UPDATE 1-Indonesia says B40 biodiesel programme unlikely to proceed next year – Successful Farming

* Energy ministry official says is a struggle to fund
programme

* Indonesia collects levies to finance biodiesel subsidies

* Ministry is still conducting trials on new B40 blend

* Biodiesel promises lower emissions, but deforestation
concerns
(Recasts, adds comments by official)

JAKARTA, Nov 16 (Reuters) – Indonesia is unlikely to proceed
with plans to raise the bio-content of its palm oil-based
biodiesel to 40% next year as it struggles to fund the
programme, an energy ministry official told parliament on
Monday.

Instead, the Southeast Asian country will retain its
biodiesel B30 programme which makes it compulsory for diesel in
Indonesia to be blended with 30% fatty acid methyl ester (FAME)
made out of palm oil next year, Dadan Kusdiana, the director
general of the country’s energy ministry, said.

“B40 is not ready,” Dadan said, referring to the biodiesel
programme containing 40% bio-content and adding that Indonesia
had allocated 9.2 million kilolitres of FAME to be used next
year.

“Supporting B30 is now very challenging from the funding
side, so we see that B40 will be more difficult,” he added.

Indonesia collects levies to help finance its palm oil
programmes, including biodiesel subsidies and replanting
programmes for smallholders.

Other than a higher percentage of bio-content, the B40
programme will also be produced using a different formulation,
combining 30% FAME and 10% “green diesel” made out of palm oil
with conventional diesel.

Dadan said that the ministry is still conducting trials for
the new blend.

Although biodiesel promises lower emissions, the use of palm
oil as a feedstock raises concern about deforestation in the
clearance of land to grow it. The European Union is planning to
phase it out as fuel for transport, creating trade friction with
Indonesia, the world’s biggest producer of palm oil.
(Reporting by Bernadette Christina Munthe; Writing by Fathin
Ungku
Editing by Ed Davies)

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