Palm oil exports may decline by 1.5 million metric tons following the implementation of a policy on the mandatory use of renewable energy, a government official said Wednesday, Bloomberg reported.
“In relation to the mandatory policy for bio-energy issued last month, we see that the use of agricultural products for alternative energy will increase,” Bayu Krisnamurthi, a deputy to the Coordinating Minister for Economic Affairs, said, adding that it will cut palm oil exports.
The government has issued a ministerial decree that will make the use of biofuel mandatory from 2009. The decree states that for biodiesel, transportation must use a blend of 1% palm-based biodiesel and 99% diesel oil, while industry and power plants must use a blend containing 2.5% and 0.25% palm-based biodiesel respectively.
By 2010, the palm-biodiesel content will be increased to between 2.5%-3% for transportation, 5% for industry and 1% for power plants.
For bioethanol, the use of a 1-5% blend of bioethanol and 99-95% of gasoline for transportation will become mandatory in 2009.
Industry will have to use a 5% blend of bioethanol -- which is made from cane molasses and cassava feedstock -- and 95% gasoline next year, increasing to 7% by 2010.
Evita Legowo, Director General of Oil and Gas, said the government would start trials for the blends from October 1, Reuters reported.
Indonesia's biofuel industry can produce between 1.3 million tons to 1.5 million tons annually, said Krisnamurthi. Capacity may double to three million tons by 2010, he said.
“The country's palm oil output will be more than 19 million tons next year and exceed 20 million in 2010” he added. Food and chemicals industry may use 4.5 million tons this year and next, and five million tons in 2010, Krisnamurthi said.