The Fate of Biodiesel Post-Pandemic
According to Oil World data for 2019, Indonesia is the third largest biodiesel producer in the world after the European Union (36 percent) and the United States (17 percent), with a share of 11 percent. These biodiesel producer countries using vegetable oil which is widely produced by their countries as feedstock for their biodiesel, for example, the European Union with rapeseed biodiesel, the United States with soybean biodiesel and Indonesia with palm oil biodiesel.
Biodiesel development in Indonesia was initially intended to fulfill global commitments in the context of reducing GHG emissions. This is because biodiesel is an environmentally friendly fuel because in the combustion process it produces much better exhaust emissions than diesel, which is sulfur free, has a lower smoke number, has a higher cetane number, the combustion is more complete, has lubricating properties to engine pistons and is biodegradable so it doesn’t produce poison (non-toxic).
The using of biodiesel as an alternative to diesel also aims at the same time to reduce dependence on fossil energy which is increasingly “undermine” foreign exchange and burdening Indonesia’s trade balance. In addition, the aim of developing palm oil-based biodiesel also aims to develop the downstream oil palm industry so that it can increase domestic absorption which will have implications for improving the prices of CPO and FFB.
Through mandatory policies and financing support schemes derived from export levies (CPO Supporting Fund/CSF) that managed by BPDPKS, the palm oil biodiesel industry in Indonesia is growing, as indicated by the continuous increase in blending rates from B15 in 2015 to B30 in 2020. Since the implementation of biodiesel mandatory, the demand for biodiesel in Indonesia also has increasing. In 2017, biodiesel consumption was 2.37 million kiloliters and increased by 49 percent in 2018 to 3.55 million kiloliters. Biodiesel consumption in Indonesia until November 2019 was 6.92 million kiloliters.
However, in this 2020, the world is facing a pandemic due to Covid-19 and its impact is felt by the whole world and in almost all economic sectors, including the biodiesel industry. Asosiasi Produsen Biofuel Indonesia (APROBI) as a biofuel producers association in Indonesia noted that Indonesia’s biodiesel consumption has decreased by 8 percent in the first quarter of 2020. Based on data from the Ministry of Energy and Mineral Resources (ESDM), the realization of biodiesel distribution volume during the first quarter of 2020 amounted to 2.17 million kiloliters or 90.4% of the purchase request or purdiase order (PO) of 2.4 million kiloliters. The decline in consumption was due to the fact that since the Covid-19 pandemic most activities had stopped.
According to the Coordinating Ministry for Economic Affairs, Deputy for Coordination of Energy, Natural Resources and Management, Monty Giriana, explained that during the pandemic there was a significant decline price of fossil-based fuel oil. This condition has a big enough impact on biodiesel development due to the gap between the market price index (HIP) palm oil biodiesel and the HIP of diesel. For this reason, the government needs to provide additional programs so that biodiesel development can keep continue.
The Indonesian biodiesel industry is indeed faced with the pressure of the Covid-19 pandemic and world oil prices which are currently at lower levels. However, MP Tumanggor who is the chairman of APROBI conveyed in the Webinar “Post-Pandemic Covid-19 Biodiesel, Continued or Stopped?” that the use of biodiesel continues to run well and optimistic that this pandemic fluctuation will quickly pass so that the B30 program in 2020 can be successful, especially since Pertamina also has developed up to B40 in June 2021.
Chairperson of Asosiasi Petani Kelapa Sawit Indonesia (APKASINDO) or assosiciation of oil palm farmers in Indonesia, Gulat ME Manurung also added that biodiesel programme must be developed by the government and must be supported by the government. In line with this statement, Professor of the Faculty of Economics, University of Gadjah Mada (UGM), Sri Adiningsih believes that the Covid-19 pandemic is temporary and mandatory for B30 to be a national priority program so that it needs to be continued for economic rescue and recovery after the Covid-19 pandemic. Currently, what needs to be done is adjustments to existing development programs such as making efficiency for biodiesel producers so that the products that produced can be more competitive.
It can be concluded that the biodiesel policy in Indonesia is not only capable of producing alternative sources of energy that are lower emissions and realizing national energy security, but also a policy that is capable of generating great economic benefits such as employment absorption to foreign exchange savings. Therefore, support from the government and the people of Indonesia are needed to continue the biodiesel program in the the Covid-19 pandemic.
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