Indonesia says B50 biodiesel plan to boost palm oil use, cut fuel imports

• The B50 mandate is expected to save 170 trillion rupiah ($9.41 billion) in fuel imports in the current year, compared to 133 trillion rupiah saved under the B40 program in 2025
• Indonesia will require 16.7-18 million kilolitres of fatty acid methyl ester (FAME) under the new mandate, up from 15.64 million kilolitres allocated under B40
• President Prabowo Subianto pushed for a B100 mandate (100% biodiesel), but ministers determined B50 would be sufficient to eliminate diesel imports, with research continuing toward a 60% blend

Indonesia Expands Biodiesel Mandate to B50, Boosting Palm Oil Demand

Indonesia has implemented a mandate to increase its biodiesel blend from B40 to B50, significantly expanding crude palm oil consumption and reducing fuel import dependence. Energy Minister Bahlil Lahadalia announced the policy will boost palm oil usage to 16.3-17 million metric tons annually, up from 15.2 million tons under the previous B40 program.

Key Figures:

• Expected import savings: 170 trillion rupiah ($9.41 billion) in 2026, compared to 133 trillion rupiah in 2025
• Biodiesel allocation: 16.7-18 million kilolitres of FAME (fatty acid methyl ester) required under B50
• Previous B40 allocation: 15.64 million kilolitres in 2026, representing 4.68% growth over 2025's 14.94 million kilolitres

Policy Details:

The mandate, announced last week and ceremonially launched in Karawang by President Prabowo Subianto, represents one of the world's largest mandatory biodiesel blending schemes. Businesses have until end-September to deplete existing B40 stocks before full implementation. The government has not yet issued additional quotas for the B50 program.

Future Outlook:

President Prabowo indicated ambitions for even higher blends, stating he initially pushed for B100 but accepted ministerial advice that B50 would sufficiently eliminate diesel imports. The government will begin researching a B60 blend as the next potential phase.

Market Implications:

As the world's largest palm oil producer, Indonesia's increased domestic consumption will tighten global palm oil supply, potentially supporting prices. The policy demonstrates Indonesia's commitment to energy self-sufficiency and carbon emission reduction while creating substantial demand for its dominant agricultural export commodity.