Indonesia seeks to cut fuel subsidies via biofuels
Rhett A. Butler, mongabay.com
January 15, 2008
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Biofuels will make up 10 percent of Indonesia’s fuel transport consumption by 2010 under a plan announced Monday by a senior government official, according to Reuters. The initiative could ease the economic impact of fuel subsidies — currently some of the highest in the world — in Indonesia, while boosting demand for locally produced bioenergy crops including palm oil, jatropha, sugar cane and cassava.
“We can’t increase prices of subsidized fuel as it will hurt consumers. But we may be able to cut consumption and replace it with biofuel,” Reuters quoted Evita Legowo, secretary at the National Biofuel Development Team, as saying at the Reuters Global Agriculture and Biofuel Summit.
Presently Indonesia spends billions of dollars subsidizing and importing oil.
Legowo said the government intends to increase bioethanol blend in gasoline to 5 percent by 2010 from 3 percent, using cassava and cane molasses as feedstock, but may keep the biodiesel blend in diesel oil at 2.5 percent due to high palm oil prices, which have more than doubled in the past 18 months.
“Biodiesel blend will stay at 2.5 percent … maybe less because we are still waiting for jatropha that we planted last year,” Legowo said.
Indonesia plans to plant 5.25 million hectares of unused land with palm oil, jatropha, sugar cane and cassava by 2010.