Indonesia to introduce biofuels subsidy of up to $0.30 per gallon

In Indonesia, the national government announced that it will establish a biofuels subsidy commencing in 2009, to encourage investment in and use of biofuels made from palm oil and other feedstocks. The government pegged the initial subsidy at $0.302 per gallon, but said that the subsidy will be limited to biofuels that are more expensive in the market than conventional fossil fuels. Officials said that with cassava-based ethanol available at a discount to conventional fuels at the moment, the subsidy initially would be limited to plam-based biodiesel. With the subsidy, the difference between market prices for biodiesel and conventional diesel would be narrowed to roughly 15 cents per gallon.

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