Indonesia plans to raise biodiesel blend to 50% on palm oil

Indonesia raised its mandatory biodiesel blend to 50% from 40% on Thursday, and Energy Minister Bahlil Lahadalia said the shift would lift crude palm oil use to 16.3 million to 17 million metric tons from 15.2 million. The announcement came in Karawang, West Java, at a ceremony attended by President Prabowo Subianto.

B50 would cut this year’s import bill by about 170 trillion rupiah, or $9.41 billion, as Indonesia tries to reduce reliance on imported diesel and soften exposure to global oil prices. Businesses have until the end of September to work through remaining B40 stocks, while the energy ministry has not yet issued additional quotas for the higher blend. The move follows B40, which took effect on January 1, 2025, after B35 was imposed in January 2023, and it came years earlier than the 2028 target.

S&P Global Energy estimated that a 50% blend could require about 5 million metric tons of palm oil to be diverted from exports into domestic fuel use, tightening availability for food, industrial and overseas buyers. APROBI estimated a full B50 rollout would push annual biodiesel demand to about 19 million kiloliters in 2026 and require 17 million to 18 million metric tons of crude palm oil feedstock.

Indonesia is the world’s largest palm oil producer, and its biodiesel program is funded through levies on palm oil exports that cover the price gap between biodiesel and diesel. The government estimated in 2024 that B35 would need about $1.75 billion because of the widening spread between diesel and palm-oil prices. BPDP, the state plantation-fund agency, said biodiesel saved Rp722.9 trillion in foreign exchange from 2015 to 2025, generated Rp114.7 trillion in added value, supported 10.9 million jobs and cut 228.41 million metric tons of carbon-dioxide equivalent. Bahlil has also said the government should keep researching a 60% mix.