Industry representatives and Government officials in Malaysia and Indonesia have vowed to progress new biodiesel mandates despite the drop in crude oil prices forcing up the subsidies owed to producers to blend stockpiled palm oil reserves.
Indonesia has flagged raising the minimum bio-content of gasoil in the country by a quarter to 20 percent in 2016. In Malaysia, a nationwide B7 mandate has been in place since November 2014. The Malaysian Biodiesel Association (MBA) said in a report in January it is now pushing for the implementation of a B10 mandate – originally slated for October 2015 – by April 2016 and a B20 mandate by 2017.
Industry analysts across both countries have pointed to the cost of palm oil reaching almost double that of gasoil in late January as a potential stumbling block. But in a response provided to Reuters, Rida Mulyana, director general of renewable energy at Indonesia’s energy ministry said, “The most important thing is that government’s policy on B20 program is going to be implemented.”
Regardless of the timing of implementation of the new mandates, both countries have the capacity to ramp up production of higher blend biodiesel products. Malaysia has set up plants to make 2.5 million tonnes of palm methyl ester or biodiesel a year, and Indonesia is capable of producing 4 to 5 million tonnes.
The new biodiesel mandates are aimed at using up about 3.4 million tonnes of palm oil stocks in Indonesia and close to 1 million tonnes in Malaysia.