Indonesia to replace 10 percent of fossil fuels with biofuels by 2010; move aimed to reduce ballooning government fuel subsidies

In Indonesia, the secretary of the Indonesian Biofuel Development Team told the Reuters Global Agriculture and Biofuel Summit that Indonesia plans to substitute 10 percent of its fossil fuel usage with biofuels by 2010. The move is reportedly aimed at reducing the size of the government fuel subsidy without raising consumer prices. Cassava and molasses are expected to be the primary feedstocks.

Indonesia said recently that it would return to a B5 standard by 2010, based on projected yields from new palm and jatropha cultivation. The state oil company, Pertamina, reduced blending from B5 to B2.5 owing to a 50 percent increase in palm oil prices. Indonesia will overtake Malaysia in 2007 as the largest producer of palm oil and expects to produce 20 million tonnes by 2010, up from 17 million tonnes in 2007.

Late last year, Greenpeace released its “Cooking the Climate” report which concluded that forest clearance in Indonesia for palm plantations has made the country the third largest producer of greenhouse gas emissions, behind the United States and China. The study found that Indonesia is losing 2 percent of its tropical forest each year to deforestation, and that the resultant emissions more than offset the gain from switching from fossil fuels to biofuels. Indonesia has six million hectares of palm under cultivation and plans to expand this to 10 million hectares by 2015.

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