Government plans mandatory ethanol fuel blend by 2028

The government will mandate the use of ethanol-blended fuel oil by no later than 2028, Energy and Mineral Resources Minister Bahlil Lahadalia said on Friday.

“I assure you that by 2028 at the latest there will be a mandatory bioethanol requirement, possibly as early as 2027–2028,” Bahlil said, as quoted by state news agency Antara.

He said the government is currently drafting a roadmap for the implementation of bioethanol blending in fuel.

Separately, Director General of New Energy, Renewable Energy and Energy Conservation (EBTKE) at the Energy and Mineral Resources Ministry, Eniya Listiani Dewi, said excise tax issues related to ethanol had been discussed with the Coordinating Ministry for Economic Affairs.

She said the Finance Ministry has waived excise tax on ethanol used for biofuel, but the exemption currently applies only to companies holding commercial trading permits.

Read also: Industry group says Indonesia could turn molasses surplus into 250,000 KL of bioethanol

Eniya cited state-owned oil and gas company PT Pertamina, which already holds a commercial trading permit (IUN), allowing it to be exempt from ethanol excise tax payments. “We are discussing whether revisions to Presidential Regulation No. 40 of 2023 (on the Acceleration of National Sugar Self-Sufficiency and Bioethanol) will include tax incentives,” she said.

Previously, Bahlil said President Prabowo Subianto had approved a mandatory 10% ethanol blend (E10) for fuel oil, in line with efforts to cut carbon emissions and reduce reliance on imported fuel.

Bahlil added that the government would provide incentives for companies building ethanol plants in Indonesia to support the E10 mandate.

Meanwhile, Deputy Minister of Investment and Public Enterprise Todotua Pasaribu said Japanese automaker Toyota has expressed interest in investing to help meet Indonesia’s bioethanol demand.

Editing by Reiner Simanjuntak