Indonesia will need to increase the bio-content of its palm oil-based biodiesel to 40% by 2024 or risk missing its renewable energy targets.
Indonesia has a mandatory biodiesel programme with 30% palm oil content known as B30, Reuters reported.
Longstanding plans to increase the palm content to 40% by 2021 were delayed due to cheaper fuel costs and record high palm prices.
"The use of (only) B30 will not achieve the RUEN target for 2025," Dadan Kusdiana, the director general of the country's energy ministry, told a virtual conference.
He was referring to Indonesia's goal to increase renewable energy use to 23% of its total energy consumption by 2025, which required biodiesel consumption of 13.9 kilolitres that year.
"The ministry will prepare B40 blending mandatory regulation to ensure investment certainty," Dadan said, adding that more studies and road tests were required.
Indonesia's energy ministry said it will increase its 2021 biodiesel allocation to meet higher demand for fuel.
Next year's biodiesel consumption is set to jump to over 10 million kilolitres.
While fuel prices bottomed out during the thick of the global pandemic, petrol and diesel prices at the pump in Asia and Europe reached near-record peaks this year, making palm a more attractive feedstock for biofuels.
Indonesia collects levies to help finance its palm oil programmes, including biodiesel subsidies and smallholder replanting programmes.
It increased its crude palm oil levies to record highs this year, and is estimated to collect as much as 71 trillion rupiah (€4.3 billion) in levies this year, said president director of the fund collection agency, Eddy Abdurrachman.
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