© Thomson Reuters A 40% palm oil-based biodiesel car is being tested at the Ministry of Energy and Natural Resources' compound in Jakarta.By Francisca Nango and Bernadette Cristina
JAKARTA (Reuters) - Indonesia, the world's biggest consumer of palm oil biodiesel, is expected to meet a mandate for bioethanol gasoline imports that would allow it to further reduce emissions of gasoline and carbon dioxide.
Indonesia imported 60% of the gasoline it burned last year, worth $17 billion, and plans to repeat the success of billions in biodiesel orders, with import duties on diesel cut.
While most of Indonesia's emissions reductions will come from forest management and closing coal-fired power stations, it expects significant reductions from burning edible oils and hydrogen and increasing the use of electric vehicles.
This year, the government plans to test gasoline containing 5% bioethanol in Surabaya, the capital of East Java province, Energy Ministry official Dadan Kusdiana told Reuters.
Indonesia plans to eventually limit bioethanol's gasoline content to 15 percent for domestic use by 2031, although two bioethanol plants are struggling to get enough molasses as feedstock.
"There is no technical problem with bioethanol. The problem is the raw material... If we rely on the existing supply of molasses, we will continue to compete (with other demands).
With limited bioethanol capacity and a country dependent on imported sugar for food, some companies are looking to produce bioethanol from other feedstocks such as cassava and biomass, possibly palm oil and palm sap by-products.
"There are two companies that are interested in producing bioethanol from biomass ... so (the project) should not rely solely on sugarcane production," Dadan said.
State energy company Pertamina plans to build a plant called A20 to produce bioethanol from cassava and blend gasoline with 5% bioethanol and 15% methanol, the CEO told a parliamentary hearing in January.
Pertamina does not claim that methanol has a living source.
Big appetite!
According to a study by the Bandung Institute of Technology (ITB), Indonesia will use 45.7 million kiloliters (12.1 billion gallons) of gasoline in 2025 and 50.1 million kiloliters (12.1 billion gallons) in 2030.
This means that a 5% bioethanol mandate by 2025 would require 2.29 million cl of ethanol per year, which is 70,000 cl more than the current annual fuel-grade bioethanol capacity.
Part of the answer is more sugar production, and President Joko Widodo has announced plans to quadruple sugar plantations to 700,000 hectares in five years to become self-sufficient in sugar for food and fuel.
Other options rely on cassava and ethanol biomass, including waste from the palm oil industry.
However, rising demand for sugar and cassava and the cost of biomass ethanol are preventing greater adoption, said Yitian Lin, a Wood Mackenzie researcher.
“Biomass waste can be converted to ethanol by enzymatic hydrolysis or fermentation. One of the main advantages is the lack of competition with food. But the technology has not yet been tested on a commercial scale and the cost is high.
Regardless of feedstock, subsidies for palm-oil-derived biodiesel will be key to ensuring widespread bioethanol adoption, Lin said.
Dadan declined to comment on the subsidies, saying he was working with potential investors to secure Indonesia's latest biomass-based ethanol production technology.
Diesel success!
In February, Indonesia increased its demand for biodiesel to 35% palm oil from 30% by 2020. The eight-year plan reduced diesel imports, reversed the current account balance and cleared excess production caused by the boom. Difficulties in shipping palm oil to Europe.
It also tested diesel fuel with 40% biodiesel, and last year Pertamina began producing 3,000 barrels per day of diesel entirely from palm oil for export.
Indonesia has cut diesel import costs by $8.34 billion by 2022 with the B30 order and expects to save $10.75 billion this year through the B35 order, government data show.
If the technology and production processes of the oil palm industry can be developed, it can provide biomass to solve the problem of bioethanol.
Indonesia could produce 5.6 million kilograms of bioethanol annually from palm sap alone, based on a 4 percent planting rate of 16 million hectares of palm plantations.
Provide exclusions and limitations
Indonesia's energy ministry estimates that total oil demand will increase by more than 70 percent by 2040 from 2020 levels, challenging Indonesia's goal of net zero emissions by 2060.
Indonesia, one of the world's largest carbon emitters, plans to reduce emissions by 31.89% by 2022 or 43.2% by 2030; Only with international support.
Greater reliance on biofuels is expected to reduce fuel supply shortages caused by delays in meeting these goals and adding new processing capacity.
"The Indonesian government is promoting alternative fuels that are marketable and complement refinery products because Indonesia will not see a new refinery in the next three to four years," said Fitch's senior analyst. Solutions. It is part of the Fitch Group.
(Reporting by Francisca Nango and Bernadette Christina Munte; Editing by Tony Munro and Tom Hogg)
