Tighter channels for Indonesian biodiesel deliveries to the European Union (EU) could reduce export numbers on the product this year, the Indonesia Biodiesel Producers Association (APROBI) predicted in a "pessimistic scenario."
According to The Star, APROBI Vice Chairman Paulus Tjakrawan said on Thursday that on the pessimistic side of the biodiesel sector, it is expected that exports may only hit 1 million or 1.2 million kiloliters (kl) this year.
Tjakrawan explained that the less than stellar forecast could be attributed to EU laws on Indonesian biodiesel. The bloc has imposed an anti-subsidy probe on the country's biofuel produce in 2017.
The World Trade Organization (WTO) later ruled in favor of Indonesia over the biodiesel dispute with the EU but some industry analysts said the impact of EU regulations could still be felt by the sector this year.
Indonesia has been working to make its palm oil-based fuel more environmentally-friendly after the EU and other countries called on cleaner produce from the country. The government rolled out its B20 fuel mandate that saw fuel firms increase the biodiesel components in their product to 20 percent.
Despite some potential setbacks on Indonesian biodiesel exports, the bullish side of a probe's forecast suggested that exports may reach up to two million kg of unblended biodiesel this year.
The optimistic forecast could be impacted by the government's aim of promoting B30 biodiesel. APROBI Chairman M.P. Tumanggor said the plan is to conduct a road test that targets completion by as early as July.
B30 implementation is expected to boost biodiesel exports by as much as 10 million kl in exports. If things go as planned, most road vehicles in Indonesia will have to use B30 biodiesel by next year.
The latest data from February indicated that biofuel exports saw a hike compared to the same month in 2018. According to Agra-Net, Indonesia exported 52,356 tonnes of the product in February.
Domestic markets have also shown increased consumption of biofuel during the first quarter of 2019. According to Reuters, Indonesians consumed 1.5 million kl in Q1. The numbers are a significant hike from Q1 2018 records of 659,813.51 kl.
Biofuel has become an issue of concern for many economists who believe that the transition to cleaner energy products is a much-needed change to help bolster Indonesia's export sector.
Earlier this month, S&P Global predicted that whoever wins the presidential election may be pushed to act on the biodiesel concerns that international advocates and local forces supporting the cause have been pressuring the government over the past years.
