Indonesia, Malaysia turn to biodiesel

Faced with soaring oil prices, Indonesia and Malaysia are turning to biodiesel, a fuel that cuts regular diesel with vegetable oil, to reduce emissions and costly subsidies.

Indonesia has long searched for ways to reduce air pollution in Jakarta, one of the dirtiest cities in the world, and the government last month introduced biodiesel at petrol stations in the capital.

“The biggest impediment of biofuel popularization is its higher price than conventional fuel,” Tomohide Sugino, a project leader for the UN’s Centre for Alleviation of Poverty through Secondary Crops’ Development in Asia and the Pacific, wrote recently in a Jakarta Post opinion column.

“Roughly speaking, the production cost of biofuel is twice as much as gasoline,” he wrote. “The forerunners who have successfully increased biofuel consumption have provided tax exemptions or subsidies to their biofuel producers.”

Without these incentives, private companies have been hesitant to produce and sell biodiesel because of the relatively high cost of their most available substitute – palm oil.

Bangkok Post