Tanks storing palm oil-based biodiesel in Cirebon, West Java, Indonesia. The country is testing to see whether vehicles can run effectively on diesel blended with 40% cooking oil. Credit: Dimas Ardian/Bloomberg via Getty Images.

The EU said on Thursday that it had begun an investigation into whether the Indonesian Government is avoiding EU duties on imported biodiesel.

The bloc has concerns that the country is managing to circumvent duties on its exported biodiesel by sending it through China and the UK. The EU stands as Indonesia’s third-largest importer of palm oil products and remains a key market for its biodiesel exports, which is made mostly from palm oil. Indonesia is the world’s largest producer of palm oil.

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The probe follows an initial complaint from the European Biodiesel Board, which argued last year that the European Commission had “failed to consider all relevant data to establish undercutting” of duty payments by Indonesia. In December, the EU General Court rejected arguments from Indonesian exporters, who sought to annul duties imposed by the bloc.

“The request contains sufficient evidence that the existing countervailing measures on imports of the product concerned are being circumvented by imports of the product under investigation,” the European Commission said in the EU’s official journal.

“A change in the pattern of trade involving exports from Indonesia and the People’s Republic of China and the United Kingdom to the Union has taken place following the imposition of the existing countervailing measures,” it added.

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At the beginning of this week, Indonesia requested World Trade Organisation (WTO) dispute consultations with the EU over the bloc’s enforcement of duties on Indonesian biofuel. According to Reuters, a European Commission spokesperson told reporters that the EU was confident its duties on Indonesia were in full compliance with WTO regulations and that the bloc was prepared to discuss the matter with Indonesia’s Government.

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On Wednesday, Indonesia pushed back its schedule to announce investment allocation from a $20bn fund. Announcements are now expected to come later in the year. The funding comes from a coalition of nations, led by the US and Japan, which has pledged to mobilise public and private finance for energy transition-related projects.

In 2021, Indonesia’s Government set out plans to increase the total share of renewable energy in the country’s energy mix from 9% in 2020 to 23% by 2025, and 31% by 2050. To reach this, 10GW of renewable energy capacity would be needed by 2025, but lack of investment and electricity pricing issues mean that the country is expected to hit just 2.5GW of renewable capacity by 2025.