Bio fuels can be created from multiple different sources, and have many different fuel classification. Biodiesel, one of the subsets, is a domestically produced, renewable resource, made usually of vegetable oils, animal fats, or general animal or human waste. It is a liquid substance, which can be used to power engine compression at any temperature. However, in colder temperatures and climates, performance depends on the quality of the blending. In terms of its potential as a viable alternative to fossil fuels, it is important to keep an eye on biodiesel prices, and what factors drive them.
Setting up a New Price
A case in point, biodiesel prices are an enormous contemporary issue in Indonesia. Rather than rely on the free market to determine price for the country, the government is leaning in the direction of setting up a national price, and regulating amounts of bio fuel and biodiesel to be created.
The biodiesel prices in Indonesia will likely be set according to rankings of prices in other countries, balanced with Indonesia’s domestic capacity and cost of living standards. There will be government action in the processing and development sector as well, through funding to various bodies to produce quality blends of biodiesel in order to supply the regional and domestic markets. The goal for the implementation of the program is 2015, and with already careful planning, Indonesia appears on track to meet this deadline.
Capacities and Spending
The total consumption of bio fuel, specifically the subsidized category, has been estimated for 2014 at around 17 million kiloliters, according to the Biodiesel Company of Indonesia. Further, the total government subsidy for blending is estimated, in weight, at around 1.7 million kiloliters. In terms of un-subsidized biodiesel fuel, about 4 million kiloliters is the estimate amount to be produced for 2014.
While subsidizing fuel will prove expensive at a national level, it may prove necessary in the short run in order for consumers to be able to afford. As it is a newer product, and supplies are shorter currently than fossil fuels, it will take time for biodiesel prices to reach parity with, or lower than, the prices of these fuels.