CORE: Accelerating B50 Requires Comprehensive Upstream-Downstream Preparedness and Risk Mitigation

Researcher Yusuf Rendy Manilet from CORE Indonesia believes that accelerating the implementation of B50 biodiesel requires comprehensive preparedness from upstream to downstream, as well as risk mitigation, to ensure the policy effectively supports national energy stability amid turmoil from conflicts in the Middle East. “When discussing the acceleration of B50, the key lies in crucial technical matters. The government needs to ensure readiness from upstream to downstream, starting from the certainty of crude palm oil (CPO) supply, FAME (Fatty Acid Methyl Ester) production capacity, to blending infrastructure at refineries and distribution,” Yusuf told ANTARA in Jakarta on Monday. He added that quality standardisation is also an important factor to ensure B50 compatibility with engines, particularly in the transportation and logistics sectors. In addition, according to him, fiscal incentives are still needed in the initial stages to maintain the economic viability of the programme, given that biodiesel prices are not always cheaper than diesel. On the other hand, Yusuf emphasised the importance of strengthening the demand side to ensure optimal B50 implementation. Certainty of absorption from the transportation and industrial sectors is deemed crucial for the sustainability of the biodiesel ecosystem. “Without demand certainty, its implementation could stall midway,” he said. Regarding the effectiveness of B50 amid potential surges in global oil prices due to conflicts in the Middle East, Yusuf considers the policy quite strategic, although it does not entirely eliminate pressure. “However, this needs to be viewed proportionately. B50 does not eliminate risks, because domestic energy prices remain influenced by global oil prices, especially for unsubstitutable components,” he said. Furthermore, he suggested that energy substitution policies like B50 should be accompanied by energy consumption efficiency measures for more optimal results. “In international practice, the combination of efficiency, consumption reduction, and energy substitution is the most effective in dampening energy shocks,” Yusuf stated. “If not managed well, there is a risk of rising cooking oil prices or its derivatives,” he added. In addition, palm oil expansion also needs to be controlled to minimise environmental impacts. Other risks that need to be anticipated include fiscal and technical aspects. Previously, the government prepared several mitigation steps to cushion the impact of global uncertainties due to the escalation of conflicts in the Middle East, which is driving up world oil prices. Several options under review include budget efficiency, flexible work arrangements (work from home/WFH), strengthening B50 policies, and national energy savings. Coordinating Minister for the Economy Airlangga Hartarto on Saturday (28/3) stated that these steps have been discussed in a cross-ministerial/institutional coordination meeting as a follow-up to President Prabowo Subianto’s directives in formulating economic policy responses amid global dynamics.