Indonesia has become the latest nation to consider a dedicated fiscal mechanism supporting sustainable aviation fuel. A research brief proposes directing revenue from a service fee on used cooking oil exports into a new Used Cooking Oil Fund that would underwrite domestic SAF production.
Analysis suggests a levy above one hundred fifty dollars per ton could close the price gap between hydro processed esters and fatty acids fuel and conventional jet. At that rate Indonesia would also generate surplus capital capable of scaling supply beyond the initial national blending target of one percent by twenty twenty seven.
Collection Matters
Current collection schemes recover less than half of the available used oil, largely because municipal practices differ across thousands of islands. Central oversight with clear producer responsibility rules could boost recovery rates, lowering input costs and reducing environmental leakage into waterways at the same time.
Service Fee Scenarios
· Fee of seventy five dollars yields modest support but limits industrial growth
· Fee of one hundred dollars enables mandate compliance with minimal surplus flexibility
· Fee exceeding one hundred fifty dollars funds collection scaling and additional research grants
Non-Obvious Insight
The study highlights an unexpected advantage of export levies: they create a natural hedge against global oil price swings. When fossil prices rise, the spread between SAF and kerosene narrows, yet export volumes also increase, bringing extra revenue that can be reinvested to accelerate innovation precisely when momentum is strongest.
Regional Spillover Benefits
Upgraded logistics for used oil will likely improve rural road quality and storage safety. Moreover, by valorizing a household waste product, the program can raise public awareness about circular resource management, supporting parallel government campaigns on recycling plastics and organic refuse.
Conclusion
If adopted, the Used Cooking Oil Fund could position Indonesia as a regional leader in sustainable aviation. Strategic fee setting, combined with centralized collection, promises to unlock both climate and economic dividends without burdening state budgets.