23 November 2021

For the first time, the United Nations climate conference (COP26), which ended last Saturday (13/11), reached an agreement that fossil fuels are the main cause of global warming. As we all know, several countries that have been using coal as energy have always rejected the issue of global warming. The reason is because the use of coal is not environmentally friendly and one of the causes of global warming.

At this climate conference, there was also initial resistance. At the last minute, India, backed by China and a number of other coal-dependent developing countries, refused to phase out coal-fired power plants.

After delegates from China, India, the United States and the European Union deliberated, it was eventually changed to a request for countries to gradually reduce their use of coal. The agreement reached at this climate conference is good news in curbing global warming, which is increasingly worrying for the survival of creatures.

Indonesia Advantage

So what are the benefits that can be obtained from the results of the climate conference agreement for Indonesia? With a gradual reduction, of course, countries that have been using coal as an energy source will look for alternative energy that is certainly environmentally friendly. One source of energy to replace coal is biodiesel.

Quoting from the online discussion Dissecting the Urgency of the New and Renewable Energy Bill in Jakarta, Monday, April 26, 2021, the Coordinating Minister for Economic Affairs Airlangga Hartarto said that Indonesia is the largest producer of biodiesel in the world with production reaching 137 thousand barrels of oil per day, higher than the biodiesel production figures of the United States with 112 thousand barrels, Brazil 99 thousand barrels, and Germany 62 thousand barrels of oil per day.

As is known, biodiesel production activities in Indonesia have been running for quite a long time and continue to experience an increase in production. Based on data from the Ministry of Energy and Mineral Resources (ESDM), in 2009 biodiesel production was 190 thousand kiloliters (kl), in 2012 it rose to 2.2 million kl. In 2015 it rose again to 2.6 million kl, in 2018 it rose to 6.2 million kl and in 2020 it rose to 8.59 million kl.

The increasing production of biodiesel in Indonesia every year shows that the demand for biodiesel continues to increase both globally and domestically.

Citing data from the Directorate General of New, Renewable Energy and Energy Conservation (EBTKE) of the Ministry of Energy and Mineral Resources, Indonesia's biodiesel uptake reached 833,197 kl in September 2021.

During January-September 2021, the highest uptake occurred in June. Biodiesel uptake reached 867,458 kl in that month. This uptake was even higher than the average monthly biodiesel uptake allocation of 766,667 kl. Meanwhile, the lowest uptake was recorded at 555,611 kl in January 2021.

Nationally, the national biodiesel uptake has reached 6.65 million kl as of October 2021, which means that the national biodiesel uptake has reached 72.17% of the 9.2 million kl target for 2021.

Meanwhile, domestic biodiesel uptake reached 8.4 million kl in 2020. This reached 87.96% of the allocation set by the Ministry of Energy and Mineral Resources of 9.55 million kl.

Now with the agreement to gradually reduce the use of coal, it is estimated that the demand for biodiesel will increase significantly. This is of course very beneficial for Indonesia as the world's largest producer of vegetable oil (palm oil) as a mixture for diesel fuel.

With the depletion of fossil fuels, the blending of vegetable oils is increasing to B100. Meanwhile, European countries that also produce vegetable oils such as sunflower, soybean and so on will not be able to keep up with the production of vegetable oil from palm oil.

Downstream 

As is known, the need for palm oil is not only for biodiesel as an energy source, but also other needs such as food, consumer goods and other needs.

The downstreaming of palm oil products is absolutely necessary and the government has prepared the downstreaming of palm oil products.

Coordinating Minister for Economic Affairs Airlangga Hartarto said the government has prepared a roadmap for the downstreaming of palm oil products, including increasing productivity, supporting downstream activities such as oleofood, oleochemicals and biofuels, creating ecosystems, governance, capacity building and technology development for palm oil business development. This will automatically create new jobs and certainly absorb labor, although so far the palm oil industry has contributed to the creation of jobs both directly and indirectly.

In addition, downstreaming will increase the country's foreign exchange. In 2020, foreign exchange from palm oil exports amounted to US$23 billion. This foreign exchange is the largest contributor to the 2020 non-oil and gas trade balance surplus, namely from US$ 27.70 billion net non-oil and gas exports and around 83% of which is contributed by palm oil foreign exchange.

By strengthening the downstreaming of palm oil products, Indonesia can become a price setter or pricecenter for global CPO. As the largest CPO producing country in the world, of course it must become a price setter. So far, CPO prices are still determined by market prices so they are easily manipulated.

When looking at Indonesia's land area, which is 10 percent of the total global land bank for vegetable oil and as much as 55 percent of the world's palm oil or vegetable oil market share has been controlled, it is enough to become a strong reason to become a CPO price determining country. In addition, Indonesia is known to be able to produce 40 percent of the world's total vegetable oil which plays an important role in the context of world food security.

Source : https://analisadaily.com/e-paper/2021-11-23/files/mobile/index.html#12