Indonesia aims to commercialize jet fuels from palm oil in 2-3 years

BALI, Indonesia -- Indonesia continues to test "sustainable aviation fuels" derived from palm oil, eyeing commercialization of the products within the next two to three years, Airlangga Hartarto, the coordinating minister for the economy, said on Thursday.

It is part of larger efforts by the world's biggest palm oil-producing nation to make use of the commodity to reduce its energy import bills and decarbonize. The government is also preparing to further expand its biodiesel policy, which similarly uses palm oil in the blend, next year.

Hartarto said these efforts will also add value to the palm oil industry and expand employment opportunities for many Indonesians.

"Going forward, the government will continue to encourage new discoveries as [a] key to better and more sustainable industrial development," he told the Indonesia Palm Oil Conference in Bali.

State-owned energy conglomerate Pertamina has been conducting tests for its "sustainable aviation fuel" (SAF) products with three flag carriers: its own subsidiary, Pelita Air, as well as Garuda Indonesia and Citilink.

Pertamina claimed that its sustainable fuels can reduce carbon emissions during flights by up to 84%. Its refinery unit, Kilang Pertamina Internasional, said its facility in the Central Java town of Cilacap has a capacity to produce roughly 238,000 kiloliters of SAF annually.

"Furthermore, [we] can increase production to meet demand," Milla Suciyani, acting corporate secretary of Kilang, told Nikkei Asia, adding that another refinery in South Sumatra can switch some of its capacity for SAF production if needed.

Pertamina had previously attempted to develop SAF using derivatives of palm kernel oil. But that was considered more expensive. Now, it is testing jet fuels using used cooking oil and looking to try the palm oil mills effluent too.

Heri Martanto, head caretaker of corporate sustainability at Garuda, said last month that the airline has tried using jet fuels from palm oil in its Jakarta-Amsterdam flights.

"The test results show that the aircraft engine's performance remained stable and safe," Martanto said in a news release on Oct. 20. "There was no technical implication disrupting operations."

Ridlo Akbar, senior manager for business growth at Airbus Indonesia, said in the same statement that using SAF is "a significant move toward low-emission flights." "As a drop-in fuel, SAF can be used immediately without needing to modify the aircraft or airport infrastructure," he said.

Demand for SAF is expected to increase amid moves such as by the International Civil Aviation Organization and the European Union to promote or even mandate low-carbon blends in jet fuels. It is not immediately clear, however, if fuels derived from palm oil will receive a good reception from the global aviation industry given deforestation concerns over palm oil industry practices in top producing countries like Indonesia and Malaysia.

Martanto said Garuda aims to use SAF in domestic flights too.

Eniya Listiani Dewi, director general for new and renewable energy at the energy ministry, told Nikkei on the sidelines of the Bali conference that she is hoping to get Danantara, Indonesia's new sovereign wealth fund, to help develop the SAF industry.

"I've suggested that Danantara invest more in some production," she said.

Apart from testing the jet fuels, Indonesia is also set to continue to expand its biodiesel policy, with the government preparing to increase the mandated palm oil content in the diesel blend from 40% to 50% sometime next year.

Dewi told local reporters in Bali that the government would conduct road tests in December for use of the so-called B50 mix across six different sectors: automotives, agriculture, mining, maritime, railway and heavy machinery.

She admitted it would be challenging to implement B50 amid Indonesia's stagnant palm oil production due to aging trees and a lack of new planting in recent years. The government will listen to industry input and might enforce the new policy gradually, Dewi said.

Abdul Roni Angkat, acting director general for plantations at Indonesia's Ministry of Agriculture, said the government is aiming to open 600,000 hectares of new oil palm plantations starting next year to help increase production, according to Reuters.