Indonesia to increase biodiesel blending for 2015

Indonesia, the world's largest palm oil producer, has plans to increase the diesel blending rate this year to cut fossil fuel import costs, reports Bloomberg.

The blending rate will be raised from 10% to 15% this year and subsequently to 20%, according to Sofyan Djalil, Coordinating Minister for Economic Affairs.

Indonesia is promoting biofuel use in an attempt to help utilise increasing supplies of palm oil and reduce carbon emissions.

However, a slump in crude oil prices in the past year has led to a decrease in demand for biofuel, threatening Indonesia's plan to boost biodiesel consumption to 1.7 million kl this year.

Once implemented, the new blending rule will be effective immediately. Increased use of palm oil in biodiesel may reduce supply of the vegetable oil and support prices, Djalil told Bloomberg.