Indonesia has resumed disbursement of funds for biodiesel and palm replanting

On January 22, Achmad Maulizal, an official of the Indonesian Plantation Fund Authority (formerly the Palm Oil Fund Agency), said the agency has resumed fund disbursement after a brief pause to support biodiesel subsidies and oil palm replanting programs.

This follows a comprehensive reorganization last week due to the expansion of the agency’s functions to include the management of cocoa and coconut projects, including replanting programs, which led to a temporary disruption in the disbursement of funds.

Following a decree from the Indonesian Ministry of Finance clarifying the new functions, the agency completed its name change and resumed normal operations.

Under the new decree, the Plantation Fund Authority will be responsible for food safety and financing programs for the plantation products processing industry, in addition to continuing to support the biodiesel subsidy and plantation programs.

Notably, the new decree makes no mention of any new tax programs to support the agency’s expanded responsibilities. Prior to this reorganization, the agency mainly financed its various programs through the collection of palm oil export taxes.

The move shows that the Indonesian government continues to advance its goals of sustainable agriculture and energy while deepening the integration and diversification of the plantation chain.

Farm to Flight Act, Accelerated SAF Production and Development

On January 16th, Senator Jerry Moran, Republican of Kansas, and bipartisan colleagues reintroduced the Farm to Flight Act to accelerate the production and development of sustainable aviation fuels (SAF).

The Farm to Flight Act seeks to expand the market for U.S. crops in aviation bioenergy by clarifying SAF eligibility in the USDA Bioenergy Program. The bill would also encourage greater cooperation among USDA agency mission areas on aviation biofuels to promote private sector partnerships and require USDA to adopt a common definition of SAF to ensure that U.S. crops effectively contribute to aviation renewable fuels.

Many biofuels and agriculture groups have expressed support for the legislation, including the Sustainable Aviation Fuels Coalition, Growth Energy and the Renewable Fuels Association.

Indonesia suspends subsidies for palm oil biodiesel and other projects

Jan. 20 (Bloomberg) — Indonesia will temporarily freeze the allocation of subsidies for the mandatory palm oil biodiesel and replanting program as the palm oil fund management agency (BPDPKS) is being restructured. Official Ahmad Maulizar said the agency is undergoing restructuring after taking over the management responsibilities of the Cocoa and Coconut Funds, and is awaiting a new organizational structure and working system, with the transition period expected to be completed as soon as possible.

The BPDPKS funds programs such as mandatory biodiesel, replanting, and research through an export tax on palm oil products. It has also been asked by the government to support the cocoa and coconut industries, including funding replanting programs, but specific details have not been disclosed.

Meanwhile, Indonesia is pushing ahead with biodiesel policy reforms to increase palm oil blending from 35% to 40% (B40). Last November, BPDPKS warned that the higher blending ratio would lead to a 68% increase in subsidy requirements. To mitigate costs, the government plans to subsidize only about 7.55 million kiloliters of biodiesel this year, out of a total of 15.6 million kiloliters.

Ernest Gunawan, secretary general of the Association of Biodiesel Producers (APROBI), believes that biodiesel distribution will not be affected if the subsidy freeze does not last more than three months. Goulart Manulong, chairman of the Palm Oil Smallholders Association (Apkasindo), said the government has allocated funds to replant 120,000 hectares of palm oil, although no official notification has been received.

Investing $1.2 Billion, Building Raw Material Factories, Preparing for B40

Energy and Mineral Resources Minister Bahlil Lahadalia has announced that the $1.2 billion biodiesel raw material plant will be built entirely with domestic investment, including private and state-owned companies. He said the plant will be located in Bojonegoro and will mainly produce methanol and ethanol as feedstock for the B40 biodiesel blend. Methanol demand is expected to reach 2.3 million tons in the 40 percent mandatory biodiesel program.

In addition, ethanol will be extracted from sugarcane, and the related production facility will be built in Malauke to boost domestic downstream processing and create added value. “We will manufacture these products in Java and Malauke, ensuring that the final mixture is done domestically,” Bahlil said.

Bahlil also emphasized the government’s push for national energy security by supporting biodiesel production from crude palm oil (CPO). Although the government is boosting oil production, the use of CPO to produce biodiesel as part of its energy security strategy will help increase domestic energy self-sufficiency and boost the bioenergy industry.

EU to revise palm oil rules

The World Trade Organization (WTO) recently ruled that parts of the EU’s Renewable Energy Directive (RED II) unfairly discriminate against Indonesia’s palm oil exports. The ruling was published on January 10 and is seen as a major victory for Indonesia in its trade dispute with the EU over biofuels.

While the WTO supports the EU’s right to pursue climate and environmental goals, it points to shortcomings in its implementation of RED II. Specifically, the WTO found that the Delegated Act’s inclusion of palm oil as a high-risk source of indirect land use change (ILUC) violated international trade rules. In addition, France’s tax incentives, which exclude palm oil-based biofuels but give preference to rapeseed and soybean alternatives, were also found to be discriminatory.

The EU pledged in a Jan. 10 statement to address these issues in light of the WTO ruling and to bring its policies into line with its international trade obligations. If no appeal is filed, the EU will need to complete the relevant adjustments within 60 days.

As the world’s largest producer of palm oil, Indonesia has long argued that RED II’s restrictions on palm oil are unfair, while European-grown oilseed crops benefit from them. The ruling not only provides legal support for Indonesia’s claims, but also strengthens Jakarta’s position in trade negotiations with the EU and other policy disputes, such as the EU Deforestation Regulation (EUDR), which was recently delayed until the end of 2025.

Airlangga Hartarto, Indonesia’s chief economic affairs officer, said, “This victory proves that Indonesia is able to fight and succeed against discriminatory policies, and further affirms the legitimacy of palm oil biodiesel along with other alternative fuels.”

The WTO ruling also criticized the EU for failing to properly assess data when classifying palm oil as high risk, as well as flaws in the certification process for low ILUC risk biofuels. These findings support Indonesia’s efforts to fight for fair treatment of its exports, especially in the context that 41% of Indonesia’s palm oil industry is supported by small farmers.

Erlanga also mentioned that the ruling provides an opportunity for Indonesia and Malaysia to strengthen their cooperation in order to jointly resist future discriminatory policies. He said, “This clears the way for resolving trade issues, including advancing the stalled Indonesia-EU CEPA (Comprehensive Economic Partnership Agreement) negotiations.”

The dispute, which began in 2019, reveals the tension between trade liberalization and environmental protection.2024 In April, Malaysia won WTO support in a similar case, further forcing the EU to adjust its policies.

Supplying Marine Biodiesel to Singapore Cruise Ships

Neste and KPI OceanConnect recently partnered with Global Energy to supply Neste MY renewable diesel to Singapore’s marine sector for operational deliveries in Singapore waters. This is the first time renewable diesel has been supplied to a marine sector participant, such as for use by cruise ships in Singapore.

“The first supply of Neste MY renewable diesel to the marine sector in the Asia-Pacific region marks an important milestone for the industry and demonstrates the product’s versatility in replacing fossil diesel in a wide range of applications. This is an effective solution to make the marine sector more sustainable,” said Ee Pin Lee, commercial director, Asia Pacific, Neste Renewable Products.

SAF One acquires Green Biotrade

SAF One has announced the acquisition of Green Biotrade, a UAE-based feedstock and biofuel trading company, a strategic acquisition that will enhance SAF One’s supply chain capabilities and provide key feedstocks for its Sustainable Aviation Fuel (SAF) program.

 

Japan’s largest SAF plant will soon be in operation, with 100% UCO as its raw material.

Cosmo Oil Co., JGC Holdings Corporation, Revo International and SAFFAIRE SKY ENERGY announced the completion of the SAF production facility, which will utilize used cooking oil as a feedstock for the production and supply of domestically produced SAF.

The four partners announced the December 25, 2024 completion date for the project.

The four companies aim to become the first company in Japan to produce domestically produced SAF on a large scale, supplying approximately 30,000 kiloliters of SAF per year domestically, using 100% used cooking oil as a feedstock.

JGC will be responsible for setting up the entire supply chain, Revo International for sourcing raw materials, Sapphire Sky Energy for producing SAF, and Cosmo Energy Group for producing blended SAF and selling it to customers.

Pertamina, the plant that produces SAF, receives ISCC certification

Kilang Pertamina Internasional, the refining arm of Indonesia’s state-owned energy company Pertamina, plans to produce its first batch of certified sustainable aviation fuel (SAF) in the first quarter of this year.

The company received SAF certifications in December, including the International Sustainability Carbon Certification (ISCC), the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) and the ISCC European Union (EU) certification.

The company will produce SAF at its Chirazza refinery using a treated distillate hydrotreating unit.

“KPI is ready to produce the first batch of ISCC-certified Pertamina SAF from waste cooking oil in Indonesia and the region, which is scheduled to start production in the first quarter of 2025,” spokesman Hermansyah Y. Nasroen said in a statement.

KPI said its Chiraza Green Refinery has the capacity to process 6,000 barrels per day of waste cooking oil for the production of hydrogenated vegetable oil and SAF, with a total annual production capacity estimated at around 300,000 kiloliters.

WTO largely supports EU’s determination on palm oil

World Trade Organization (WTO) experts on Friday largely supported the European Union’s (EU) restrictions on the use of palm oil in biofuels after Indonesia filed a complaint.

Indonesia, the world’s largest producer of palm oil, requested the panel to review the relevant EU restrictions in 2019. According to a Geneva-based trade official, the dispute panel “basically ruled in favor of the EU.”

The official added that the panel found certain deficiencies in the preparation, issuance and administration of the challenged measures.

The EU found palm oil production to be unsustainable.