Apr 6, 2012

Indonesia - Indonesia Risks Getting Left Behind on Biofuels, Industry Warns


Biofuels are expected to account for more than a quarter of transportation fuel consumption worldwide by 2050, but Indonesia could miss out on the benefits without greater government commitment to local biofuel production.

Paulus Tjakrawan, secretary general of the Indonesian Biofuel Producers Association (Aprobi), told the Jakarta Globe on Friday that the country’s standing as the world’s largest palm oil producer and ninth-largest sugarcane producer made it well-placed to take advantage of the boom.

“Production has to start big,” he said.

“We have a calculation to determine whether it’s going to be profitable to start selling biodiesel in eastern Indonesia or not,” he added, referring to the restriction of biofuel sales to just the western islands of Sumatra, Java, Madura and Bali.

The International Energy Agency predicts that if consumption trends continue at the current rate, biofuels could make up 27 percent of total worldwide transportation fuel consumption by 2050.

The biofuels currently available in Indonesia include biodiesel and biogasoline, both sold by state oil and gas company Pertamina under the trade names Biosolar and Biopremium/Biopertamax respectively.

Biosolar is classified as a B5 biofuel, which means it contains 95 percent diesel and 5 percent biofuel derived from palm oil. As of last month, however, the biofuel content was raised to 7.5 percent.

Though not widely available nationwide, it is the lowest blend of biodiesel available for which no modifications are required to the car engine. Higher blends of 20 percent (B20) and up are cleaner in terms of emissions, but require some form of modification to engines and gas tanks, which would require automakers to produce new parts.

Biopremium and Biopertamax are similarly not available at all Pertamina stations. Both are classified as E5 (95 percent gasoline and 5 percent ethanol), which again is the highest blend available that does not require engine modification. However, ethanol for this purpose is most often synthesized from sugarcane or maize.

Indonesia might be the 16th-largest ethanol-producing country in the world, but its output equalled only 1 percent of Brazil’s total bioethanol production, Paulus said.

Bioethanol production here in 2010 was 244,000 kiloliters, most of which was used for industrial consumption.

The government actually terminated its bioethanol program in 2010 following a series of disagreements on the market price index formulation between producers and the Energy Ministry.

Paulus said the benefits of boosting biofuel production went beyond just energy diversification. The manufacturing of biodiesel also produces as a side product crude glycerin, a chemical that can be used to manufacture soaps and cosmetics.

Biofuel production will also provide jobs for many Indonesians and reduce carbon emissions, he argued.

“Pertamina uses 350,000 kiloliters of biodiesel in its fuel mixture,” he said.

“This amount of biodiesel alone requires the employment of 30,000 workers, from palm oil plantations to final distribution, and can potentially decrease CO2 emissions by 900,000 tons. If we use imported fossil fuel, we won’t reap such benefits.”

He also played down arguments that biofuel would have an adverse impact on domestic food prices.

“Currently we produce 23 million tons of crude palm oil, 70 percent of which is exported. We could use more biofuel for consumption at home and export less of it, and it still would not impact food prices,” he said.

Michael Victor Sianipar
The Jakarta Globe



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