Based on statements from a government agency, Indonesia's biodiesel consumption is set to decline in the second half of 2017 due to some "technical issues". While in the first six months of 2017 biodiesel consumption in Indonesia reached 1.67 million kiloliters, this figure is expected to fall to 0.86 million kiloliters in the second half of the year, hence resulting in an estimated total of 2.53 million kiloliters in full-year 2017.
Through government sponsored programs, local authorities encourage the production (and consumption) of biodiesel in Indonesia. Considering Southeast Asia's largest economy is the world's biggest palm oil producer, it can produce palm oil-based biodiesel in a relatively cheap way. Moreover, biodiesel consumption eases Indonesia's rising reliance on imports of crude oil-based fuel, while it also curbs the nation's greenhouse gas emissions.
In the latest biofuel program, the B20 program that was launched in 2016, the Indonesian government requires a minimum 20 percent blend of bio content in diesel fuel, up from 15 percent (the B15 program) in 2015.
Dono Boestami, Chief Executive at government agency Indonesia Estate Crop Fund, said he expects to see a slowdown in biodiesel consumption in Indonesia in the last six months of 2017 due to some technical difficulties. In the near future, Boestami wants to boost the country's biodiesel consumption volume to 3.5 million kiloliters per year.
In terms of biodiesel exports, there is some concern for Indonesia as the US recently decided to impose a preliminary 50.7 percent anti-dumping duty on biodiesel imports from Indonesia. According to the US Commerce Department, Indonesia dumps its biodiesel products on the US market because the Indonesian government subsidizes the production through the B10, B15, and B20 biodiesel programs. The final ruling by the US Commerce Department is scheduled for 7 November 2017.
Meanwhile, Fadhil Hasan, Board member of the Indonesian Palm Oil Association (Gapki), said palm oil production in Indonesia will increase to 38.5 million tons in 2018, up from an expected 36.5 million tons in 2017. Indonesian palm oil exports are expected to rise to 29 million tons in 2018, from an expected 28 million tons in 2017. Meanwhile, he sees crude palm oil prices averaging between USD $700 and $710 per ton in 2017 (on a CIF Rotterdam basis).