Falling Crude Oil Prices Affect China’s Plans of Consuming Palm Biofuels

Published By : 03 Mar 2015 | Published By : QYRESEARCH

Indonesia’s plans of increasing the consumption of palm oil based biodiesel via greater subsidies are under threat because of falling crude oil prices. As per a senior official at the Indonesian Palm Oil Board, the consumption pattern of palm biodiesel of 1.7 million kiloliter as previously targeted may not be realized in 2015. In order to meet that goal, the largest palm oil producer would essentially require a capacity worth 1.5 million metric tons. This would be against a capacity worth 800000 tons that was consumed last year. 

In a world led by global surplus, the declining prices of crude oil has led to certain fall in prices of fossil fuels as well which in a way reduces the economic attractiveness of deriving energy from botanical sources. In the month of February, Joko Widodo, the President of Indonesia had given his approval for increasing the subsidy levels on biodiesel. This led analysts to conclude that such a step would lead to higher consumption of palm oil whilst increasing productivity and output and weakening consumption from countries such as China. 

It is a challenging phase for the producers of biodiesel. The attractiveness of biodiesel will get enhanced due to the subsidies; however, the demand patterns will be rather weak and slow because of the pressure created by falling prices of crude oil. Indonesia for long has been promoting the use of biofuel in order to tackle the supply of edible oil all across the globe which is extensively used in cosmetics and food, and is also used for reducing carbon emissions. Regular diesel when blended with biodiesel is used as an industrial fuel and also for transportation. In 2015, it is anticipated that the overall palm based biodiesel consumption will hit 2.2 million kiloliters if it includes non-subsidized use. 
Back To Top