(Indonesia) B50 Biodiesel Mandate Takes Effect, Lifting Palm-Oil Demand

Indonesia has officially implemented the B50 biodiesel policy since July 1, increasing the blending ratio of palm oil-based biodiesel in diesel from 40% to 50%, becoming one of the countries with the highest mandatory blending ratio in the world (neighboring Malaysia's current standard is B15). The policy sets a three-month transition period. The national oil company Pertamina plans to clear B40 inventory within two months, and all distribution points will switch to B50 from October 1.

The Indonesian government has incorporated B50 into the overall framework of energy security, import substitution and palm oil industry upgrading. The Ministry of Energy and Mines predicts that switching B50 in 2026 will reduce the consumption of fossil diesel by about 4 million kiloliters and save about 157.28 trillion rupiah (about US $8.8 billion) in foreign exchange for fuel imports. Indonesia also plans to stop importing diesel from July 1. On the raw material side, the Indonesian Palm Oil Association estimates that B50 requires about 16 million tons of crude palm oil (CPO) per year, an increase of about 3 million tons from about 13 million tons of B40. Indonesia's total palm oil production in 2025 is about 56.55 million tons, of which CPO is about 51.66 million tons.

The focus of the policy after landing is on cost and suitability. B50 subsidies rely on palm oil export tax and export levy income, the recent fall in international crude oil prices, palm oil prices remain high, the spread between the two increased subsidy pressure. In terms of terminal adaptation, users of heavy diesel equipment such as mining and logistics reported that a high proportion of biodiesel may lead to an increase in fuel consumption (tests show about 3%-5%) and accelerated wear and tear of components, thus shortening the maintenance cycle. Indonesia's Ministry of Energy and Mines said that the durability test of B50 on heavy equipment has accumulated for more than 900 hours, and there has been no engine failure due to fuel quality, so it is technically ready for promotion.

As the world's largest producer and exporter of palm oil, Indonesia's domestic demand expansion will reduce its export supply elasticity. Palm oil is China's largest import of vegetable oil varieties, the international price upward will be through the import cost and oil price difference, to the downstream transmission to soybean oil, vegetable oil alternative consumption.

Source: Indonesian Ministry of Energy and Mineral Resources; Antara News Agency; Xinhua News Agency, July 2026.