18 Jan 2017: EU Parliament has voted to exclude palm oil from the EU-RED. What's next? What can you do?
We've been working on ways to quantify "no deforestation, no peat, no exploitation" (NDPE) in the last few months, in view of the escalating issues on market access. It was back in April 2017 that the EU policy-level warning shot came, and the 17 January 2018 vote result is no surprise, especially in light of years of poor sentiment and volume challenges faced in the EU. A few months ago, we checked with EU company experts who told us that the process may culminate in year-end legislation. Producer countries will focus on "unfair discrimination" and the international lawyers will be very keen to assist. Don't be surprised if more smallholder protests are organised.
For those with your feet on the ground, what can you do next? I believe there will have to be an evolution to quantify NDPE, to offer different buyers what they seek. What if some buyers are keen on smallholder palm oil that comes from areas planted by 1970 (decades ahead of popular certification cut-offs)? That's identifiable. Indeed there's 100s thousand hectares of this; and you only need 300,000 hectares to get over 1 million tonnes of 1970 no-deforestation material; or how about looking at the 2000 no-deforestation zones of Kelantan (see below)? What if buyers want to implement a direct worker reporting system, so you can generate data and work on "no exploitation"? It'll come down to how keen are palm oil producers to put their best foot forward, and explore how to best market.
Yu Leng of Khor Report's posting in LinkedIn and sample of Kelantan potential zones (yellow):
- European Parliament draws a RED line under palm oil, sets biofuels position JANUARY 17, 2018 https://biofuels-news.com/display_news/13337/european_parliament_draws_a_red_line_under_palm_oil_sets_biofuels_position/
- Bursa Malaysia crude palm oil futures fall on concerns over EU Parliament vote on RED II provisions Singapore (Platts)--17 Jan 2018 https://www.platts.com/latest-news/agriculture/singapore/bursa-malaysia-crude-palm-oil-futures-fall-on-27906122
- M’sian oil palm smallholders protest against Europe’s ‘crop apartheid’ Erika Benjamin / The Edge Financial Daily January 17, 2018 http://www.theedgemarkets.com/article/msian-oil-palm-smallholders-protest-against-europes-crop-apartheid
- EU heading for ‘zero palm oil’ in transport by 2021 By Frédéric Simon | EURACTIV.com https://www.euractiv.com/section/energy/news/eu-heading-for-zero-palm-oil-in-transport-by-2021/
29 Dec 2017: China stops production of 553 passenger-car models not meeting fuel-consumption limits, Khor Reports confirms diesel non-compliance faces production stop and those produced face fines
Editor's note: Just two days ago, Dr. Sathia Varqa, Owner and Co-founder at Palm Oil Analytics wrote on my LinkedIn posting "China unveiled a new barometer of the health of its regional economies based on environment-related indicators" (news link below) the following: "Thanks for posting. Indicators offer a chance to explore the problem. Well done to China. National bioethanol mandate in 2020 is just one of the many solutions. I doubt if similar national biodiesel program is launched in China." I replied, "I also doubt that biodiesel fits their policy imperatives." And today, I have news from a senior executive in the China automobile sector that 1 Jan 2018, all diesel non-compliance will be production stopped; and for those already produced, a fine imposed (Khor Reports' interview, 29 Dec 2017 with senior executive in China automobile sector). I was checking as China just published its first list of pollution offending car models-production ban. My auto industry expert noted that this is low-key news in China. Notable that China has taken a decisive stance on the diesel emissions scandal that broke out in September 2015 on VW's cheating (that started in 2005). Blow back on biodiesel prospects not surprising.
China to Stop Production of 553 Vehicle Models Over Fuel Use by Bloomberg News December 28, 2017, 5:37 PM GMT+8 https://www.bloomberg.com/news/articles/2017-12-28/china-to-stop-production-of-553-vehicle-models-over-fuel-use.... "China will end the production of 553 passenger-car models that don’t meet fuel-consumption limits amid efforts by the nation to curb pollution. The halt in production will begin Jan. 1, the China Vehicle Technology Service Center said in a statement Thursday. Models include FAW VW’s Audi FV7145LCDBG sedan, Beijing Benz’s Benz BJ7302ETAL2 sedan and Shanghai GM’s Chevrolet SGM7161DAA2 sedan..."
China Ranks Provincial Economies With New Environment Index by Bloomberg News December 26, 2017 https://www.bloomberg.com/news/articles/2017-12-26/china-ranks-provincial-economies-with-new-environment-index
Engineering a Deception: What Led to Volkswagen’s Diesel Scandal By JACK EWING MARCH 16, 2017 https://www.nytimes.com/interactive/2017/business/volkswagen-diesel-emissions-timeline.html
Timeline: Volkswagen's long road to a U.S. Dieselgate settlement by Reuters Staff JANUARY 11, 2017 https://www.reuters.com/article/us-volkswagen-emissions-timeline/timeline-volkswagens-long-road-to-a-u-s-dieselgate-settlement-idUSKBN14V100
VW’s Diesel Scandal Could Hurt Biodiesel by JOHN DAVIS SEPTEMBER 23, 2015 http://energy.agwired.com/2015/09/23/vws-diesel-scandal-could-hurt-biodiesel/
22 Dec 2017: European Council position on renewable energy use. Australia vs Canada and Croatia canola entry to EU.
The European Council news is seen as gloomy to renewable energy experts in palm. "Up to 7%" with the Council's 27% target (instead of 35%) means that a member state could choose 0% first generation biofuels to lower its transport fuel total to 20%. On the power generation side, palm seems to have things easier. Refer to the Japan situation too. Notable that Australia canola gets ahead of Canada and Croatia for European biodiesel ahead of the new threshold. An RE specialist said this:"the problem palm faces is that they (destinations) see a difference between 'cannot do' and 'will not do'..." Origins have been talking strongly about smallholder interests and rattle the 'trade war' talk. Presumably, there is also some good NEW work going on to present suitable data evidence. Australia shows not all canola origins are the same, and the same is true for other feedstocks. And at a corporate level there is strong differentiation, with lead palm suppliers offering 70% GHG-savings material to the most discerning destinations and efforts to measure GHG savings with alternative processing methods.
Indonesia biodiesel has come in weaker than targeted, which is to be expected. However, we should keep an eye on the change in the Indonesia election cycle. The next Presidential election will be the first (post-Suharto) where the incumbent can really make use of the power of incumbency. The BPDP has been used almost fully to fund the domestic biodiesel mandate. However, there may be increased pressure for it go toward smallholder replanting, as the incumbent builds his rural support base for re-election; and there are strong fiscal deficit limits in Indonesia. The balancing of BPDP funding for biodiesel (price support) and smallholder replanting will be interesting to watch relative to palm oil - gas oil spreads and levels.
Promoting renewable energy use – Council adopts its position 18/12/2017 The EU is committed to reach a target of at least 27% renewable energy of its overall energy consumption by 2030....In the transport sector, the renewables target for 2030 is set at 14% for each member state, and there is a sub-target of 3% for ‘advanced biofuels’, for which double-counting will be allowed. This advanced biofuels target has an intermediate binding milestone of 1% in 2025 to increase investment security and guarantee the availability of fuels throughout the period. Electromobility is strongly encouraged by two multipliers of 5x for renewable electricity used in road transport, and of 2x for rail transport.... The existing 7% cap on first-generation biofuels is maintained to provide certainty to investors. If a member state sets a lower cap, it will be rewarded with the option of lowering its overall target for renewables in transport.... http://www.consilium.europa.eu/en/press/press-releases/2017/12/18/promoting-renewable-energy-use-council-adopts-its-position/
Where Green Incentives Led to a Surge in Palm Oil By Chisaki Watanabe November 8, 2017 -- Japan approvals surge for biomass plants using palm oil. Fuel blamed for destroying rain forests, Indonesian peat lands. https://www.bloomberg.com/news/articles/2017-11-07/where-green-incentives-chop-down-palm-trees-in-search-for-fuel
Australian canola for European biodiesel emits half the greenhouse gas of fossil fuels By Sarina Locke 18 Dec 2017 -- Australia has secured access to a billion-dollar European biodiesel market for canola, just two weeks away from a cut-off date. ..Dr Eady said it took Europe 12 months from when it received the CSIRO and Lifecycle's report on canola to approve and legislate it. She said it had come close to being a disaster for Australian canola growers...Canada and Croatia are also significant suppliers into the EU, and they were not able to get their country report accepted by the EU because they had significant issues still to be addressed http://www.abc.net.au/news/rural/2017-12-18/australian-canola-approved-as-low-emission-fuel-for-europe/9269232
4 Dec 2017: European Parliament ITRE disappoints palm exporters. Air pollution (pro-electric, anti-diesel) news flow
Editor's note: Palm exporters had some hopes that the ITRE might be more positive on the use of palm oil in the EU, but this hope was dashed last week. Palm oil producers should also be interested in the EU Forest Strategy which has its public hearing today. The political view on palm oil has been on the cards. Some EU corporate experts point to an end-2018 legislative timeframe if this gets through to the wider vote, and other processes including the Council of Ministers. Data-driven approaches used so far by exporting countries have had limited impact in turning policy maker views in destinations like the EU. Some local palm oil experts say that "serious work in making palm oil the healthy super food of the future should begin from now." There are however evident business interests sceptical of the food contaminant allegations (calling it a sham argument; and lacking data rebuttals) and preferring to sell to "less fussy" markets as few are interested to change production practices. I feel that it is important to understand rural political realities. Palm oil won in the cooking oil, oleocehmicals and energy sector against other oils-oilseeds but faces pushback. It has also positioned itself as a competitor to the dairy sector. This is a great concern. The risk is that the political fights expands from oilseed growing centers to contestation across the dairy belt. Dairy is an important income component for many (including temperate zone) farmers*; an important interest group, just as oil palm farmers are important voters in some tropical countries. Trade problems have arisen for palm not just in the EU and US, but also in the likes of Turkey, Iran, Russia and India. There are over 3 million oil palm farmers worldwide, and there are 75 million diary farms in India and 1.35 million in Brazil. Moreover, China (and India?) policy efforts to enhance rural incomes, will be a headwind for palm imports as domestic feedstocks are the focus.
*Faostat reports top 10 milk producers: USA, India, China, Russian Federation, Brazil, Germany, France, New Zealand, United Kingdom, Turkey. Top 10 dairy cow populations: India, Brazil, Sudan, China, Pakistan, Kenya, USA, Russian Federation, Tanzania, Ethiopia. Note: 2012 data.
Ban on palm oil biofuels a step backwards on EU-Malaysia relations, says Mah -- The government describes European Union (EU) Parliament’s Industry, Research & Energy Committee (ITRE) to endorse the ban palm oil biofuels as a step backwards for EU-Malaysia trade relations.
European Parliament news, http://www.europarl.europa.eu/committees/en/itre/home.html:
- Joint ENVI-ITRE-AGRI public hearing on the EU Forest Strategy 30-11-2017 - 15:04 - On 4 December, the ENVI-ITRE-AGRI committees will hold a joint public hearing. The objective of this event is to provide input to the review to be carried out by 2018 in order to assess progress in the implementation of the EU Forest Strategy.
- During its 28 November meeting, ITRE voted on two reports on the Promotion of the use of energy from renewable sources (Recast) and Energy Efficiency, which are key files of the Clean Energy for All Europeans Package.
23 October 2017, there was an Environment Committee vote that calls for a phase-out use of palm oil in biofuels by 2021 (EU Environment MEP's vote on RED II – mixed reactions on upgraded proposal, https://bioenergyinternational.com/opinion-commentary/eu-environment-meps-vote-red-ii-mixed-reactions-upgraded-proposal).
Air pollution; pure electric cars to be cheapest? The researchers analysed the total cost of ownership of cars over four years, including the purchase price and depreciation, fuel, insurance, taxation and maintenance. They were surprised to find that pure electric cars came out cheapest in all the markets they examined: UK, Japan, Texas and California....At the moment the cost is partly because of government support, but electric cars are expected to become the cheapest option without subsidies in a few years.....Air pollution concerns are especially acute in China, which is now the biggest market for electric cars and growing rapidly, mainly driven by domestic manufacturers including BYD, Geely and Beijing Auto. “China is stealing the march on everybody and they will be the leaders of that market,” said Tate. “The European and US motor industry have been caught napping.”.... https://www.theguardian.com/environment/2017/dec/01/electric-cars-already-cheaper-to-own-and-run-than-petrol-or-diesel-study
Transport tops US pollution. "America crowns a new pollution king. For the first time in 40 years, power plants are no longer the biggest source of U.S. greenhouse gas pollution. That dubious distinction now belongs to the transport sector: cars, tracks, planes, trains and boats. The big change didn’t come from increasing transportation emissions, but instead from the cleanup of America’s electric grid."
UK pollution and diesel scrappage? Five cities and 23 local authorities have been selected in the new plan to come up with measures to reduce illegal levels of nitrogen dioxide by December 2018. But the government refused to legislate for more “clean air zones” that would charge the dirtiest vehicles to enter the UK’s most polluted cities and has stopped short of bringing in a diesel scrappage scheme. https://www.theguardian.com/environment/2017/nov/30/uk-government-being-dragged-screaming-to-tackle-air-pollution
Delhi air pollution and vomiting cricketers. A cricket Test match between India and Sri Lanka was repeatedly interrupted on Sunday with claims players were “continuously vomiting” due to hazardous pollution levels in the Indian capital. https://www.theguardian.com/world/2017/dec/03/pollution-stops-play-at-delhi-test-match-as-bowlers-struggle-to-breathe
27 Nov 2017: Epure talks about phase out of bad biofuels like palm
Phasing-out biofuels: What’s really at stake? 06/10/2017 -- A new Euractiv Special Report focuses on the biofuels debate now under way in the EU, and what the European Commission’s proposal to phase out crop-based biofuels would mean for Europe’s energy and climate goals, as well as its agriculture sector. http://epure.org/news-and-media/news/phasing-out-biofuels-what-s-really-at-stake/
28 Oct 2017: EU politicians moving on palm oil in transport fuel by 2021?
The environment committee of the European Parliament voted today to phase out the support for biodiesel from vegetable oils in 2030 and terminate the use of palm oil biodiesel as early as 2021. However, MEPs decided to exempt some food-based biofuels such as bioethanol and crops grown on marginal land from this phase out. They also voted to increase the overall target for advanced fuels to 9% of fuels supplied in 2030. https://www.transportenvironment.org/press/meps-vote-end-public-support-food-based-biodiesel-including-palm-oil
27 Sep 2017: US EPA opens door to cutting biodiesel and RFQs, BMD palm oil futures dip with soy (palm, -12% YTD), Icahn-refiners litigation fight starts, Indonesia biodiesel dumping allegations faces 29 Dec measures
Editor's note: Icahn versus biofuels point of obligation, versus soy barons & palm tycoons?
27 Sep: Palm oil for Dec. delivery drops as much as 1.1% to RM2,718/ton on Bursa Malaysia Derivatives before trading at RM2,730 by 11:11am in Kuala Lumpur. Futures -12% YTD Market went lower, tracking losses in Tuesday’s soybean oil trade due the impact of the EPA notice - EPA Opens Door to Cutting Biodiesel, Renewable Fuel Quotas. http://www.theedgemarkets.com/article/palm-oil-futures-drop-after-soy-falls-epas-biofuel-notice
22 Sep: Pruitt Responds To Senators’ Request For Details On Icahn’s Advisory Role https://www.natlawreview.com/article/pruitt-responds-to-senators-request-details-icahn-s-advisory-role
29 Aug: Icahn Sees Biofuels Fight Deepening as Refinery Losses Mount. Billionaire Carl Icahn says an oil industry push for structural changes to the U.S. biofuels mandate will persist, even if the Environmental Protection Agency rebuffs requests from refiners to relieve them of the regulatory burden. Icahn’s remarks came as convenience store owners took the fight to federal court and mark the investor’s first public comments since an Aug. 18 open letter announcing his departure as a special regulatory adviser to President Donald Trump. https://www.bloomberg.com/news/articles/2017-08-28/icahn-sees-biofuels-fight-deepening-as-refinery-losses-mount.
25 Aug: Trump and Pruitt, Making America Polluted Again by Paul Krugman, https://www.nytimes.com/2017/08/25/opinion/trump-pruitt-polluted-climate-.html
24 Aug: Indonesia denies biodiesel dumping allegation in US. The US Department of Commerce (DOC) announced Tuesday its preliminary anti-dumping determination on biodiesel from Indonesia and Argentina. Its preliminary investigation claims that Wilmar International Ltd. has benefitted from a 41.06 percent subsidy from the government, while PT Musim Mas received a 44.92 percent subsidy and all other local producers 44.92 percent. Indonesian producers would, therefore, be required to pay a fee to US Customs and Border Protection (CBP) based on those preliminary rates. Petitions against Indonesian and Argentinian biodiesel were filed last March and the US government has been investigating the case. Should the claims be proven correct, an order for anti-dumping measures will be issued on Dec. 29 this year. http://www.thejakartapost.com/news/2017/08/24/indonesia-denies-biodiesel-dumping-allegation-in-us.html
4 Aug: The Environmental Protection Agency is preparing to formally deny requests by Valero Energy Corp., Icahn’s CVR Energy Inc. and other oil companies to shift the compliance burden for using ethanol and other biofuels away from refiners, moving it to fuel blenders and other entities instead. The people asked not to be identified discussing the policy action before it was announced, possibly before the end of this week. https://www.bloomberg.com/news/articles/2017-08-03/trump-s-epa-is-said-to-reject-icahn-backed-biofuel-program-tweak
6 July: Ethanol gets 15-billion-gallon guarantee. Oil gets a gift: Instead of increasing the required volume of advanced biofuels, he decided to cut them by 40 million gallons, reducing the overall amount of biofuel required under the program. Advanced biofuels gets … rocks: Pruitt reduced overall advanced biofuels in 2017, held advanced biodiesel steady in 2019, and cut the cellulosic ethanol mandate (which requires fuel made from agricultural leavings and switchgrass and has a much smaller carbon footprint) by almost a quarter. Changes on the horizon?: Pruitt also started the path for significant changes to such guidelines. He is launching an analysis for a "reset" of the volumes allowed under the law, asking for comment on imported ethanol and biodiesel, and opening the door to an examination of the market for zero percent ethanol. It’s not over until the final rule. The EPA often modifies the volumes it proposes in a final rule. Now the agency has until Nov. 30 to accept comments, analyze them and produce a final rule. http://www.politico.com/tipsheets/morning-agriculture/2017/07/06/rfs-2018-a-mixed-bag-221181
20 Sep 2017: The technology transition outlook (is oil the new coal?), US import duties on Musim Mas, Wilmar and others, "abject coalfields"
Editor's note: In the words of Michael Taussig in Becoming Palm (2017), "Palm oil is an elixir from which all manner of being emerges. The metamorphic sublime.... in this green desert... Poor palm, once heralded, still heralded, as world-saving "biofuel," salvation of ecocide. Now it is becoming the equivalent of the abject coalfields.."
Riding the Energy Transition : Oil Beyond 2040, May 22, 2017 -- Summary: Recent technological developments and past technology transitions suggest that the world could be on the verge of a profound shift in transportation technology. The return of the electric car and its adoption, like that of the motor vehicle in place of horses in early 20th century, could cut oil consumption substantially in the coming decades. Our analysis suggests that oil as the main fuel for transportation could have a much shorter life span left than commonly assumed. In the fast adoption scenario, oil prices could converge to the level of coal prices, about $15 per barrel in 2015 prices by the early 2040s. In this possible future, oil could become the new coal.
Ambank report: Bloomberg reported that US has proposed import duties on biodiesel from Argentina and Indonesia. Initial results of a Commerce Department probe indicated that the duties should be 50.3% to 64.2% on Argentine biodiesel imports and 41.1% to 68.3% on Indonesian biodiesel imports. The Commerce Department will announce on 7 November if the duties are finalised. Separate action by the International Trade Commission will follow thereafter... The interesting thing about the duties is that US set import duty rates specifically for certain companies. US has proposed an import duty rate of 68.3% for Musim Mas and 41.1% for Wilmar International. All other Indonesian exporters are subjected to an import duty of 44.9%.
U.S. Department of Commerce Issues Affirmative Preliminary Countervailing Duty Determinations on Biodiesel from Argentina and Indonesia, 22 August 2017 for United States Department of Commerce
More here, Palm oil trade & market news: Dr James Fry presentation, China policy favours domestic ethanol, IOI de-integrates Loders Croklaan, trade tussles and the "unhealthy commodity" label, Brent Crude $55.14 http://khorreports-palmoil.blogspot.my/2014/09/export-taxes-and-markets-news.html
10 August 2016: Malaysia eyes China biodiesel programmeMinistry Invites Tianjin Palm Oil Industry Players To Look In Tie-ups From S. Joan Santani -- TIANJIN, Aug 9 (Bernama) -- The Ministry of Plantation Industries and Commodities is inviting Tianjin palm oil industry players to look into collaborating with Malaysians in the biodiesel programme besides palm oil.....Tianjin City is the third largest palm oil entry point into China, after Jiangsu Province and Guangdong Province.... He said Malaysia was looking forward to this joint-venture with Tianjin for the implementation of the biodiesel programme. "Malaysia, which has 18 biodiesel plants, has implemented B7 biodiesel and was in talks about moving the start of B10 later this year. "The implementation of B10 and B7 programmes are expected to lead to an annual consumption of 709,000 metric tonnes t of biodiesel," he said.... Mah said he was confident the collaborations would augur well for both countries as they would lead to a saving of 820 million litres of gasoil and carbon dioxide emissions reduction of 2.16 million tonnes. "We can export more B7 into states like Tianjin and Beijing, as these two cities are polluted," he said. China is also committed to having a biodiesel programme in 2020, hence the ministry was looking ways to export biodiesel to China, he said....http://www.bernama.com.my/bernama/v8/bu/newsbusiness.php?
25 July 2016: BPDP fund raises Rp5.6 trillion in 1H2016, EU special report says its certification system is "not fully reliable"Cara BPDP Jaga Produksi Sawit Saat Moratorium by Pebrianto Eko Wicaksono 21 Jul 2016 http://bisnis.liputan6.com/read/2558220/cara-bpdp-jaga-produksi-sawit-saat-moratorium
Note: Pak Bayu says the moratorium decision of President Jokowi (if it comes into regulation) will be respected. Bayu, notes there are many estates that level of production is only one ton per hectare against a potential fo seven tons, blaming bad planting materials (seeds) in large part. Also, trees over 30 years old must be replanted. Bayu said for Jan-June 2016 the oil fund has raised to Rp 5.6 trillion, against this year's target of Rp 11 trillion. The realized oil fund levy for 1H2016 was lower than 2H2016's (July to December 2015) Rp 6.9 trillion likely because of oil exports have dropped slightly.
Special Report - The EU system for the certification of sustainable biofuels: "The audit addressed the question ‘Have the Commission and Member States set up a reliable certification system for sustainable biofuels?’ We conclude that, because of weaknesses in the Commission’s recognition procedure and subsequent supervision of voluntary schemes, the EU certification system for the sustainability of biofuels is not fully reliable...."
INVESTOR KORSEL BAKAL BANGUN PABRIK BIODIESEL DI KALBAR Berita Utama | 25 July 2016 http://www.infosawit.com/news/4995/investor-korsel-bakal-bangun-pabrik-biodiesel-di-kalbar
12 July 2016: Indonesia's PLN Says Biofuel Regulation Unworkable - machinery gets clogged with residue
State Power Firm PLN Says Biofuel Regulation Unworkable - Indonesian state power firm Perusahaan Listrik Negara (PLN) says it cannot comply with government rules on burning diesel with a bio content of at least 30 percent as it would damage generators By : Bernadette Christina Munthe and Wilda Asmarini | on 1:42 PM July 11, 2016 -- Less-than-expected growth in bio consumption by Indonesia's largest diesel buyer could weigh on palm prices as more supplies are diverted to the global market. "It's risky if we use B30 (because) machinery can shut down," Chairani Rachmatullah, head of PLN's fuel and gas procurement division, told Reuters in an interview late last month. "Eventually the machinery gets clogged with residue like slagging causing blockages, and then it breaks down," she said, adding that diesel with a bio content of 20 percent would be "safer"..... The official in charge of government biofuel policy said the biodiesel rule should be no problem for PLN, and that his office would investigate the issue and could apply sanctions. He did not specify what measures the ministry could take. "If there's no problem for vehicles, logically there should be no problem for power," said New and Renewable Energy Director Rida Mulyana. "I definitely don't want to pull back from this mandatory regulation." Indonesia's automotive industry association has said high biodiesel concentrations can lead to engines overheating and greater fuel consumption. Indonesia's efforts to diversify energy sources have faced criticism from power station developers. http://jakartaglobe.beritasatu.com/business/state-power-firm-pln-says-biofuel-regulation-unworkable/
11 July 2016: Malaysia haulier trucks still lacking of warranty for B10 use, CPO-biodiesel breakeven level is RM1,287 per tonne without government subsidy
Ambank 11 July 2016: In Malaysia, it was reported that the Association of Malaysian Hauliers, whose members have not received warranty from truck manufacturers on B10, have appealed to the government to conduct trials on prime movers and trailers to verify the impact of B10 on engines. An official was told that B10 is of higher acidity and hence, it is too aggressive on the plastic and rubber seals in the engine.
CIMB Analysing the steep fall in CPO prices, 10 July 2016: Brent crude oil prices fell 7% during the week to US$46.76 per barrel. The sharp drop in crude oil prices may trigger concerns of potentially weaker biodiesel demand. We estimate that at the current crude oil price level of US$47 per barrel and exchange rate of RM4/US$1, the CPO-biodiesel breakeven level is RM1,287 per tonne without government subsidy, and RM1,887 per tonne with government subsidy.
14 June 2016: Malaysia auto sector players negative on B10 adoption
1 June 2016: Malaysia raises biodiesel mandates to B10 and B7, Europe worries and Britain eschews palm biodiesel?
CIMB May 31, 2016: Malaysia has agreed to raise the biodiesel blend for the transport sector to B10 and implement B7 in the industrial sector progressively, starting 1 Jun 2016.... The implementation of B10 for the transport sector and B7 for the industrial sector is expected to contribute to annual consumption of 709,000 tonnes of biodiesel in Malaysia and lead to savings of 820m litres of diesel as well as 2.16m tonnes of carbon dioxide equivalent annually. ....the more conservative figure provided for biodiesel consumption could be due to lower diesel usage in Malaysia, following the removal of fuel subsidies.....
Forest-destroying palm oil powers cars in EU: report AFP | Jun 1, 2016 -- PARIS: Palm oil produced on tropical plantations that drive deforestation has become a major biofuel for vehicles in the European Union, industry figures released on Tuesday by an environmental group revealed. In 2014, nearly half of the palm oil used in Europe wound up in the gas tanks of cars and trucks, according to data compiled by the EU vegetable oil industry association Fediol, and obtained by Brussels-based NGO Transport & Environment. Second only to rapeseed as a biofuel, overall palm oil use in EU countries jumped six-fold from 2010 to 2015, accounting for a 34 per centincrease in biodiesel consumption during that period, the figures showed. Palm oil is also found in food, animal feed and cosmetics, but use in these sectors has dropped in Europe, in part due to pressure from environmental groups on major corporations. http://timesofindia.indiatimes.com/home/environment/Forest-destroying-palm-oil-powers-cars-in-EU-report/articleshow/52533099.cms
Biodieselgate? British industry leads EU on elimination of palm oil biofuels, says REA 1 June 2016, source edie newsroom -- The Renewable Energy Association (REA) has revealed that UK importation and consumption of palm oil-based biodiesel for use as a feedstock for vehicles still stands at 'zero' for 2015/16, in light of new data which shows that cars and trucks were responsible for almost half of all of the palm oil used across Europe in 2014. http://www.edie.net/news/7/Biodieselgate-EU-palm-oil-biofuel-transport-environment-report-2016/
30 May 2016: Bloomberg report on the Indonesia Estate Crop Fund
Ambank note: Bloomberg reported that the Indonesia Estate Crop Fund has collected Rph4 trillion (US$294.6mil) from January to April this year. So far, the fund has disbursed Rph1.5 trillion (US$110.5mil) of biodiesel subsidies. Pertamina absorbed about 874,000 kiloliters (761,324 tonnes) of biodiesel in the first four months of this year.
18 May 2016: Indonesia non-subsidized transport fuel segment at 4% of target
Indonesia - Biodiesel blending in non-subsidized segment far below target. Published: 13 May 2016 08:05 AM... Government agency BPDP pointed to a lack of biodiesel demand from the non-subsidized transport fuel segment. In Jan/Apr 2016, a mere 106 mln litres were blended, around 93,000 tonnes and 4% of the consumption target.... https://www.agra-net.com/agra/world-ethanol-and-biofuels-report/biofuel-news/biodiesel/indonesia---biodiesel-blending-in-non-subsidized-segment-far-below-target.-515014.htm
25 April 2016: Indonesia biodiesel news updates
Updates from AmBank news alert today:
· Bloomberg cited a government official as saying that Indonesia’s biodiesel production amounted to 884,000 kiloliters (770,035 tonnes) in 1Q2016. In terms of usage, Indonesia consumed 710,103 kiloliters (618,557 tonnes) of PSO (Public Service Obligation) and non-PSO biodiesel in 1Q2016. In contrast, the country’s diesel consumption declined by 10% to 15% YoY in 1Q2016.
· Also, Indonesia Estate Crops Fund has collected 2.8trillion Rupiah so far (US$213.1mil). The fund will subsidise biodiesel by about Rupiah5,000/litre in April and May 2016. Pertamina bought about 200,000 kiloliters (174,216 tonnes) of biodiesel per month in 1Q2016. Indonesia is targeting biodiesel usage of about 2.5mil to 2.7mil (2.18mil to 2.35mil tonnes) under the PSO in 2016F.
· Pertamina and AKR Corporindo have signed for the delivery of 1.5mil to 1.6mil kiloliters (1.3mil to 1.4mil tonnes) of biodiesel from May to October 2016. Wilmar International was the largest producer, accounting for 39% or 590,113 kiloliters of Pertamina’s supply while Musim Mas accounted for another 16.9%.
22 April 2016: Indonesia Domestic Gasoil Surplus at 140,000 Barrels per Month, Bayu: slumping demand for biodiesel from the transportation sector, LDC biodiesel plant, WTO sides with Argentina on some biodiesel anti-dumping duties, US Biodiesel Tax Credit and Trump
Indonesia Domestic Gasoil Surplus at 140,000 Barrels per Month: Pertamina - Pertamina launched a new diesel product called Dexlite on Friday, and hopes 20 percent of diesel consumers will have switched to the new non-subsidised fuel in 2017. By : Wilda Asmarini | April 15, 2016 http://jakartaglobe.beritasatu.com/business/indonesia-domestic-gasoil-surplus-140000-barrels-per-month-pertamina/
Indonesia's Pertamina, AKR to buy up to 1.6 mln kl of biodiesel -official Apr 18, 2016; JAKARTA, April 18 (Reuters) - Indonesia state oil company Pertamina and AKR Corporindo will buy up to 1.6 million kilolitres of unblended biodiesel for May to October, the head of the country's biodiesel subsidy program operator said Monday.... That's down from the 1.87 million kilolitres (kl) in supply quotas the two companies awarded for November 2015 to April this year.... The decline follows slumping demand for biodiesel from the transportation sector, Bayu Krisnamurthi, the head of Indonesia's Estate Crop Fund agency told reporters.
The Estate Crop Fund agency is in charge of Indonesia's biodiesel subsidies and oversees how much unblended biodiesel is procured for domestic consumption. Pertamina and AKR report their biodiesel sales to the Fund to reimburse the subsidies... Unblended biodiesel, or palm methyl ester (PME), is the raw component of finished biodiesel. Indonesia's consumption of unblended biodiesel in 2015 declined to 863,000 kl from 1.78 million kl in 2014. Last week, officials at the energy ministry said Indonesia could miss its 2016 target.... The decline in the biodiesel buying is in spite of Indonesia, the world biggest palm oil producer, requiring a 20 percent blend of biodiesel into domestic gasoil supplies in 2016 as it aims reduce its crude oil import bill, cut greenhouse gas emissions and create more demand for the edible oil....
Indonesia - Large biodiesel plant started 07 April 2016; Agribusiness major Louis Dreyfus Commodities said a local unit has started a palm oil methyl ester production line, adjacent to one of its palm oil refineries. The Lampung-based plant has an annual production capacity of 420,000 tonnes https://www.agra-net.com/agra/world-ethanol-and-biofuels-report/biofuel-news/biodiesel/indonesia---large-biodiesel-plant-started--1.htm
US Biodiesel Tax Credit: Why Trump’s Attack on Unbalanced Trade Policies Resonates With Voters 04/21/2016 http://www.huffingtonpost.com/paul-alexander/biodiesel-tax-credit-why_b_9746468.html
EBB reacts to WTO panel report on Argentine complaint By The European Biodiesel Board | March 31, 2016 http://www.biodieselmagazine.com/articles/945067/ebb-reacts-to-wto-panel-report-on-argentine-complaint
WTO sides with Argentina on some biodiesel anti-dumping duties 3/31/2016 - by World Grain Staff http://www.world-grain.com/articles/news_home/World_Grain_News/2016/03/WTO_sides_with_Argentina_on_so.aspx?ID=%7B2CA8ACFF-8192-4B6F-A235-305E1A290676%7D&cck=1
18 April 2016: Indonesia biodiesel output to miss target on wide price differential (recently over $300 a tonne)? Watch fall out from crude oil talks fail.
Editor's note: Reuters article from 8 March just added - "Indonesia may produce about 2.5 million tonnes of palm oil-based biodiesel in 2016, about a third of its targeted volume." Also note crude oil plunge as output restricting talks fail.
Oil price & macro: Bloomberg - Oil Plunges After Output Talks Fail Amid Saudi Demands Over Iran, Brent Crude 40.87 http://khorreports-palmoil.blogspot.my/2014/10/oil-price-news-its-fallen-from-105-110.html
INTERVIEW-Indonesia 2016 biodiesel output to miss target -industry official Mar 8, 2016 By Naveen Thukral * Biodiesel output seen at 2.5 mln T vs 6.6 mln T target * Wide biodiesel-gasoil spread to limit biodiesel use * Malaysia industry urging govt raise blend to 10 pct by April... Indonesia may produce about 2.5 million tonnes of palm oil-based biodiesel in 2016, about a third of its targeted volume, because of the widening spread between biodiesel and gasoil, a Malaysian industry official said on Tuesday..."It will be difficult for Indonesia to fulfil its biofuel targets, given the fact that current differential between biodiesel and gasoil is well over $300 a tonne," U.R. Unnithan, deputy president of Malaysian Biodiesel Association told Reuters. Prices for palm methyl ester, the raw component of biodiesel, in Southeast Asia are currently at $630 a tonne versus gasoil prices in Singapore, the regional benchmark, at $44.07 a barrel, or about $328 a tonne.... http://uk.reuters.com/article/palmoil-southeast-asia-idUKL3N16C2M3
14 April 2016: Thomas Mielke sees gradual policy shift away from biodiesel and advocates no more investment in biodiesel facilities and urgency of food demand
13 Mar 2016: Illegal UCO cartels hinder biofuel program: observers - Jakarta Post
Illegal UCO cartels hinder biofuel program: observers by Anton Hermansyah thejakartapost.com, Jakarta | March 12 2016; ...."Instead of selling it for biodiesel, the restaurants and hotels are selling it to the illegal cartels," Currently, she continued, the cartels are disrupting the UCO supply for biodiesel as they are buying up the UCO for Rp 6,000 per liter and selling it as NBCO for Rp 10,000.... http://m.thejakartapost.com/news/2016/03/12/illegal-uco-cartels-hinder-biofuel-program-observers.html#sthash.7dzI4RkF.dpuf
3 Mar 2016: Indonesia BPDP reports Jan tax revenues above projections, 2016 budget IDR16.4 tln with carry over from last year
Indonesia - Palm oil export tax revenues exceed expectations 02 March 2016; BPDP reported that tax revenues from palm oil and product exports in January 2016 were above its projections.The agency said it collected around IDR1 tln ($1=IDR13,351), pointing to seasonally accelerated exports at the beginning of the year to de-stock.... The agency targets tax revenues of IDR9.5 tln and an annual budget of IDR16.4 tln, including IDR6.9 tln left over from last year, due to a weaker biodiesel demand following delayed legislation... https://www.agra-net.com/agra/world-ethanol-and-biofuels-report/biofuel-news/biodiesel/indonesia---palm-oil-export-tax-revenues-exceed-expectations--1.htm
22 Feb 2016: CIMB - Indonesia biodiesel benefits Wilmar tropical oils division, Wilmar and First Resources are key beneficiaries of biodiesel program.
Editor's note: Please review CIMB reports.
Indonesia makes progress in biodiesel usage CIMB 21 Feb 2016 - This is positive for CPO prices, and we estimate the CPO Fund could support up to 3.19m kls of biodiesel in 2016, higher than the usage of 863,000 kls in 2015. Wilmar and First Resources are key beneficiaries of Indonesia’s biodiesel program.
Wilmar International CIMB 21 Feb 2016: Key takeaways from results briefing
The key takeaways from Wilmar’s results briefing are: (1) concerns over its unwinding of carry trade proved unfounded; (2) rice and flour businesses in China have turned profitable; (3) higher biodiesel consumption in Indonesia will benefit its tropical oils division; (4) no plans to venture into property in the immediate term; and (5) keen on M&A at the right price.... Oilseeds and grains post strong profits. Tropical oils earnings slumped to its lowest since 2007. Final core net profit 3-4% above due to higher oilseeds and grain earnings....
20 Jan 2016: Bloomberg - Oil Rout Threatens to Scupper Demand for Palm Oil in Biofuel - government mandates may miss
Oil Rout Threatens to Scupper Demand for Palm Oil in Biofuel by Anuradha Raghu and Yoga Rusmana January 19, 2016. Indonesia may miss blending-mandate of 20% as crude below $30. Malaysia's biodiesel program impacted by crude slump: Embas....Oil is down about 21 percent this year amid volatility in Chinese markets and speculation the removal of restrictions that capped Iran’s crude sales will help to prolong a global glut. That’s sent the premium of crude palm oil over low sulphur gasoil futures to almost $290 a metric ton from the five-year average of a $13 discount...The government subsidy may rise to 5,000 rupiah (36 cents) per liter from 2,230 rupiah per liter, Fadhil said. The government may face a shortfall of 2 trillion rupiah in biodiesel subsidies, estimated at total of 18 trillion rupiah for this year, he said..... The Malaysian cabinet will discuss next month the B10 mandate that was expected to absorb 1 million metric tons of palm oil, Embas said. The country has capacity to produce 2.6 million tons of biodiesel, he said....
15 January 2016: Reuters - Crude oil tumble hits Southeast Asia's biodiesel ambitions - industry experts say it doesn't make sense for Malaysia and Indonesia levy fund would be insufficient to cover the target amount
Editor's note: Oil price and macro blog posting is here - http://khorreports-palmoil.blogspot.my/2014/10/oil-price-news-its-fallen-from-105-110.html
Crude oil tumble hits Southeast Asia's biodiesel ambitions SINGAPORE | BY NAVEEN THUKRAL, Jan 14, 2016; The world's top palm oil producers Indonesia and Malaysia may have to curb plans to channel more of the commodity into biodiesel as tumbling crude oil prices render the edible oil twice as expensive as its fossil fuel alternative. Indonesia expects to raise the minimum bio content of gasoil in the country by a quarter to 20 percent in 2016, while Malaysia has said it plans a 10-percent blend, up from the 7-percent targetted in 2015....But industry officials and analysts said they were sceptical about both countries' plans, with crude oil prices plunging to 12-year lows, while palm oil gained 34 percent in the last quarter of 2015.... Indonesian government officials told Reuters they stood by their blending plan, while Malaysia's plantations ministry declined to comment.... "I think both Malaysia and Indonesia will have to review their biodiesel mandates since both countries are also oil and gas producers and exporters," said M.R. Chandran, a veteran palm oil industry official who works as a consultant in Kuala Lumpur. "It doesn't make economic sense the way oil prices are falling, gasoil now costs just half of palm oil."...nalysts said the growing gap between palm oil and crude prices has ramped up the amount the Indonesian and Malaysian governments would have to pay in subsidies to blenders as part of their schemes to move towards biofuels. Palm was quoted at about $550 a tonne on Thursday, with gasoil selling at around $283 a tonne. The new targets would require subsidies of more than $900 million in Indonesia and $260 million in Malaysia at current market prices, according to Reuters calculations based on the price spread between the two products.... Indonesian officials said most of the subsidies in their country could be funded by a $50 a tonne tax on palm oil exports, but some in the industry said that was unrealistic. "The funds wouldn't be sufficient to cover subsidies for the targetted volume," said Fadhil Hasan, executive director at the Indonesian Palm Oil Association.... "Subsidies are an issue for both Malaysia and Indonesia as the economic growth forecast is weak and currencies are under pressure," Chandran said... http://www.reuters.com/article/us-southeast-asia-biodiesel-idUSKCN0US0VX20160114
12 December 2015: Malaysia’s biodiesel exports flux to monthly low
Malaysia’s biodiesel exports plunge to three-year low in Nov at 82 MT: MPOB 11/12/2015 Malaysia’s biodiesel exports fell to a three-year low of 82 mt in November, official statistics released Thursday by the Malaysian Palm Oil Board showed. This was less than 1% of the 11,334 mt shipped out from the Southeast Asian producer during October. The contrast was even more pronounced compared with November 2014, when exports reached 22,753 mt. Exports were last seen lower in October 2012 at 60 mt, according to MPOB data. Over January-November, Malaysia exported 168,917 mt of biodiesel, more than double from exports of 66,740 mt seen in the year-ago period. The November figure further adds into the wild fluctuation in exports seen over the year. The previous low for the year was at 186 mt in April. http://www.hellenicshippingnews.com/malaysias-biodiesel-exports-plunge-to-three-year-low-in-nov-at-82-mt-mpob/
26 November 2015: James Fry says Malaysia B10 Mandate Not 'Wildly Ambitious'
B10 Mandate Not 'Wildly Ambitious' by Global Standards: LMC, by Bloomberg TV Malaysia, Published on Nov 22, 2015 - November 20, 2015 (Kuala Lumpur) -- LMC International chairman James Fry says implementing the B10 mandate in Malaysia requires agreement from auto manufacturers. The agribusiness expert also discusses why there is limited downside risk to his palm oil predictions with Bloomberg TV Malaysia's https://www.youtube.com/watch?v=Md-R0eAKaLw
6 November 2015: Indonesia energy ministry announces biodiesel quota winners and B20 diesel ready to enter market next year
TABLE-Indonesia energy ministry announces biodiesel quota winners Nov 4, 2015; Indonesia's energy and mineral resources ministry has published the names of the companies that have won quotas to supply biodiesel to state energy company Pertamina for the period November 2015 to April 2016: Company Volume (kilolitres) Cemerlang Energi Perkasa 148,016 Wilmar Bioenergi Indonesia 386,324 Pelita Agung Agriindustri 90,552 Ciliandra Perkasa 73,078 Musim Mas (Batam) 257,061
Musim Mas (North Sumatra) 81,921 Darmex Biofuels 130,744 Energi Baharu Lestari 20,078 Anugerahinti Gemanusa 49,361 Wilmar Nabati Indonesia 534,087 Bioenergi Pratama Jaya 33,375
Primanusa Palma Energi 44,189
Below are the names of the companies that have won quotas to supply biodiesel to PT AKR Corporindo for the period November 2015 to April 2016: Company Volume (kilolitres) Musim Mas 3,070 Wilmar Bioenergi Indonesia 1,980 Wilmar Nabati Indonesia 13,420
Read more at Reuters http://www.reuters.com/article/2015/11/05/indonesia-pertamina-biodiesel-idUSL3N13021J20151105#Y2fd8uJewmZWsxt8.99
B20 diesel ready to enter market next year Apriadi Gunawan, The Jakarta Post, Medan | Business | Wed, November 04 2015; ...The government is optimistic that B20 biodiesel fuel will be ready to enter the market next year in accordance with an initial schedule, as no technical or quality problems were found in the new variant of the diesel fuel during a recent test.Indonesia Oil Palm Estate Fund (BPDP) fund distribution director Dadan Kusdiana said in Medan over the weekend that the use of B20 diesel had been through a series of trials, including a 3,383 kilometer vehicle road test from Jakarta to Medan.The test results showed no problems in the utilization of the biodiesel variant despite the fact that the vehicles’ fuel consumption had increased while engine power decreased compared to those using regular diesel, he said. - See more at: http://www.thejakartapost.com/news/2015/11/04/b20-diesel-ready-enter-market-next-year.html#sthash.ihLhL0eB.A2NLC8q9.dpuf
19 October 2015: Indonesia biodiesel blending, LMC International - Dr James Fry's PME forecast, Indonesia tax breaks grants, Wilmar China Inventure waste oil biofuels, Malaysia targets 2 million tonne stocks
Editor's note: Also reading this morning AmBank's plantations news highlight that points out "Bloomberg reported that Indonesia would start B20 blending in 2016F. Pertamina’s biodiesel consumption may rise to 5.1mil kilolitres (1.8mil tonnes) in 2016F. In November and December 2015, demand for subsidised biodiesel from Pertamina and Listrik Negara is expected to be 330,000 kilolitres (116,538 tonnes) per month." So here's the expectation of LMC International's Dr James Fry on Indonesia biodiesel:
Mid-to-long-term CPO price outlook improving — Analysts October 12, 2015, Monday KUCHING: The mid-to-long-term crude palm oil (CPO) price has been viewed as improving as on-going droughts and less fertilisation activity will likely lead to the decline in production early next year and subsequently, the decline of supply. Kenanga Investment Bank Bhd’s research arm (Kenanga Research) said in a report following the MPOB International Palm Oil Congress and Exhibition 2015 (PIPOC2015) in Kuala Lumpur, “According to speaker Dr James Fry (chairman, LMC International), CPO prices are likely to be on an uptrend, potentially reaching US$600 per metric tonne (circa RM2,540 per metric tonne) by end of the first quarter of 2016 (1Q16). “This is excluding potential El Nino impact, as on-going droughts and less fertilisation activity will lead to declining production early next year and therefore tightens supply. “While we agree that 1Q16 is likely to see stronger CPO prices due to the above reasons, we think prices are likely to decline later in the year on seasonal production trends and ample supply of competing soybean oil (SBO), to average RM2,400 per metric tonne (MT) for the full-year,” the research team said. During his talk, Dr Fry also stressed the importance of mandated biodiesel production to support CPO prices going forward. Read more: http://www.theborneopost.com/2015/10/12/mid-to-long-term-cpo-price-outlook-improving-analysts/#ixzz3osmbP2ZR
Dairy, Palm Oil Firms Granted Tax Incentives to Help Expansion; By : Damiana Simanjuntak & Tabita Diela | on 8:19 PM September 21, 2015; Jakarta. One dairy and two palm oil companies have been granted tax allowances that will let them enjoy reduced income tax bills for up to 15 years. Fonterra Brands Manufacturing Indonesia, Wilmar Bioenergi Indonesia and Wilmar Nabati Indonesia were approved for the privilege after a Finance Ministry decree issued recently, according to Industry Ministry official Haris Munandar. Corporate income tax in Indonesia is typically set at 25 percent, with a discount offered to companies that invest heavily in the country. Haris did not provide details on how much of a discount the companies would enjoy. Fonterra Brands Manufacturing Indonesia plans to invest $29.6 million for a plant in Bekasi, on the eastern outskirts of Jakarta, to produce powdered milk. Wilmar Bioenergi Indonesia is pouring $36.1 million into its oil palm plantation in Dumai, Riau province, and Wilmar Nabati Indonesia is investing Rp 828.43 billion ($57 million) for its organic chemical base plant, also in Dumai. Haris said the government had extended the tax breaks to other companies and was currently reviewing two other requests. http://jakartaglobe.beritasatu.com/business/dairy-palm-oil-firms-granted-tax-incentives-help-expansion/
16 September 2015: EU approves Wilmar-Fox Petrolifera JVEuropean Commission OKs Wilmar JV with Fox Petrolifera for Italian biodiesel plant September 14, 2015 | Meghan Sapp http://www.biofuelsdigest.com/bdigest/2015/09/14/european-commission-oks-wilmar-jv-with-fox-petrolifera-for-italian-biodiesel-plant/
24 August 2015: Aviation fuel plans, Malaysia B7 to expand to industrial sector, PERTAMINA and AKR 765,000 L buy by end 2015, Indonesia Euro IV contestation?
Editor's note: Had some useful updates from RSB on renewable aviation fuel certification efforts in the making. Contact, if interested!
This Pond Scum May Fuel Your Airplane by Tom Redmond and Yuko Takeo July 8, 2015 — 5:00 AM HKTUpdated on July 8, 2015 — 3:18 PM HKT http://www.bloomberg.com/news/articles/2015-07-07/this-pond-scum-already-in-your-smoothie-may-fuel-your-airplane
AmBank Plantation Sector: Newsflow for week 17-21 August: Bloomberg quoted the CEO of Indonesia Estate Crop Fund Palmoil ... Non-subsidised biodiesel usage is estimated at 750,000 kiloliters (264,860 tonnes) until year-end. ... the Indonesian Palm Oil Association said that while the export levy may hurt CPO prices in Indonesia in the short term, they will help boost prices in the long term if the biodiesel mandate is enforced effectively. About 5.5mil tonnes of palm oil are expected to be used in the domestic market for biodiesel. ..... Malaysia plans to expand B7 to the industrial sector. The proposal will be presented to the cabinet in three weeks’ time. The usage of B7 in the industrial sector is envisaged to take up 280,000 tonnes to 300,0000 tonnes of palm oil annually. Currently, usage of B7 in the automotive sector is absorbing about 500,000 tonnes of palm oil annually. The government is also mulling reinstating replanting incentives to smallholders, who have oil palm trees that are more than 25 years old.....
Pertamina and AKR to purchase 765,000 kiloliters of biodiesel to satisfy B15 before year’s end August 18, 2015 | Meghan Sapp; In Indonesia, Pertamina and AKR say they will purchase 765,000 kiloliters of biodiesel to satisfy the new B15 blending mandate for the rest of 2015, with 339,000 kl to be purchased between now and October and the remaining to be purchased later in the year, predominantly from Wilmar, Eterindo, Musim Mas, Pelita Agung and Darmex Agro. The Indonesia Estate Crop Fund has received $54.3 million from the levy attached to palm oil exports since July 16...http://www.biofuelsdigest.com/bdigest/2015/08/18/pertamina-and-akr-to-purchase-765000-kiloliters-of-biodiesel-to-satisfy-b15-before-years-end/
Bid for cleaner fuel blocked by Pertamina Hans Nicholas Jong, The Jakarta Post, Jakarta | Headlines | Sat, August 22 2015, 5:16 PM; “We already tried drafting a ministerial decree for Euro IV. The problem that we face is the availability of [clean] fuel,” the ministry’s environmental pollution and damage control director general, MR Karliansyah, said during a conference on air pollution held by the University of Indonesia (UI) in Jakarta. - See more at: http://www.thejakartapost.com/news/2015/08/22/bid-cleaner-fuel-blocked-pertamina.html#sthash.zHAGgwZe.dpuf
22 August 2015: Golden Agri Resources to invest $150 million in two Indonesian biodiesel plants, Pertamina to construct bioavtur plant in 2017, PERTAMINA sets aside $200 million to enter plantation business
Golden Agri Resources to invest $150 million in two Indonesian biodiesel plants August 17, 2015 | Meghan Sapp; ...Each facility will produce 300,000 tons of biodiesel annually and will be online as soon as next year. The two facilities will be located in Marunda in North Jakarta and Tarjun in South Kalimantan...http://www.biofuelsdigest.com/bdigest/2015/08/17/golden-agri-resources-to-invest-150-million-in-two-indonesian-biodiesel-plants/
Pertamina to construct bioavtur plant in 2017 Nadya Natahadibrata, The Jakarta Post, Jakarta | Business | Thu, August 13 2015, 3:48 PM; State-owned oil and gas giant Pertamina is planning to construct a bioavtur plant in 2017 in support of the government’s program to reduce the use of fossil fuel in the aviation industry, an official has said.Pertamina technology and product development manager Andianto Hidayat said that the company was finalizing a feasibility study for the bioavtur plant.“The feasibility study will be completed within the next six to eight months, and [the plant] will be ready for groundbreaking in 2017. The construction itself may take up two years. Hopefully, the bioavtur plant will be on stream in 2018,” Andianto told a discussion on green aviation at the Transportation Ministry on Wednesday.The company, he said, could not yet reveal the location of the plant, but hinted that it would be built near an international airport in Java or Sumatra.Investment between US$450 million and US$480 million with a production capacity of 260 million liters per year were the plant’s current estimates, the official went on. - See more at: http://www.thejakartapost.com/news/2015/08/13/pertamina-construct-bioavtur-plant-2017.html#sthash.ZdttNlhN.dpuf
Pertamina Setting Aside $200m to Enter Plantation Business for Biofuels; “We will target investment in plantation that will be planted by any energy-producing plants,” said Andianto Hidayat, manager of technology and product development at Pertamina’s renewable and non-renewable energy directorate, on Thursday. “We are exploring any potential cooperation through merger or acquisition, we are open to a co-partnership opportunity. We are setting aside $200 million as investment for five years,” he added. Andianto said Pertamina has explored entering the plantation business with state-owned agribusiness company Perkebunan Nusantara for a location in Sumatra and Kalimantan for plantation... http://jakartaglobe.beritasatu.com/business/pertamina-setting-aside-200m-enter-plantation-business-biofuels/
31 July 2015: USA Senate Finance Committee passes a tax extenders package that includes two-year extensions of tax credits for cellulosic biofuels and biodiesel with amendment to change the biodiesel fuels tax credit from a mixture credit to a production credit - imports from Argentina, Singapore, the European Union and South Korea etc. will not benefit
Tax extenders package benefiting biofuels passes Senate committee By Erin Voegele | July 21, 2015
The Senate Finance Committee has passed a tax extenders package that includes two-year extensions of tax credits for cellulosic biofuels and biodiesel. The next step for the legislation is consideration by the full U.S. Senate, which has not yet been scheduled. The bill contains a provision extending the $1.01 per gallon production tax credit for cellulosic biofuels, which expired at the end of last year. Under the legislation, the cellulosic biofuels producer tax credit would be extended for two years, through 2016. The bill would also extend incentives for biodiesel and renewable diesel for two years, through 2016. The extension would apply to the $1.00 per gallons credit for biodiesel, the 10-cent-per-gallon small agri-biodiesel producers credit, and the $1.00 per gallon tax credit for diesel fuel created from biomass.....During the hearing to address the extenders package, the committee accepted an amendment offered by Sen. Chuck Grassley, R-Iowa, to change the biodiesel fuels tax credit from a mixture credit to a production credit. During the hearing, Grassley explained that the amendment would help ensure the credit benefits only domestic biodiesel production and doesn’t subsidize imported biofuels. “It’s projected that imports from Argentina, Singapore, the European Union and South Korea could exceed 1 billion gallons in the years 2016 and 2017,” Grassley said, noting the tax incentive should not apply to these imported fuels. “By restricting the credit to domestic production, we’ll save tax payers money and reduce the cost of the extension by $90 million,” he continued....
21 July 2015: Pertamina pushes for switch from gasoline to LNG, for the mining sector and others
Pertamina pushes for switch from gasoline to LNG Raras Cahyafitri, The Jakarta Post, Jakarta | Business | Thu, July 16 2015, 11:20 AM; State-owned oil and gas giant Pertamina is pushing forward with its move to shift the country’s high usage of oil fuel toward gas, particularly liquefied natural gas (LNG), for the mining sector.The company signed an LNG purchase and selling agreement on Tuesday with the contractors of Mahakam block, Total E&P Indonesia and Inpex. Under the agreement as many as 660 tons of LNG would be delivered this year for mining and commercial industries in East Kalimantan.“We are facing limited oil resources and therefore we need to switch to gas and also from fossil fuels to renewable resources,” Pertamina president director Dwi Soetjipto said.... The company’s vice president for LNG, Didik Sasongko Widi, estimated that Pertamina would need 6.5 million tons of LNG per year by 2020.“Out of the total figure, we have secured 4 million tons, which includes deliveries from the US [Cheniere Energy] and Jangkrik [gas field in Kalimantan developed by ENI],” Didik said.Along with the commencement of operations of the filling plant, Pertamina also launched the operation of seven other downstream oil and gas infrastructure facilities. - See more at: http://www.thejakartapost.com/news/2015/07/16/pertamina-pushes-switch-gasoline-lng.html#sthash.u8JgRkhp.dpuf
16 July 2015: CPO Fund eyes $337 million in 2015and $730 million in next full year. Says priority is replanting 2,000 ha of smallholder area in Pekanbaru and Jambi (overall 300,000 ha need replanting ) and next priority is biodiesel subsidy.
Palm oil fund body eyes Rp 4.5 trillion in 2015 Grace D. Amianti, The Jakarta Post, Jakarta | Business | Wed, July 15 2015, 3:57 PM; An organization newly launched to collect a palm oil levy will soon start operation, aiming to garner up to Rp 4.5 trillion (US$337.36 million) in funds this year to revitalize aging oil palm plantations and incentivize the domestic biodiesel industry. The body, set up as a public service agency under the Finance Ministry, will begin charging exporters taxes on Thursday following the appointment of its full management team earlier this week.Former deputy trade minister Bayu Krisnamurthi, who leads the agency, named the Indonesia Oil Palm Estate Fund (BPDP), said that it aimed to generate between Rp 3.5 trillion and Rp 4.5 trillion up to the end of this year from palm oil shipments, an expectation that he said was based on the optimism of exporters. “Annually we hope that the funds collected in the future will reach around Rp 9.5 trillion to Rp 10 trillion based on current exchange rates and 2014 export data,” Bayu said Tuesday in a press conference at the agency’s office.... As its initial move, the agency plans to replant at least 2,000 hectares of oil palm plantations run by small holders in Pekanbaru and Jambi in Sumatra, with each hectare costing around Rp 60 million, according to Bayu.The area is a part of 300,000 hectares of plantations that Indonesia, the world’s largest palm oil producer, has to revitalize as most of them have been operating for more than 30 years....The next priority would be to subsidize biodiesel in a bid to help domestic consumption reach between 1.8 million and 2 million kiloliters (KL) in the next four months. A total consumption of 5.2 million KL is targeted for the whole of 2015, Bayu said, saying the incentive will amount to between Rp 600 and Rp 700 per liter.“The calculation of around Rp 600 to Rp 700 per liter is based on the price movement of CPO on top of the capped diesel fuel subsidy of Rp 1,000 per liter in the 2015 revised state budget,” Bayu said.He added that Finance Ministry was also revising the current palm oil export tax rule to avoid double taxes being charged to palm oil exporters. - See more at: http://www.thejakartapost.com/news/2015/07/15/palm-oil-fund-body-eyes-rp-45-trillion-2015.html#sthash.ZlPP0H1m.dpuf
15 July 2015: CIMB - Regional Plantation - Indonesian biodiesel conundrum - subsidy may not be sufficient to cover price gap in Indonesia; how much of CPO Fund goes to biodiesel? Will CPO Fund board be checking on differential pricing for smallholders?
Khor Reports note: Our earlier checks with Jakarta sources on how much of the CPO Fund goes to biodiesel initially yielded answer of c.40% and most recent news is of 80-90%. Clearly the usage of the CPO Fund has been (and may be) a contested policy issue. Experts reckon that the estimated money collected should be $750 million per year; the rest goes to replanting, smallholder, promotion, R&D etc. Notably smallholders are to be excluded from the CPO Fund levy price impact (not clear how they avoid the market re-pricing that is expected to ensue - and actually preceded and anticipated the levies); specialists note that there might even be regional price variations depending export-intensity of different zones (perhaps CPO Fund board will be checking for the economic impact on smallholders).
For reference: Serika Petani Kelapa Sawit's analysis of the CPO Fund (in Bahasa): http://www.spks.or.id/berita-analisis--cpo-fund-.html
CIMB - Regional Plantation - Indonesian biodiesel conundrum; 15 July 2015 at 08:21; "Indonesia announced that it will impose a levy on palm oil exports starting 16 July, after weeks of delay. We are positive that the government is progressing with its plans to lift biodiesel demand in the country. However, our concern is that the biodiesel subsidy of Rp600-700 litre may not be sufficient to cover the current biodiesel and diesel price gap in Indonesia, which we estimate to be at Rp 913 per litre(corrected from Rp3,423 per litre). This could affect the pace of implementation..."
22 June 2015: Range of Indonesia palm oil product levies adjusted to $10-50? Biodiesel levy trimmed to $20? Several Malaysia auto units line up against B10 biodiesel proposal.
VEGOILS-Palm edges up as ringgit weakens, but posts 2nd weekly drop By Anuradha Raghu 19-Jun-2015 06:30:58 PM *Prices down 1.7 pct in 2nd weekly fall *Ringgit down 0.8 pct to 3.7390 per dollar *Palm production seen easing during Ramadan - traders *Indonesia looking to impose $20/T levy on biodiesel - minister ....Indonesia is considering levies on 24 palm products, including kernel shells and biodiesel, in a regulation that will take effect from July 1, senior government officials said. The range of the levies will be between $10 and $50, and the levy considered for biodiesel is $20 per tonne, Minister of Industry Saleh Husin said. Indonesian crude palm oil Public Service Agency President-Director Bayu Krisnamurthi said the levies are unlikely to impact Indonesia's biodiesel competitiveness in the global markets. "On the other hand, we are creating a new huge domestic market...we are encouraging higher domestic consumption," he said. In other markets, oil eased below $64 a barrel on Friday... http://in.reuters.com/article/2015/06/19/markets-vegoils-idINL3N0Z53FO20150619
Note earlier related news: Biofuel producers demand exemption from palm oil levy by Grace D. Amianti, The Jakarta Post, Jakarta | Business | Fri, May 08 2015, 8:19 AM; Domestic biofuel producers have demanded exemption from paying levies for the shipment of palm oil products overseas, as such policy will create more burdens for the industry. “We are hoping that we will be exempt from the rule of paying US$30 per metric ton of processed palm oil products, http://www.thejakartapost.com/news/2015/05/08/biofuel-producers-demand-exemption-palm-oil-levy.html#sthash.Mo0GNETB.dpuf
Mercedes, Toyota, Isuzu, VW – B10 biodiesel no go By Jonathan James Tan / 18 June 2015 11:26 am / 29 comments; Following BMW Malaysia announcing it found “technical challenges” running its diesel engines on B10 biodiesel (10% palm-based biodiesel/90% petroleum diesel blend, will reportedly be implemented nationwide by October), and that its engines can take up to B7, Mercedes-Benz Malaysia, UMW Toyota and Volkswagen Malaysia have issued responses that echo the same sentiments.... http://paultan.org/2015/06/18/mercedes-toyota-vw-malaysia-b10-biodiesel/
20 June 2015: Launch of special agency, collector and manager of the $30-50 levy on farmers / producers, called the Crude Palm Oil Supporting Fund (CPO Fund) - in large part to directly support biodiesel producer segment (and hoping to support international CPO prices in longer term)
CPO tax body officially launched Grace D. Amianti, The Jakarta Post, Jakarta | Business | Tue, June 16 2015, 9:07 AM ; The government launched on Monday a special public service agency (BLU) in charge of a new levy on exports of palm oil to support development of the commodity. The special agency will act as a collector and manager of the levy, called the Crude Palm Oil Supporting Fund (CPO Fund), which will be used to develop the palm oil industry and pay for biodiesel subsidies in Indonesia, the world’s largest palm oil producer. “The special agency will start operating on July 1 under the management of six directors. We are currently preparing appointments to the board of directors that will be completed next week,” Coordinating Economic Minister Sofyan Djalil said in a press conference. The government has appointed Bayu Krisnamurthi and Yuniar Yanuar Rasyid as the agency’s president director and finance director, respectively. Bayu was deputy trade minister during the administration of then president Suso Bambang Yudhoyono, while Yuniar is director of accounting and financial reporting at the Finance Ministry’s treasury directorate general. - See more at: http://www.thejakartapost.com/news/2015/06/16/cpo-tax-body-officially-launched.html#sthash.s6kThCrG.dpuf
15 June 2015: Indonesia delays start date for palm export levy to July 1 - Reuters
Indonesia delays start date for palm export levy to July 1 -minister 15-Jun-2015 14:37:42 JAKARTA, June 15 (Reuters) - Indonesia has delayed the implementation date for its planned levy on crude palm oil exports to July 1 from June 15 due to administrative issues, Coordinating Minister of Economic Affairs Sofyan Djalil told reporters on Monday.
10 June 2015: New Indonesia agency (BLU) under Office of the Coordinating Economic Minister to be completed this week for near term start of $20-50 levy; Malaysia plans to expand to B10 in October, to consume 1 million tonnes of oil locally but faces BMW Malaysia engine damage concern
Palm-oil levy collector to be established next week Grace D. Amianti, The Jakarta Post, Jakarta | Business | Tue, June 09 2015, 9:15 AM; The government expects to soon complete the establishment of a special public service agency (BLU) that will collect and manage a new levy on exports of palm oil, a minister says. The special agency, which will work under the Office of the Coordinating Economic Minister, will act as a collector and manager of the palm oil levy to help develop the palm industry and pay for biodiesel subsidies in Indonesia, the world’s largest palm oil producer.“The establishment of the special agency will be completed this week. We will hold several meetings tomorrow and the days after,” Industry Minister Saleh Husin told reporters after a meeting at the Office of the Coordinating Economic Minister on Monday.Saleh said in the next meetings, the ministries would discuss regulations and tariffs for the palm oil levy, which were expected to be finalized this week so that the agency could start operating shortly afterward .Delays in the establishment of the BLU, which was initially planned for the end of May, as well as a new biofuel index price (HIP), are feared to disrupt the government’s biodiesel push this year that aims to boost domestic consumption of the more environmentally friendly fuel and reduce dependence on oil imports.The Industry Ministry’s director general for agro-industry Panggah Susanto said the levy imposed on palm oil exporters would vary between US$20 to $50 per ton of crude palm oil (CPO) regulated under a Finance Ministry regulation. - See more at: http://www.thejakartapost.com/news/2015/06/09/palm-oil-levy-collector-be-established-next-week.html#sthash.g310PTWT.dpuf
BMW Drops Wrench Into Palm Energy Plan as Engine Damage Seen by Ranjeetha Pakiamand En Han Choong June 9, 2015 — 8:37 AM BSTUpdated on June 9, 2015 — 10:18 AM BST A drive to introduce a blend that uses 10 percent palm oil, up from 7 percent, risks causing severe engine damage, according to BMW Group Malaysia. The largest palm producer after Indonesia promotes the crop for use in foods and energy, and has been stepping up the amount that’s blended into local fuels. Plantation Industries and Commodities Minister Douglas Uggah Embas said this week the so-called B10 program will be implemented from October. The government is in the midst of consultations on the B10 mandate, Uggah said in Bangi, outside Kuala Lumpur, on Tuesday. With B10 in place, consumption of palm will rise to 1 million metric tons from about 700,000 with B7, he said.
26 May 2015: Indonesia not ready for new palm levy, it could come (as late as August, or "hopefully") in two weeks - Reuters; some trade specialists reckon on this after Eid (as this lowers Indonesia domestic prices and 40% comes from smallholders, the authorities might not want to "spoil" their situation during Ramadhan fasting and Eid celebrations)
The news stream on the Indonesia new biodiesel and downstream support levy (earlier news of revised levy proposals and now the implementation date uncertainty) suggests a level of ambivalence that has been confirmed by various Jakarta sources of internal palm oil industry and inter-ministry opinion differences over it. The upstream palm oil industry has to subsidise its own levy as those outside have been unwilling. Interestingly, the Jokowi-Kalla manifesto called for a fairer distribution of economic gains from biodiesel to involve (oil palm) farmers. Presumably the hoped for higher prices will help, but the immediate and certain impact is a transfer from upstream / farmers to downstream corporate asset owners.
Indonesia delays $50/T palm levy, could come (as late as August, or "hopefully") in two weeks Mon May 25, 2015 12:27am EDT; JAKARTA May 25 A regulation that will force exporters in Indonesia to pay a levy of $50 per tonne on shipments of crude palm oil has been delayed, the finance minister in the world's top producer of the edible oil said on Sunday. Earlier this month, Indonesian President Joko Widodo signed the regulation, which will require exporters to pay a tax of $50 per tonne of crude palm oil (CPO) and $30 for processed palm oil product shipments, with proceeds used to fund recently announced biodiesel subsidies. Senior government ministers had said the levy would be introduced in the fourth week of May, but last week the Indonesian Palm Oil Association told Reuters that delays in establishing guidelines and a new biodiesel fund or agency meant this would be pushed back as far as August. "It's no problem," Finance Minister Bambang Brodjonegoro told reporters on Sunday. "When the BLU (Public Service Agency) is ready, it will be imposed," he said, referring to the public body that will collect the palm levy. "The BLU is under preparation. Hopefully it will be finished in two weeks."
22 May 2015: Malaysia targets B15 by 2020
CIMB - Plantation update - Malaysia targets B15 by 2020 by Ivy Ng CIMB
The Malaysian government has revealed plans to raise the country’s biodiesel blend mandate from 7% to 15% by 2020, under the 11th Malaysia Plan’s initiative to implement clean fuel in the transport sector. This is the first time it has revealed its target of implementing a B15 biodiesel programme and provided a timeline for this. We are medium-term positive on this news as it could raise biodiesel usage in Malaysia from around 200k-300k tonnes in 2014 to 1.2m-1.5m tonnes by 2020
14 May 2015: Biofuel producers demand exemption from palm oil levy
Biofuel producers demand exemption from palm oil levy by Grace D. Amianti, The Jakarta Post, Jakarta | Business | Fri, May 08 2015, 8:19 AM; Domestic biofuel producers have demanded exemption from paying levies for the shipment of palm oil products overseas, as such policy will create more burdens for the industry. “We are hoping that we will be exempt from the rule of paying US$30 per metric ton of processed palm oil products because the domestic sales price is already low,” Biofuel Producers Association (Aprobi) executive chairman Paulus Tjakrawan said on Thursday. Paulus said biofuel producers had suffered from margin compression following the slump in global CPO prices, which were currently traded at $614 per ton, as the government has also yet to set the newest benchmark price for biodiesel through export reference price (HPE).
The government is in the process of setting a new biodiesel price with a formula of CPO price plus $125 per ton and transport cost. The $125 figure is based on the government’s recent calculation, lower than the previous $188. “The new benchmark price formula will not offer any profit for us and it will be heavier if the CPO price rebounds to above $750, which means we should also pay export tax besides paying the additional levy,” Paulus said. Under an existing rule, exporters will have to pay between 7.5 percent and 22.5 percent in export tax if the CPO price is higher than $750 per ton. If the CPO price is lower than $750 per ton, exporters will be exempt from the export tax.
However, they will have to pay the levy regardless of the CPO price, as stated in a regulation to take effect later this month. .... http://www.thejakartapost.com/news/2015/05/08/biofuel-producers-demand-exemption-palm-oil-levy.html#sthash.Mo0GNETB.dpuf
1 May 2015: Aprobi hopes for Indonesia 4 million KL this year, US biodiesel scammers lose Picasso, Renoir, Miro, Dalis and other art works
Local biodiesel use to reach up to four million KL this year Linda Yulisman, The Jakarta Post, Jakarta | Business | Thu, April 30 2015, 8:16 AM; A recent move to increase the proportion of palm oil-based derivatives in mandatory fuel blending will push up domestic biodiesel consumption this year significantly, an industry group says.Biodiesel consumption in Indonesia, the world’s largest palm oil producer, may reach between 3 million and 4 million kiloliters from the second quarter to the end of the year, according to Biofuel Producers Association (Aprobi) secretary-general Togar Sitanggang.Half of the figure will be absorbed by state-owned oil and gas firm Pertamina for its public service obligation, while the rest will be taken by private firms.Both Pertamina and private firms are still in talks with biofuel makers, particularly on pricing schemes.“For now the program still cannot work because there’s no subsidy, without which biodiesel producers cannot supply,” Togar told reporters on Tuesday during the inauguration of the new Indonesian Palm Oil Producers Association (Gapki) organizational structure.Effective this month, the government has raised the biofuel stipulation in the fuel mix from 10 percent to 15 percent as part of its measures to reduce dependence on oil imports, which have put heavy pressure on the nation’s trade balance and contributed to the weakening rupiah.The government plans to charge levies of US$50 per metric ton of crude palm oil (CPO) shipments and $30 for processed palm oil products when prices dip below $750 per ton to subsidize biodiesel and incentivize oil palm growers. The funds will be collected and managed by a special public service agency within the Finance Ministry, to be established later. - See more at: http://www.thejakartapost.com/news/2015/04/30/local-biodiesel-use-reach-four-million-kl-year.html#sthash.oJDjlh2A.dpuf
Biodiesel scammer forfeits Picasso by Seth Slabaugh, email@example.com 9:11 a.m. EDT April 29, 2015; MIDDLETOWN – A defendant in an interstate biodiesel scam has agreed to forfeit a Picasso, a Renoir, a Leroy Nieman, a Miro, five Salvador Dalis and other art work to the federal government. When he pleaded guilty on April 11, Joseph Furando, 49, Bergen County, N.J., also agreed to give up other property that was the subject of a restraining order after his indictment, including 19 diamond, sapphire, ruby, emerald and gold pieces of jewelry, two Rolex watches, two ultra-luxury Patek Philippe watches, a 7,447-square-feet home worth $3.5 million, a Schimmel grand piano, two Orange County Choppers custom motorcycles, a BMW and other property. Furando has admitted that he conspired with the owners/operators of a biodiesel production facility in the northwestern Henry County community of Middletown, south of Daleville, in a renewable fuels fraud scheme. We (also) were able to secure forfeiture agreements for approximately $100 million (in cash) but most of the money in the (bank) accounts is already gone," said Tim Horty, a spokesman for the U.S. attorney's office in Indianapolis. "So we only have a few million in hand." Furando signed a plea agreement acknowledging that all of the property and funds to be forfeited constituted proceeds of the crimes to which he pleaded guilty......The scheme added more than $55 million in fraudulent value to about 35 million gallons of biodiesel and cost taxpayers millions of dollars in fraudulent tax credits, prosecutors say. Other forfeited art work included a Gumbo-Carlos Comesanas, a George Braque, several Katia Pissaros and an Itzchak Tarkey, along with two rugs....... http://www.thestarpress.com/story/news/local/2015/04/28/biodiesel-scammer-forfeits-picasso/26528141/
29 April 2015: Malaysia's biodiesel formula - special price of RBD plus RM515 per tonne (and transport subsidies)
Analysts are quite interested in how much has been paid out by Malaysia in subsidies related to biodiesel. Formally speaking, it sounds like subsidies are via the petroleum companies who pay RBD plus RM515. In chats with regional players, it is obvious that Thailand, Philippines and Indonesia biodiesel players have all looked with envy at the Malaysia situation ("generous" is the general opinion). See below Platts article referring to Malaysia formula. These figures are also widely cited in analyst reports.
Indonesia's Pertamina in talks with biodiesel producers to switch PME price formula
Singapore (Platts)--23Jan2015/610 am EST/1110 GMT; Indonesia's state-owned oil and gas company Pertamina is in talks with biodiesel producers and the government to switch the oil-linked price formula for its palm methyl ester purchases to one based on palm oil prices, trade sources said Friday, January 23. Togar Sitanggang, secretary-general of the Indonesian Biofuel Producers Association, or Aprobi that is involved in the discussions, said the proposed switch is "for the calculation of the subsidy on biodiesel." Indonesia has a fixed biodiesel subsidy of Rupiah 3,000/kiloliter (24 cents/kl).
The subsidy is given to Pertamina to compensate for the difference between the market price of biodiesel and the retail price of subsidized gasoil. When asked if the new proposed reference price was similar to the Malaysian formula where petroleum companies buy PME at a premium of MR515/mt ($143/mt) over refined, bleached and deodorized palm oil, Sitanggang said it was.
"We proposed CPO [crude palm oil] plus processing cost," he said.......
22 April 2015: Carmaker worries on higher biofuel mix, as does PLN, Coordinating Economic Minister says new levy on palm oil will strictly fine those exporters not complying and funds will be managed by special agency under the Finance Ministry
Carmakers worry higher biofuel mix could damage engines Raras Cahyafitri and Linda Yulisman, The Jakarta Post, Jakarta | Business | Thu, April 16 2015, 7:48 AM; The automotive industry is worried that the government’s policy to increase mandatory blending of biofuel into diesel could affect engines.“The usage of biodiesel is good. However, we are still worried about the impacts. There are engines that can accept 15 percent or even 20 percent [biofuel] content, however, some other engines cannot accept that,” Association of Indonesian Automotive Manufacturers (Gaikindo) deputy chairman Jongkie Sugiarto said...State-owned oil and gas giant PT Pertamina, which is the biggest fuel distributor in the country, admitted that it had received complaints from automotive producers that their engines would not be able to adapt to higher biocontent.“There is a recommendation from one of them that its engines can only receive 12.5 percent at the maximum level. [State-owned electricity firm] PLN is also worried about an obligation of up to 25 percent biofuel to be mixed for power plants,” Pertamina marketing director Ahmad Bambang said. He added that Pertamina would comply with the mandatory blending policy. While worries emerge over the higher biofuel blending policy, the government continues its efforts to boost the biofuel industry.... On Wednesday, Coordinating Economic Minister Sofyan Djalil said that the government was finalizing a presidential regulation to levy palm-oil exports, the proceeds of which would be used to subsidize biofuel so that it could incentivize more producers and consumers. Crude palm oil (CPO) shipments would be charged with levies of US$50 per metric ton, while processed products would be levied $30 when prices dip below $750 each ton.“We will strictly fine those [exporters] who do not comply and they will even be prohibited from exports and their licenses will be revoked,” he said after a coordinating meeting at his office, adding that the presidential regulation might be signed within the week.Sofyan further said that the funds collected from the taxes would be managed by a special public service agency under the Finance Ministry, which would be set up soon. - See more at: http://www.thejakartapost.com/news/2015/04/16/carmakers-worry-higher-biofuel-mix-could-damage-engines.html#sthash.Szutaz4f.dpuf
2 April 2015: Domestic subsidies criticized for causing deforestation, GHG reduction from bioethanol depends on food consumption cuts in developing world (Searchinger in new research published by Science)
Subsidies to industries that cause deforestation worth 100 times more than aid to prevent it by Arthur Neslen Tuesday 31 March 2015 16.48 BST Last modified on Tuesday 31 March 2015 17.59 BST
Brazil and Indonesia paid over $40bn in subsidies to industries that drive rainforest destruction between 2009 and 2012 - compared to $346m in conservation aid they received to protect forests, according to new research.... More than half of the world’s forest loss between 1990 and 2010 took place in Brazil and Indonesia......Brazil and Indonesia spent over 100 times more in subsidies to industries that cause deforestation than they received in international conservation aid to prevent it, according to a report by the Overseas Development Institute (ODI)..... The two countries handed out over $40bn (£27bn) in subsidies to the palm oil, timber, soy, beef and biofuels sectors between 2009 and 2012 – 126 times more than the $346m they received to preserve their rainforests from the United Nations’ (UN) REDD+ scheme, mostly from Norway and Germany. .... “The fact that domestic subsidies for commodities that cause deforestation so vastly outweigh international aid seeking to prevent it shows we need a radical rethink,” Will McFarland, one of the report’s authors told the Guardian. “By making the cost of producing these commodities cheaper, subsidies increase their profitability and make them more desirable to investors. That in turn artificially inflates their growth, and threatens the rainforests further. With subsides running at over 100 times that of forest aid, we should be urgently trying to reform this system.”... Asad Rehman, a senior international climate campaigner for Friends of the Earth compared Brazil and Indonesia to “cancer charities asking for donations whilst subsidising cigarette production at the same time”. ...“Deforestation is ultimately driven by consumption demands in the North,” he said. “We all have a responsibility to tackle the businesses that are colluding in this destruction. The only real solution to this failure is empowering communities to safeguard their forests.” ... McFarland said the phenomenon was “incredibly contradictory” and demanded the conditioning of future aid on environmental protection measures. “Through subsidy reform, modest sums of forest finance can be used to ensure that any subsidies are provided in a manner that both protects forests and the poor,” he said.... But an ODI finding that Brazil spent $2.7m in biofuel subsidies in 2009 – mostly for ethanol – illustrates how contentious such conditions may be in practice. New research by Timothy Searchinger published in the journal Science last week, found that any greenhouse gas reductions from bioethanol would depend on cuts to food consumption in the developing world.... http://www.theguardian.com/environment/2015/mar/31/subsidies-to-industries-that-cause-deforestation-worth-100-times-more-than-aid-to-prevent-it
1 April 2015: Indonesia new biodiesel formula awaited to boost domestic demand - margins reduced on contestation
Industry specialists say that this will all depend on Indonesia Ministry of Finance. This is part of big Indonesia policy plan to boost domestic demand in face of poor export prospects for biodiesel.
New formula rolled out to lower biodiesel price Raras Cahyafitri, The Jakarta Post, Jakarta | Business | Tue, March 24 2015, 5:40 AM; In a move to support a rise in the proportion of biofuel that must be added to diesel, the Energy and Mineral Resources Ministry has introduced a new formula aiming to lower the price of the mixed substance purchased by distributors...... Under the new formula, the biodiesel index price will be calculated based on the crude palm oil (CPO) base price plus US$125 per ton. The added $125 is the cost of converting CPO into fatty acid methyl ester (FAME), which is used to produce biodiesel. The conversion cost is lower than a previous formula that put it at $188 per ton..... Coordinating Economic Minister Sofyan Djalil has also said that the government might ask CPO producers to earmark 15 percent of their output for domestic usage to ensure the certainty of the supply of CPO to support the mandatory biodiesel policy..... According to palm oil producers association GAPKI, Indonesia produced 31.5 million tons of CPO last year, rising by around 5 percent from a year earlier. Of the total production, 21.7 million tons were exported last year. If the 15 percent mandatory mix is fully implemented, the country will need 5.3 million kiloliters of biofuel to be blended into diesel. The figure is equal to CPO needs of 4.8 million tons..... http://www.thejakartapost.com/
14 March 2015: Indonesia may notify higher blending rule soon
Indonesia to Expand Biodiesel Blending to Boost Palm Oil Prices by Eko Listiyoriniand Agus Salim Suhana 8:08 PM HKT March 13, 2015 (Bloomberg) -- Indonesia plans to increase blending of palm oil with diesel this year to cut costs of importing fossil fuel and shore up prices of the world’s most-used vegetable oil. The world’s largest palm oil producer will raise the blending rate to 15 percent this year from 10 percent and subsequently to 20 percent, Coordinating Minister for Economic Affairs Sofyan Djalil said in Jakarta on Friday.... The Energy and Mineral Resources Ministry may notify higher blending rule next week and it will be effective immediately, Djalil said. Increased use of palm oil in biodiesel may reduce supply of the vegetable oil and support prices, he said.
25 February 2015: EU may cap biofuel at 6% of transport fuel instead of the current 10%
EU lawmakers back new limit for food-based biofuel By Barbara Lewis BRUSSELS Tue Feb 24, 2015 2:52pm EST; BRUSSELS (Reuters) - A European Parliamentary committee on Tuesday backed a new limit on traditional biofuels made from food crops that critics say stoke inflation and do more harm than good to the environment.... But those who have invested in biofuels made from crops such as maize or rapeseed say it puts jobs at risk.... Current legislation requires EU member states to ensure that renewable sources account for at least 10 percent of energy in transport by 2020.... The European Parliament's environment committee on Tuesday agreed that biofuel from food crops should not exceed 6 percent of final energy use in transport - a tougher limit than the 7 percent backed by member states last year.... http://www.reuters.com/article/2015/02/24/us-eu-biofuels-idUSKBN0LS2D620150224
Today is a defining moment for Europe’s flawed biofuels policy - MEPs set to vote on whether to limit the use of palm oil and other food crops in biofuels, which campaigners claim is fuelling deforestation in Indonesia by Laili Khairnur Laili Khairnur is executive director of Gemawan Institute, Indonesia Tuesday 24 February 2015 07.10 GMT; Their judgment will have serious repercussions, affecting some of the most vulnerable people and ecosystems in Indonesia.... When I visited Brussels last year to talk with EU decision-makers about Europe’s policy to promote biofuels, my message to them was clear: by using and promoting crops such as palm oil for biofuels, Europe shares responsibility for deforestation and the increase in carbon emissions in Indonesia, not to mention human rights abuses. It’s time for Europe to step up and fix the problem... In my home of West Kalimantan, Borneo, around five million hectares of land – an area larger than Denmark – have been reserved for oil palm plantations. This represents almost one third of our total land in the region. Fifteen per cent of this will be in areas that are currently forested. The rest of the region is almost entirely earmarked by the government for other extractive industries, such as bauxite mining. There will be little, if any, land remaining as forests, for agriculture or for local people to live and farm.... The palm oil debate is funded by the Roundtable on Sustainable Palm Oil. All content is editorially independent except for pieces labelled advertisement feature. Find out more here.
6 February 2015: ALERT - legislators cut requested USD1.4 billion biofuel subsidy to USD0.55 billion or 39%, do not agree to support non-subsidized sector. Finalisation of Indonesia new subsidy at IDR 4,000/liter for US$86 operating profit for biodiesel producers?
News has been trickling out and this one is important to note that the level of subsidy given is reported by Jakarta Post at 39% of what was requested (thus, rather less generous than was earlier apparent to traders) - reducing the volume of subsidized biodiesel by half, from 3.41mil kilolitres to 1.7mil kilolitre or about 600,000 tonnes of palm oil according to analysts. Analysts are also mulling over the volume for the non-subsidized biodiesel sector.
Bottom-line: Biodiesel off-take impact on stock levels are a key concern on immediate palm oil price outlook. Beyond the short term, traders are eyeing the 16% of global palm oil that goes into biodiesel - on say 55 million tonnes, 16% is 8.8 million. While trying to boost implementation of the Indonesia biofuels program, it's interesting and important to note the significant amendments apparently made by the legislators on the rather more generous government proposals for biodiesel producers.
Legislators cut biodiesel subsidy to Rp 4,000 per liter by Raras Cahyafitri, The Jakarta Post, Jakarta | Business | Fri, February 06 2015, 8:34 AM; The House of Representatives has lowered the subsidy proposed by the government for the sale of biodiesel, saying that the required amount was too high.... The Energy and Mineral Resources Ministry allocated about Rp 17.4 trillion (US$1.4 billion) to subsidies in the sale of biofuel so that producers of renewable energy such as fatty acid methyl ester (FAME) and ethanol used in biofuel can continue their operations despite the sharp drop in oil prices.... However, in the deliberation of the proposed revision to the 2015 State Budget on Wednesday, House of Representatives Commission VII overseeing energy cut the allocation to Rp 6.8 trillion. With the amount approved by the legislators, the subsidy for biodiesel is lowered to Rp 4,000 per liter from Rp 5,000 per liter as proposed by the government, while the bioethanol subsidy is fixed at Rp 3,000 per liter in line with the proposal....“The government has also proposed to provide subsidies for non-subsidized biodiesel, but we do not agree,” Commission VII head Kardaya Warnika said....http://www.thejakartapost.com/news/2015/02/06/legislators-cut-biodiesel-subsidy-rp-4000-liter.html#sthash.JjGu4X8t.dpuf
Ambank writes: "Platts reported that Indonesia’s Parliamentary Panel has allocated Rupiah 4,000/liter (32 US cents/liter) as subsidy for biodiesel production and Rupiah 3,000/liter for ethanol in the 2015 state budget. Previously, a biodiesel subsidy of Rupiah 5,000/liter was proposed..... Based on the subsidy of Rupiah 4,000/liter, the subsidy bill would come up to Rupiah 10.4trilllion (US$821.6mil) versus Rupiah 17.4trillion (US$1.37bil) previously.... We estimate that without the subsidy, biodiesel producers would be making an operating loss of US$240/tonne. With the subsidy, the operating profit would be about US$86/tonne...."
BofA on 4 February notes that "Higher Indonesian biodiesel subsidies should support 2015 growth in Indonesian biodiesel demand in-line with our forecasts. But this alone cannot offset industry challenges from falling Brent and record soybean. Stay cautious on CPO price outlook. We prefer young growth names....and Wilmar who can benefit from Indonesian biodiesel mandate growth....."
Reactions from palm oil specialists we hear: Consistent surprised comments about generosity. The less optimistic ask it will really work this time - as the biodiesel story has not lasted, in the past.
Palm Oil Climbs Most in Four Years on Indonesian Biofuel Subsidy by Ranjeetha Pakiam 5:25 PM BNT February 5, 2015 (Bloomberg) -- Palm oil advanced the most in more than four years on Indonesia’s plans to boost biodiesel subsidies, which would expand palm demand in the largest producer and consumer.... Futures climbed 5.1 percent to 2,310 ringgit ($648) a metric ton on the Bursa Malaysia Derivatives on Thursday, the biggest advance at close since October 2010.... The biodiesel mandate is feasible with the increased subsidy, said Hariyanto Wijaya, a Jakarta-based analyst at PT Mandiri Sekuritas. It will boost palm demand for biodiesel to 1.7 million tons this year from 800,000 tons in 2014, he wrote in a report on Thursday.... The country’s target for biodiesel production is 2015 is 3.4 million kiloliters, said Dadan Kusdiana, director of bioenergy at the Energy & Mineral Resources Ministry. Output last year was 1.7 million kiloliters, half the 3.4 million goal, he said in a text message.... http://www.bloomberg.com/news/articles/2015-02-05/palm-oil-climbs-most-in-28-months-on-indonesian-biofuel-subsidy
Elsewhere, other government support for commodities too. Notably Thailand for rubber.
Thai Interventions in Rubber Market Propping Prices, Tightening Supply
Purchases Exacerbating Rubber-Market Supply Shortages By Huileng Tan Feb. 5, 2015 4:09 a.m. ET ; Thailand’s big interventions in the natural-rubber market are propping up prices and keeping supplies tight for the world’s largest producer and exporter of the raw material.
Global benchmark natural rubber futures on the Tokyo Commodity Exchange posted 7% gains this week, hitting a one-month high on Wednesday before settling 1.2% lower at ¥206.4 a kilogram on Thursday. Thai government purchases currently account for 5% to 20% of daily rubber sales in the local market, according to Pongsak Kerdvongbundit, managing director at Von Bundit Co., one of Thailand’s biggest rubber exporters. Last October, Thailand’s junta government approved a budget of up to 30 billion baht ($919 million) for buying rubber, and has been purchasing the commodity aggressively from farmers at the country’s central rubber markets.... http://www.wsj.com/articles/thai-interventions-in-rubber-market-propping-prices-tightening-supply-1423127349
4 February 2015: Biodiesel seeks US$441/tonne subsidy (over US$650 million?) to improve implementation of Indonesia mandate, House of Representatives approval needed
Please note our 13 January alert on this item, for which there is now more news and analyst reactions which include those summarized below. The subsidy to biodiesel producers would amount to over US$650 million. Indonesia biodiesel producers seek strong support, not dissimilar to that enjoyed by Malaysian biodiesel producers. Reuters also reports that Indonesia downstream also asks for review of export duty to be more competitive against Malaysia.
CIMB writes: "proposal to raise the subsidy for biodiesel in Indonesia by 333% to Rp5k per litre. The higher subsidy will significantly raise the CPO-biodiesel breakeven price level and revive biodiesel consumption. Indonesia plans to blend up to 3.41m kl of biodiesel in 2015. If successful, we believe it will boost CPO demand by 1.5m tonnes. This news is positive for CPO prices and biodiesel producers in Indonesia..."
Ambank writes: "Indonesia’s Energy and Mineral Resources Ministry... is also proposing that 3.41 million kilolitres (1.2 million tonnes) of biodiesel be mixed in diesel.... The proposals are pending approval by the House of Representatives.... Pertamina said that it had failed to hold a biodiesel tender due to poor infrastructure and selling price. In 2014, only 1.17 million kiloliters (413,182 tonnes) of biodiesel were blended, lower than the target of 1.57 million (554,440 tonnes) kiloliters... On a per tonne basis, the subsidy of US$0.39/litre is estimated at US$441.... "
28 January 2015: In conversation with auto specialist on talk of diesel car crackdown in Europe
In conversation with auto specialist on Tuesday: Auto guys think this is likely political grand standing. How likely is such a big policy changes if it would impact so severely France auto national champion so after their big capex in diesel; and think about new capex and leadtime needed to develop alternative vehicles. France is not at the forefront of such technology, and has no cutting edge alternative. Do they give up on autos and leave everything to the Germans? Is this auto sector complacency or is it passing political fancy? There is no doubt there is an increasingly vocal group against diesel engines (Boris Johnson in London also). Notably, the Germans have not decided to end diesel vehicles, but they are pressing on with alternative fuel vehicles. Context: In the UK and Germany over 50% and in France 90% of cars run on diesel. Nothing is cleaner than hybrid battery cars.
26 January 2015: France looks to banning diesel vehicles, European crackdown in the offing on air pollution deaths and mistaken measure of CO2 (well-to-wheel benefits lag); Thailand cuts palm oil in biodiesel to 3.5% from 7%
France looks at progressively banning diesel vehicles - Carmakers braced for European crackdown on diesel vehicles by Andy Sharman, Motor Industry Correspondent; January 22, 2015 12:41 pm - It was a move worthy of an environmental campaigner, not a state shareholder.... The November announcement by prime minister Manuel Valls — in which he admitted the promotion of diesel cars had been a “mistake” — was followed last month by a promise from Paris mayor Anne Hidalgo to ban these vehicles from the city by 2020.... Cities are under pressure from the European Commission to tackle pollution. Studies from the International Council on Clean Transportation, a research body, and King’s College, part of the University of London, have highlighted the scale of emissions from diesel vehicles and linked them to as many as 60,000 deaths a year in the UK.... London has vowed to act on these findings...Cities in Norway have discussed similar anti-diesel measures.... There is growing concern that the emphasis on diesel has encouraged European manufacturers to bet on a technology that is only really bought in their home continent.... While Europe leads the world as the biggest market for diesel cars, there has been very little take-up in Japan and the US.... the perceived CO2 benefits of diesel have been overstated if the overall “well to wheel” impact of using the fuel is taken into account. The fuel is more energy intensive to refine, and the types of diesel cars consumers purchase tend to be heavier than the petrol equivalents.
Thailand: PME Blend in Biodiesel to be cut - Palm oil's portion in biodiesel to be halved Published: 21 Jan 2015 at 06.00 | by Yuthana Praiwan; http://www.bangkokpost.com/business/news/458571/palm-oil-portion-in-biodiesel-to-be-halved
.....The Energy Ministry will cut the proportion of palm-based biodiesel (B100) in retail biodiesel to 3.5% from 7% to spare crude palm oil supply and help prevent a shortage in the food industry at a time when domestic palm oil production is in seasonal decline.
13 January 2015 update alert
Khor Reports comment: Plantation analysts remain concerned about the non-viability of palm biodiesel at the current prices. This affects the significant voluntary blending market as well as concerns about the usage in countries with soft mandates such as Indonesia; where it is also fighting to reform its energy sector to bring down spending on energy to free up money for investment in infrastructure. At the same time, Indonesia seems to be pushing on bureaucratic reforms and anti-corruption moves in the agro forestry sector as well as in aviation which recently suffered the Air Asia QZ8501 disaster. The Jokowi-JK presidential election manifesto also talks about the reorientation of economic gains in its biofuels sector to ensure gains for farmers. All in, several challenges issues for Indonesia biodiesel?
Widodo’s Next Hurdle: What Indonesia Can Tackle Post Fuel Revamp By Chris Brummitt Jan 13, 2015 1:12 AM GMT+0800; The opening salvo in Indonesian President Joko Widodo’s bid to revitalize Southeast Asia’s biggest economy was a revamp of the country’s energy sector. His next hurdle is delivering the gains from the shake-up.... In his first three months in office, Jokowi, as the leader is known, freed up 230 trillion rupiah ($18 billion) of budget funds for development by scrapping gasoline subsidies and capping government aid on diesel. He also moved to plug revenue leaks and improve efficiency in the energy industry, changing the management of the state oil company as well as setting up an oil and gas reform team..... http://www.bloomberg.com/news/2015-01-12/widodo-s-next-hurdle-what-indonesia-can-tackle-post-fuel-revamp.html
[these comments and links are replicated from our "eye on Jokowi" blog posting, read more here: http://khorreports-palmoil.blogspot.com/2014/11/eye-on-president-jokowi-asks-china-aiib.html]
1,2 Juta Kl Biodiesel Ditenderkan PERTAMINA; updated 10:30 AM UTC, Jan 9, 2015; http://sawitindonesia.com/berita-terbaru/1-2-juta-kl-biodiesel-ditenderkan-pertamina; reports that Pertamina is holding a tender for biodiesel as a continuation of the mandatory biodiesel program in 2015. But manufacturers are less responsive because the tender price is no longer economical... the tender price scheme set by DG EBTKE MEMR is 103.48 % MOPS diesel. However, amidst the decline in the price of oil including diesel biodiesel producers are languishing. Paul Tjakrawan, Chief Executive of the Indonesian Biofuel Producers Association ( APROBI ) said that some biodiesel companies are ceasing operations temporarily because (biodiesel is non economic) under the price index ....
22 December 2014: Indonesia diesel output is to more than double to 770,000 bpd by 2025
Indonesia - Pertamina targets higher diesel output Published: 11 December 2014 07:15 AM
Pertamina, whose entire board of directors was recently replaced as part of the energy reforms, signed MoUs with China Petroleum and Chemical Corp. (Sinopec), Saudi Aramco and JX Nippon Oil & Energy Corp. to help with refinery upgrades. The upgrades will be completed in around four years, and there will also be a growth in demand, so this alone will not be enough to fill the demand gap, the company said, adding that it was also looking at building new refineries.... Indonesia's Refinery Development Master Plan targets to double crude oil processing capacity to 1.68 mln barrels per day (bpd) from 820,000 bpd at present. Gasoline output is to more than triple to 630,000 bpd by 2025 from 190,000 in 2012, while diesel output is to more than double to 770,000 by 2025 from 320,000 in 2012.... http://www.reuters.com/article/2014/12/10/indonesia-pertamina-idUSL3N0TU1KO20141210
29 November 2014: Brent crude slide and Indonesia biodiesel mandate outlook
Oil Prices Sink as World-Wide Supplies Rise - Pressure Increases as Weak Demand and Robust Global Production Leave Extra Crude Sloshing Around the Market By Christian Berthelsen Updated Sept. 15, 2014 10:28 p.m. ET; "A global oil surplus is driving U.S. crude prices to fresh lows. Benchmark U.S. oil-futures prices approached a 16-month low for the second time in three trading sessions on Monday before recovering. Oil for October delivery ended at $92.92 a barrel, down more than 13% from highs for the year hit in June. Both U.S. and world prices have tumbled over the past few months, as weak demand and robust global production left extra..." http://online.wsj.com/articles/oil-prices-sink-as-world-wide-supplies-rise-1410824215?mod=djem10point
Wilmar won majority of the third round Pertamina tender. Darmex won less than 30,000 kilolitres.Total volume was around 600,000. Price paid was mostly MOPS + 3%. Biodiesel spreads are now very good at POGO minus $220/tonne plus.
Palm Oil Industry Upbeat Over Policies By Alina Musta’idah on 08:33 pm Sep 04, 2014; "...Gapki, expects the total crude palm oil and palm kernel oil production to be between 27.5 million and 28 million tons, up 2.2 percent to 4 percent from last year. “But such achievement also needs great support from the new government through conducive policies.” Fadhil said the government needed to encourage the construction of biodiesel production facilities and infrastructure across the country in order to boost demand in the domestic market. The government originally aimed for nationwide biodiesel production to reach 3 million kiloliters this year. However, the association estimates that biodiesel production has only reached 800,000 kiloliters so far this year and expects to only reach one million kiloliters by year’s end...." http://www.thejakartaglobe.com/business/palm-oil-industry-upbeat-policies/
Garuda to use biofuel in 2016 to reduce emissions by Nadya Natahadibrata, The Jakarta Post, Jakarta | Business | Wed, August 27 2014, 10:30 AM; "National flag carrier PT Garuda Indonesia is planning to mix avtur (aviation turbine fuel) with biofuel starting in 2016, to help reduce its carbon emissions.
Garuda Indonesia operational director Capt. Novianto Herupratomo said on Tuesday the airline had taken several measures to protect the environment, including by preparing to switch from fossil fuel to clean energy... Under the MoU, the government targeted reducing the use of fossil fuel in the aviation sector by mixing avtur with 2 percent biofuel in 2016 and planned to increase the amount to 3 percent in 2020..." http://www.thejakartapost.com/news/2014/08/27/garuda-use-biofuel-2016-reduce-emissions.html
Geothermal is a target for Indonesia electricity generation, but its economics needs to improve. Unlikely to supplant biodiesel for some time?
Geothermal operations to give greater benefits to locals by Raras Cahyafitri, The Jakarta Post, Jakarta | Business | Mon, September 01 2014, 11:08 AM; http://www.thejakartapost.com/news/2014/09/01/geothermal-operations-give-greater-benefits-locals.html; "....Indonesia’s abundant geothermal resources are estimated to be able to produce around 29 gigawatts, among the highest in the world. However, only 1,341 megawatts of electricity are currently generated by geothermal resources in the country.
Exploitation of the resource is hampered by licensing problems — particularly the prohibition of geothermal projects in conserved forest areas — protests from local residents over perceived harm to the environment, the vast amounts of capital required and the uneconomical tariff of electricity produced by geothermal plants..."
Malaysia Delays Full Implementation of B5 Biodiesel Mandate By Ranjeetha Pakiam Aug 6, 2014 5:46 PM GMT+0800; "Malaysia, the largest palm oil producer after Indonesia, delayed the nationwide implementation of its biodiesel mandate to the end of the year, said Douglas Uggah Embas, Plantation Industries and Commodities Minister. The B5 program will be completed by December instead of an original target of July, doubling average monthly consumption, Uggah said in an e-mailed response to Bloomberg questions. The delay was because construction of 15 blending facilities in the states of Sabah and Sarawak and the federal territory of Labuan in East Malaysia were taking longer than expected, he said.... Palm, the world’s most consumed cooking oil, has declined 16 percent in 2014 and slumped to the lowest level in a year in Kuala Lumpur today as the U.S. government predicts record global inventories of soybeans, used to make an alternative oil. Prices have also been pressured by the failure of Indonesia and Malaysia to boost use in biofuels, according to Dorab Mistry, director at Godrej International Ltd., on June 26..... The government and the palm oil board are “monitoring the progress of the construction of the blending facilities and exploring ways to accelerate completion,” Uggah said. “Full implementation of the B5 program is expected to consume 500,000 tons of methyl ester annually.” B5, which involves blending 5 percent of palm methyl ester with 95 percent of diesel petroleum, was completed in March in Peninsular Malaysia, Uggah said. Monthly usage will average 41,667 tons upon full implementation compared with 20,833 tons now, Uggah said. This will increase to 58,333 tons with the start of the B7 program in the first quarter, he said. The government and the palm oil board are in discussions with engine manufacturers and automobile associations to get warranties for B7, he said.....
Oil Traders Flee Brent as Prices Signal Glut: Chart of the Day By Grant Smith Aug 7, 2014 7:01 AM GMT+0800; "Oil traders are fleeing Brent crude at the fastest pace in eight years as signs of a glut undermined bets that the Islamist insurgency in Iraq would threaten supply...."
Palm oil price revival depends on biodiesel scheme by hanim adnan Updated: Thursday July 31, 2014 MYT 8:01:56 AM http://www.thestar.com.my/Business/Business-News/2014/07/31/CPO-price-revival-depends-on-biodiesel-scheme/; "GOING into the second half of the year, many quarters are anticipating the country’s steep palm oil stocks can be reduced considerably – thanks to the nationwide implementation of the B5 biodiesel programme that takes effect this month.
It is envisaged that some 500,000 tonnes of palm oil annually would be taken up from the palm oil stockpile for B5 biodiesel that will be used in the Government’s subsidised and non-subsidised sectors.... The Government’s strong push for the biodiesel mandate could translate into the steep domestic palm oil stocks being reduced to below one million tonnes and also provide a floor price for CPO at RM2,000 per tonne.... Despite the uncertainties ahead and the CPO price currently trading lower at RM2,250 per tonne, some quarters maintained that planters in Peninsular Malaysia would continue to reap in profits as their average CPO cost of production (COP) is still good at RM1,200 per tonne. The COP for Sabah and Sarawak planters’ is RM1,300 per tonne and RM1,600 per tonne respectively...."
Supply concerns hamper expansion of biodiesel use by Raras Cahyafitri, The Jakarta Post, Jakarta | Business | Fri, July 18 2014, 10:18 AM; http://www.thejakartapost.com/news/2014/07/18/supply-concerns-hamper-expansion-biodiesel-use.html; "...State-owned electricity company PT PLN said on Thursday that it had not received the biodiesel needed to fuel its power plants and meet the government’s mandatory policy of using cheaper renewable energy sources.... The PLN placed part of the blame on the state oil and gas company, PT Pertamina, for failing to provide supply.... The PLN head of oil and gas division, Suryadi Mardjoeki, said the company could only absorb 85,000 kiloliters (kl) during the January to June period, less than 12 percent of the PLN’s initial target of 800,000 kl this year.... Pertamina vice president of retail fuel marketing Muhammad Iskandar said that the PLN had yet to officially request the fuel-type and that several power plants could not actually be run with the type of biodiesel set by the PLN... For electricity, beginning this year, the mandatory blending percentage will be set at 20 percent. The Energy and Mineral Resources Ministry’s bioenergy director, Dadan Kusdiana, said as many as 999,000 kl of biodiesel had been blended into fuel by the end of the first second quarter.... The figure included blended biodiesel subsidized and non-subsidized fuel as well as electricity.... Absorption over the first half of the year was deemed inadequate, as the government had set a target of 3.96 million kl in biodiesel use by year’ end.... Dadan estimated that biodiesel blending may reach just 2 million kl by year’s end.
“The only way to meet the target is by requesting Pertamina to supply B20 and B40. Apart from that, we are also seeking supplies of PPO [pure palm oil] to be blended with our fuel,” Suryadi said...."
AmResearch, 14 July 2014 notes: "...the American Soybean Association (ASA) urged its members to lobby the Environmental Protection Agency (EPA) and Congress to mandate the blending of 1.7bil gallons of biodiesel as part of the 2014 renewable fuel standard. In contrast, the EPA is proposing to require 1.28bil gallons of biodiesel blending only. The EPA is due to release the final number in spring. However, the release has been delayed. It is not surprising that the ASA is lobbying for higher biodiesel mandates in view of the surge in the supply of soybean and soybean oil this year. Biodiesel is expected to absorb 21.8% of soybean oil supply in the US in 2014F/2015F..... Based on the latest USDA (US Department of Agriculture) report, which was released last Friday, ending inventory of US soybean oil is forecasted to increase 8% to 1.8bil pounds in 2014F/2015F due to a drop in demand. Production of US soybean oil is estimated to remain flat. In the same report, USDA had also revised its forecast of US soybean production upwards by 4.5% to 3.8bil bushels in 2014F/2015F due to higher planting acreage. As a result, soybean production in US is anticipated to expand by 15.5% YoY in 2014F/2015F...."
13 July 2014; China Targets 30% New Government Vehicles Use Alternative Energy
By Bloomberg News Jul 13, 2014 8:30 PM GMT+0800 ; "China is mandating that at least 30 percent of new government vehicles be powered by alternative energy by 2016 in the government’s latest salvo to combat pollution and reduce energy dependence. At least 15 percent of new vehicles will use new energy this year in areas such as Beijing and the Pearl River Delta in Guangdong province, the government said in a statement posted on the website of the National Government Offices Administration department. New energy is a term used for electric cars, plug-in hybrids and fuel-cell vehicles...." http://www.bloomberg.com/news/2014-07-13/china-targets-30-new-government-vehicles-use-alternative-energy.html
European Commission and Industry Investing $5 Billion in Biomass By Louise Downing Jul 9, 2014 6:00 PM GMT+0800; "The European Commission and companies including Coca-Cola Co. are investing as much as 3.7 billion euros ($5 billion) to foster the growth of a regional bio-energy industry. The commission is providing 975 million euros from 2014 to 2024, with the remaining 2.7 billion euros coming from the Bio-Based Industries Consortium, according to an e-mailed statement from BBI and the EC. The public-private partnership aims to spur investments and create a competitive market....." http://www.bloomberg.com/news/2014-07-09/european-commission-and-industry-investing-5-billion-in-biomass.html
Pertamina miss target due to poor infrastructure, 13 June 2014
http://www.thejakartapost.com/news/2014/06/13/blended-diesel-miss-target-due-poor-infrastructure.html; "The Energy and Mineral Resources Ministry is estimating that the volume of blended subsidized fuel will only be 1.32 million kiloliters (kl) by year-end, or 90 percent of the 1.46 million kl target, according to the ministry’s bioenergy director, Dadan Kusdiana. According to the ministry’s figures, only 446,935 kl of biodiesel had been blended into subsidized fuel as of the end of May. Meanwhile, in the electricity sector, fuel blended with biodiesel reached 68,000 kl as of May 31, according to state power firm PT PLN’s oil and gas division head, Suryadi Mardjoeki.
The government began requiring diesel used for industry and transportation to contain 10 percent biofuel in September last year.... Last year, the mandatory biodiesel blending requirement helped lower diesel fuel imports by 1.05 million kl worth US$831 million. Prior to the move, the country had implemented an obligation of 7.5 percent. Total diesel fuel consumption is estimated to reach 34.14 million kl, while the volume of blended diesel fuel is targeted to total 3.96 million kl...."
EU to limit production of biofuels from food crops - Energy ministers agree to a 7% cap on using food crops such as maize or rapeseed for making biofuels; theguardian.com, Friday 13 June 2014; "...The ministers' endorsement of a new compromise overcomes last year's stalemate when EU governments failed to agree on a proposed 5% cap on the use of biofuels based on crops such as maize or rapeseed. Friday's deal would set a 7% limit on the use of food-based biofuels in transport fuel. It must now be considered by the newly-elected European parliament...." http://www.theguardian.com/environment/2014/jun/13/eu-biofuels-food-crops
Brazil ups biodiesel blend to 7%; May 30, 2014 report by CIMB; "The decision by Brazil to raise the mandatory biodiesel mix from 5% currently to 6% in Jul and 7% in Nov 14 is indirectly positive for CPO prices. The higher blend will boost demand for soybean oil in Brazil and its global prices in the medium term. Our rough estimate suggests that the higher blend could potentially raise usage of soybean oil in Brazil by 854k tonnes to 2.75m tonnes. This represents around 12% of Brazil and 2% of global soybean oil production. We do not expect major obstacles in implementing the higher blend but expect most of the incremental demand to be felt in 2015.... According to the USDA, Brazil is expected to consume 2.9bn litres of biodiesel in 2014, based on a mandatory biodiesel mix of 5%.... Soybean oils represent 73% of total feedstock use in biodiesel production in Brazil. Using the same proportion, we conservatively deduce that the potential amount of soybean oils that will be absorbed by the higher biodiesel mandate to be around 0.95bn litres (or 854k tonnes). This represents around 11% of Brazil's soybean oil output and 2% of global soybean oil production... This is slightly lower compared to Indonesia's biodiesel policy, which is expected to divert around 3m tonnes of palm oil for domestic biodiesel usage (assuming 10% blend) vs. our estimate for Brazil of 2.7m tonnes of soybean oil (assuming 7% blend). Brazil has 8.2bn litres of biodiesel facilities. As such, we do not see significant obstacles for the government to implement the higher blend..."
Asian Biofuel Motorists Drive Palm-Oil Prices Higher - Palm Oil's Growing Use as a Biofuel Is Reducing its Availability for Other Uses By Huileng Tan, Updated May 29, 2014 11:56 a.m. ET