Indonesia Sets 2023 Biodiesel Allocation at 13.15 Million kL

Jakarta — Indonesia set its 2023 biodiesel allocation at 13,148,594 kilolitres, or about 13.15 million kL, to support the planned increase in the biodiesel blend to B35 in 2023. The Ministry of Energy and Mineral Resources (ESDM) announced the allocation on 16 December 2022, after ESDM Ministerial Decree No. 205.K/EK.05/DJE/2022 was issued on 15 December 2022.

The volume was about 19% higher than the 2022 biodiesel allocation of 11,025,604 kL. According to ESDM, the increase followed the President's 6 December 2022 direction to raise the biodiesel blend from B30 towards B35, taking into account Biosolar demand and the readiness of biofuel supply.

Allocation rises with the B35 plan

The 2023 allocation was based primarily on projected Biosolar demand. The government cited projected 2022 Biosolar distribution of 36,475,050 kL. With demand growth assumed at 3%, projected Biosolar sales for 2023 reached 37,567,411 kL. From that figure, the biodiesel requirement for a B35 blend was calculated at 13,148,594 kL.

Media Indonesia reported the same figure, saying biodiesel needs for the following year would reach 13.15 million kL, around 19% above the current-year allocation. Katadata had also reported earlier in December that the government was preparing the B35 programme for 2023 with an allocation of about 13.15 million kL.

As of 16 December 2022, the policy direction was to increase the FAME share in Biosolar during 2023. The announcement concerned a plan for the following year rather than a report of implementation results.

Producer capacity and fuel quality

ESDM said biodiesel supply would come from 21 biofuel producers. The combined installed capacity cited by the government was 16,653,821 kL per year, higher than the 2023 allocation requirement of 13.15 million kL.

The government also prepared fuel-quality requirements for the planned higher blend. ESDM referred to Directorate General of New, Renewable Energy and Energy Conservation (EBTKE) Decree No. 195.K/EK.05/DJE/2022, dated 9 December 2022, as the quality-standard basis for biodiesel under the planned increase. Quality rules mattered because B35 would raise the FAME share in Biosolar compared with the B30 programme.

In addition, the government said laboratory tests and B40 road tests had been running since July 2022 and were scheduled to continue until the end of December 2022. Those tests formed part of the technical preparation before a higher biodiesel blend was introduced the following year.

Policy aims and supply considerations

The government linked the higher biodiesel blend to cleaner energy use and lower diesel import dependence. It also described the programme as a way to improve distribution efficiency and mitigate supply-failure risks, especially as national Biosolar demand continued to grow.

Although aggregate producer capacity was described as sufficient, the allocation still required strict distribution management. Biodiesel had to be delivered from producers to fuel distributors according to volume, location and schedule. Under B35, the challenge was not only national capacity, but also the readiness of the supply chain from plants and fuel terminals to blending points.

For the palm oil and energy markets, the 13.15 million kL allocation signalled that the government planned higher vegetable-oil absorption for energy in 2023. The figures and policy framing here are limited to information available on 16 December 2022.