Indonesia’s B30 Program to Drive Global Biodiesel Production in 2021-2030: Report
by Aditya Kondalamahanty (S&P Global) Indonesia’s use of palm oil to make biodiesel to rise by 23% by 2030; Biodiesel use projected to increase by 7% over coming decade; Palm oil production expected to weaken on sustainability, land constraints
Indonesia will be the main driver for increasing use of vegetable oil as feedstock for biodiesel in the coming decade, the UN Food and Agriculture Organization, or FAO, and the Organization for Economic Cooperation and Development, or OECD, said in their annual outlook report.
Under its ‘B30’ mandate, Indonesia — the world’s largest palm oil producer and exporter — blends 30% palm-oil based fuel into its biodiesel to lower its fuel imports and boost domestic production of palm oil.
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While the Indonesian government was looking to increase its palm oil blending mandate to 40%, or ‘B40’, in 2021, the implementation date has been pushed to 2022 due to record-high palm oil prices and lower fuel consumption. The FAO-OECD outlook expects Indonesia’s biodiesel blending rate to remain around 30% over the projection period of 2021-2030.
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Meanwhile, in the European Union — the world’s largest biodiesel market — palm oil consumption is projected to decline as the updates to its Renewable Energy Directives, or RED II, sets limits on the use of palm oil as a biofuel feedstock.
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Production of palm oil is expected to weaken due to increasing attention to sustainability concerns and the aging of oil palm trees in Indonesia and Malaysia, the report said.
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While the surge in prices over the last year along with Indonesia’s blending mandate could catalyze investments in the palm oil sector, land availability will be the major constraint to growth, FAO and OECD said.
Indonesia and Malaysia account for about 85% of the world’s supply of palm oil. READ MORE
Indonesia’s B40 biodiesel plan faces new delay due to palm price (Today)
Malaysia forges ahead with B30 biodiesel goal (Biofuels International)