The National Biofuel Development Committee will propose legislation on mandatory use of biofuel in industry before its tenure ends in August, the chairman said.
Alhilal Hamdi told The Jakarta Post on Monday the committee was coordinating with the government to determine what level of consumption should be mandated.
"We are still discussing it, but I assume the number will be around 1 percent of the total national fuel usage of 60 million kiloliters."
The country consumes around 60 million kiloliters of fuel every year. A government subsidy intended to ease the burden on low income families applies to half of that amount.
Biofuel quotas would apply first to non-subsidized fuels which are predominantly used in industry, Alhilal said.
Alhilal was optimistic the legislation would encourage the use of environmentally friendly fuel.
According to data from the Indonesian Biofuel Producers Association (APROBI), state oil and gas company Pertamina, which acts as the sole buyer for biofuel, currently sells only 75,000 liters per day in that category.
Biofuel producers worry that a decision by Pertamina to reduce the percentage of biofuel in its biosolar and biopremium products from 5 percent to 2.5 percent would hurt their business.
Pertamina said it was scaling back its biofuel operations due to losses in 2006 of Rp 16.9 billion (US$1.8 million) caused by the high price of ethanol and crude palm oil.
The association has since demanded the government make biofuel use mandatory so as to help the newly developed biofuel industry.
The association has 22 members and a total installed capacity of 1.5 million tons.
Under the government's biofuel promotion plan, Indonesia will increase its usage of biofuel to 5.29 million kiloliters by 2010 and 9.84 million kiloliters by 2015.
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