Biofuels policy in Indonesia: overview and status report
A summary of the history and current state of biofuels policy in Indonesia, highlighting the tension between the country’s renewable energy policy and the ambition in reducing its carbon emissions. Increasing domestic use of palm oil biodiesel is a pressing strategic issue for Indonesia. As the world’s 15th-largest motor vehicle market, Indonesia is well on its way to becoming one of the 10 largest, and national demand for transport fuel is growing rapidly. The government of Indonesia sees this rising oil demand as a problem with implications for both the economy and environment.
Diesel fuel accounts for about 43% of Indonesia’s land transportation energy demand, and almost 40% of Indonesia’s diesel fuel is imported. The need for oil imports to supply the high demand for diesel is a major driver behind government support for palm biodiesel. Indonesia’s palm oil production has shown exponential growth over the past two decades and today the country produces more than half of the global palm oil supply.