The Indonesia government launched its 50% palm-oil based biodiesel (B50) programme on 1 July after the government said fuel tests had shown positive results, Reuters reported.
Increasing the biodiesel mandate from B40 to B50 would increase crude palm oil (CPO) use from 15.2M tonnes to 16.3M-17M tonnes, energy minister Bahlil Lahadalia was quoted as saying in the 9 July report.
Despite the launch of the B50 programme, industry participants were still waiting for the government to issue revised biodiesel allocations, Reuters wrote.
The biodiesel programme, which had been shelved earlier this year due to financing concerns, was aimed at reducing the country’s reliance on imported fuel, the report said.
In March – in response to oil supply disruptions following the US-Israel attacks on Iran – the Indonesian government reinstated its plan to raise the biodiesel blending mandate to 50% from the current 40% (B40), Reuters wrote in a previous report on 18 June.
Palm oil typically sells at a premium over crude oil, but the war in the Middle East had inflated crude oil prices and led to lower palm oil prices in relative terms, Reuters wrote.
Raising the blend to 50% was expected to reduce this year’s import bill by IDR170tn (US$9.41bn), compared with savings of about IDR133tn (US$7.37bn) rupiah in 2025, energy ministry data showed.
Under the B50 mandate, Indonesia – the world’s largest palm oil producer – would require 16.7M-18M kilolitres of fatty acid methyl ester (FAME), an energy ministry official said on 9 July.
B50 would mainly be used in public transport buses, trucks and heavy machinery, farming machinery, ships and diesel power plants with businesses having until the end of September to use up remaining B40 stocks, according to a 30 June Reuters report.
Indonesia provides subsidies for its biodiesel mandate, using proceeds from a levy on palm oil exports to bridge the gap between crude oil and palm-based biodiesel prices.
A recent parliamentary hearing showed that over the January-May period, Indonesian plantation fund BPDP, which is responsible for the palm oil export levy, collected IDR17.4tn (US$964M), or 64% of its full year target of IDR26.84tn (US$1.49bn), Reuters wrote on 18 June.
