Indonesia, world's largest producer of palm oil, to force manufacturers to use biofuel

Indonesia, the world's largest producer of palm oil, plans to force manufacturers to use biofuels for some of their energy needs to reduce dependence on imported oil amid soaring global prices.

The government also wants to cut spending on fuel subsidies, which were put in place decades ago to protect the country's poorest but now account for almost half the budget.

Efita Legowo, a member of the Energy Ministry's biofuel team, said a decree would be issued in October stipulating that factories use palm oil and other cleaner burning fuel for 2.5 percent of their total needs.

The new energy policy sets a target of making biofuels account for 5 percent of the energy mix by 2025. Some critics of a similar European Union plan say the push for the use of biofuels is a major factor in soaring food prices.

Together, Malaysia and Indonesia provide 87 percent of the world's palm oil. Nearly 15 million acres (about 6 million hectares) is covered by palm-oil plantations.

source: Jakarta Post | July 2008