First, to protect people’s health, Indonesia is implementing the Euro IV equivalent emission standards for light- and heavy-duty vehicles, which will be applied to all diesel vehicles starting in April 2022 as regulated by an environment and forestry ministerial decree. These standards shall apply stricter limits to emissions of carbon monoxide (CO), hydrocarbons (HC), nitrogen oxide (NOx) and particulates (PM) of new vehicles.

In addition to vehicular emission standards, the new standards also apply to the use of fuel in general, including regulating sulfur content to 50 parts per million (ppm). However, currently, none of Pertamina’s diesel fuel products meet this requirement. The highest quality product, Pertamina Dex diesel fuel, has a sulfur content that meets only Euro III standards (300 ppm), not the higher-level Euro IV standards Indonesia has set. In addition, 90 percent of the market is dominated by diesel fuel of lower quality with a sulfur content of up to 2,500 ppm. In other words, for Indonesia to make the shift to Euro IV, a higher quality fuel than Pertamina Dex must be available at all gas stations to meet the diesel fuel demand for road transportation.

The second objective is related to the country’s need to reduce its dependency on imported refinery products. The 2014 biodiesel blend mandate was implemented with an increased blending rate of 10 percent in 2014, known as B10, to 20 percent (B20) in 2016 and to 30 percent (B30) in December 2019.

At the same time, Energy and Mineral Resources Ministry data shows that diesel fuel imports decreased from 35 percent of total diesel fuel consumption in 2014 to 22 percent in 2018. Coordinating Economics Minister Airlangga Hartarto has explained that Indonesia’s blending rate should reach 40 percent (B40) by mid-2021.

Apart from a plan to use the biodiesel (B100) blend that is conventionally produced in Indonesia by the esterifying of crude palm oil (CPO) fats, State oil and gas company Pertamina also plans to commercialize a new renewable fuel product called green diesel (D100). Green diesel qualifies as a drop-in fuel, meaning that it can be blended with conventional diesel fuel, and it can use the same fuel supply infrastructure. In contrast to biodiesel, green diesel does not require the adaptation of vehicle powertrains or engines, making it more widely adoptable. Green diesel also emits lower emissions and burns more efficiently than traditional biodiesel.

The key question is: Are the two objectives, namely shifting to Euro IV emission standards and achieving a higher blend of biofuels, compatible?

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