Biofuel trading scheme awaits regulations

The Jakarta Post, Jakarta

The full-scale development of biofuels could start sooner rather than later with a presidential instruction on trading systems currently being prepared, a ministry spokesman says.

"Business people are now waiting for the trading regulations. We have completed the draft and it should be made official in the next couple of months," State Minister of Research and Technology Kusmayanto Kadiman said on Tuesday.

The draft of the presidential instruction contained mostly incentives for businesses that develop biofuels and was currently the subject of review from all stakeholders, he said.

Kusmayanto explained that one option for the trading of biofuels could involve mixing it into existing oil-based fuel products currently sold at gas stations.

He said that the idea of combining 10 percent biofuel with 90 percent fuel was both technologically and economically feasible.

According to recent research by the Agency for the Study and Application of Technology (BPPT), mixing in such compositions would result in lower carbon emissions.

"For a start, once the trading scheme is official, we propose that the end result of the mixture contain 5 percent biofuel. That should give time for the industry to develop themselves gradually before meeting the market's demand," he said.

The ministry stated that by 2010 the use of both biodiesel and bioethanol should have reached some 2 percent of total national fuel consumption.

Indonesia's oil-based fuel consumption currently stands at 70 million kiloliters.

Kusmayanto said that if 10 million hectares of abandoned land in the country was planted for biofuel, some 40 percent of Indonesia's fuel consumption could be met.

There are 60 options for potential plants, ranging from cassava and sugarcane for bio-ethanol, or jatropha, oil palm, sunflower and soybean for bio-diesel.

Investment in the sector could start from as low as Rp 300 million, depending on the scale of the plantation and the factory.

"Currently, we are one the biggest CPO (crude palm oil) producers. That could be feasible in the short period," he said, explaining the snowballing effect of refining CPO into bio-diesel would create employment for more than 100,000 workers.

Indonesia is the second largest CPO producer in the world. Together with Malaysia, the world's largest producer, it controls 85 percent of global CPO production. Last year, there were a total of 4.1 million hectares of oil palm plantations in the country.