Indonesia Advances E10 Fuel Plan with Regulatory Adjustments

Targeting 10% Ethanol Blend by 2028

The Indonesian government, through the Ministry of Energy and Mineral Resources (ESDM), is pushing forward with plans to implement E10 fuel - a gasoline blend containing 10% ethanol - by 2028. This initiative is part of the country's efforts to develop its renewable energy sector and reduce dependence on fossil fuels.

Regulatory Challenges and Proposed Solutions

Director General of New, Renewable Energy, and Energy Conservation (EBTKE) at ESDM, Eniya Listiani Dewi, highlighted that while existing regulations, specifically Finance Minister Regulation (PMK) No. 82, already exempt biofuels from excise tax, there are still significant implementation hurdles. The current rules require Industrial Business Licenses (IUI) and Trading Business Licenses (IUN), which are considered obstacles to implementation.

Roadmap and Implementation Timeline

The ministry is currently finalizing a roadmap for E10 fuel implementation, which is expected to be released soon as a Ministerial Decree. Eniya stated that discussions are ongoing regarding potential tax relief measures for ethanol producers, which could involve revising Presidential Regulation No. 40 to include provisions for tax relaxation.

Economic and Energy Implications

The successful implementation of E10 fuel would mark a significant step in Indonesia's energy transition, potentially reducing the country's reliance on imported fossil fuels while supporting its domestic agricultural sector through increased demand for ethanol, typically produced from crops like sugarcane or corn.

Challenges Ahead

While the plan shows promise, its success will depend on addressing the regulatory hurdles and ensuring a stable supply of ethanol. The government's efforts to balance energy security, economic viability, and environmental sustainability will be crucial in determining the pace and scale of this transition.