The government of Indonesia on last 1 September 2018, has issued the policy on the utilization of Biodiesel B20 for mining, electricity, railway, and manufacturing sector, through the Presidential Decree no 66 Year 2018. B20 is.
Previously, the utilization of Biodiesel B20, which contains of the mix of 20% biodiesel and 80% of diesel, with biodiesel type Fatty Acid Methyl Ester (FAME), is only required for public service transportation. This new policy is the initial stage in the implementation of B100 policy (100% biodiesel) which is targeted to be achieved in the next 2-3 years.
The government claimed that the utilization of B20 can help 12 millions of Indonesian people whose lives depend on oil palm. Edi Wibowo, the representative from Indonesia Oil Palm Estate Fund Agency (BPDPKS) in Discussion “Measuring the Policy on the Expansion of B20 Utilization in Indonesia,” last (22/10), said that the background of the B20 mandatory policy is to save the Rupiah through decreasing fuel import and increasing the utilization of renewable energy.
According to him, until this time it’s estimated to save foreign exchange by not importing diesel worth USD 2.53 billion. As well as increasing tax revenue up to IDR 2.28 trillion. Besides, the B20 policy has reduced carbon emission. The use of 6.02 million KL of B20 during 2015-2018 has succeeded in reducing the carbon emission by 9 million CO2e.
Edi added, the implementation of biodiesel mandatory policy also helps to create jobs in the industrial sector and palm oil plantation. This policy has increased demand for Crude Palm Oil (CPO), contributed to CPO price stabilization, and improved the welfare of oil palm farmers.
The decree also regulates the palm plantation fund, whose allocation is intended to cover the gap between Market Index Price (HIP) of diesel and biodiesel. The fund itself will be given to the Biofuel Business Entity (BU BBN), so the biodiesel price can compete with the diesel price. Ministry of Energy and Mineral Resources has set the HIP of biodiesel at IDR 8,161 per liter (not including the transportation cost), while the diesel selling price is set at IDR 5,150 per liter. As directed by President Jokowi, the diesel price won’t increase until 2019.
On the other hand, the use of palm plantation fund to provide incentives for Biofuel Business Entity is feared to rule out its function to empower the palm farmer. Wiko Saputra, the researcher at Auriga Foundation said that the palm plantation fund should be prioritized for human resource development, promotion of the plantation, research and development, replanting/rejuvenation, and improvement of the plantation facilities.
“Because 2.1 million people who own 4.7 million hectares of land are still experiencing obstacles in managing their plantation, because several reasons: the narrow land, low productivity due to non-certified seeds, and the land legality aspects, said Wiko.
Maryati Abdullah, the National Coordinator of PWYP Indonesia, conveyed that on the one hand, the government wants to increase the use of renewable energy through the utilization of biodiesel, but on the other hand, it triggers massive palm oil exploitation which leads to deforestation. “It is necessary to ensure that B20 policy does not open new land for palm oil plantation,” said Maryati.
After two (2) months, the implementation of B20 still faces obstacles. Richard, the representative from Mining Service Association added that several mining service companies in East Kalimantan and North Kalimantan have difficulty in obtaining the B20 supplies. The blending facility owned by Pertamina is still very limited, leading to insufficient B20 supply. Consequently, many mining heavy equipment are not operated. They hope, along with the issuance of the policy, the B20 supply could be guaranteed.