Rising oil prices drive Indonesians to embrace biodiesel
- Indonesia rolls out new B50 palm oil fuel blend
- Biofuel prices are subsidised unlike conventional diesel
- Some drivers say conventional fuel has become unaffordable
Motorists in Indonesia are modifying their cars to run on subsidised biodiesel amid high global oil prices, as Jakarta raises the fuel's palm oil content in an effort to reduce the country's reliance on energy imports.
Indonesia, the world's biggest palm oil producer and exporter, accelerated testing on fuel under its B50 mandate, a blend of 50% palm-based diesel and 50% conventional diesel, after the U.S.-Israeli war on Iran that started in February sent oil prices surging.
Jakarta began implementing the B50 biofuel mix on July 1.
High global prices have pushed up the price of conventional diesel, which is not subsidized in Indonesia, by as much as 46% this year. In early July, diesel was 21,150 rupiah ($1.17) per liter, more than three times the price of subsidised biodiesel at 6,800 rupiah per liter.
The program also faces feasibility challenges as efforts to reach a peace deal in Iran sent oil prices into retreat. Prices of palm oil, which typically trades at a premium to diesel, have also been high, adding to the government's subsidy bill.
Still, the government counts B50 as a win. At an official launch on Thursday, President Prabowo Subianto said the half-half blend was "an extraordinary achievement for the nation".
"We shall continue. Don't stop at B50. Maybe we can reach B60," Prabowo said.
($1 = 18,085.0000 rupiah)
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