeds US$619/t). In 2019, the Estate Crop fund suspended the levy collection due to low crude palm oil prices.
In November 2019, Indonesia started a market trial of biodiesel fuels with a 30% bio-content (B30) and the use of the B30 fuel became mandatory in January 2020. It intends to implement B40 fuel (40% bio-content diesel) fully in January 2022 (postponed from January 2021 in early May 2020).
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