<article><p class="lead">Indonesia will increase biodiesel capacity by 2.2mn kl/yr in the first quarter of 2021 and by 3.6mn kl/yr by the end of next year, Paulus Tjakrawan, vice chair of the Indonesian Biofuel Producer Association, said at the Indonesian Palm Oil Conference.</p><p>The expansions, which have been delayed from this year because of the Covid-19 pandemic, will raise capacity from the current 11.6mn kl/yr and pave the way for Indonesia's domestic biodiesel mandate to rise to B40 from B30.</p><p>The current B30 mandate requires around 9.6mn kl/yr of biodiesel but B40 is projected to require 12.8mn kl/yr, raising the need for the additional capacity especially given current utilisation rates of around 85pc.</p><p>Indonesia produced 6.47mn kl of biodiesel in January-September, of which 6.33mn kl was consumed domestically.</p><p>More work needs to be done before B40 can be implemented, including further tests on whether such a heavy biodiesel mixture can run safely through transportation vehicles, Tjakrawan said. </p><p>Market participants also hope that the additional <a href="https://direct.argusmedia.com/newsandanalysis/article/2159610">hydrotreated vegetable oil</a> capacity coming on line will help meet higher mandates, but even then headwinds remain in funding the programme. </p><p>High feedstock costs have led to a surge in biodiesel's premium to gasoil this year. The price difference is plugged by <a href="https://direct.argusmedia.com/newsandanalysis/article/2138997">funds</a> drawn from crude palm oil export levies. A higher mandate will require more funding, which is likely to lead a rise in the levies charged.</p><p>Regardless, Tjakrawan said he hoped B40 could be implemented at the end of next year or in 2022.</p><p class="bylines">By Amandeep Parmar</p></article>
