B50 program could cut Indonesia’s palm oil exports by nearly 4 mln tons per year

Indonesia’s B50 biodiesel program, which increases the mandatory palm oil content in biodiesel to 50%, could reduce the country’s crude palm oil (CPO) exports and lower export revenue by about $2.7 billion annually. At the same time, the government expects the policy to reduce dependence on imported diesel fuel.

The phased rollout of the B50 mandate began on July 1 following an eight-month trial period. According to the Indonesian Palm Oil Association (Gapki), the program will divert around 2 mln tons of CPO from export markets in the second half of 2026. On an annual basis, additional domestic demand could reach nearly 4 mln tons.

Gapki estimates that, based on the average CIF Rotterdam palm oil price of $1,356/t in the first quarter of 2026, redirecting 2 mln tons of CPO from exports would reduce export earnings by approximately $2.7 billion.

Economists say the program will be beneficial only if savings from lower diesel imports consistently exceed the loss of palm oil export revenue, biodiesel subsidy costs, and the risk of higher domestic cooking oil prices. The issue has become more significant after Indonesia recorded its first monthly trade deficit in six years in May.

Analysts recommend introducing a more flexible blending policy that adjusts biodiesel requirements according to domestic CPO inventories, palm oil prices, cooking oil prices, and the country’s trade balance. They believe such an approach would help strengthen Indonesia’s energy security while limiting risks to exports and the domestic food market.

Tags: export, Indonesia, palm oil, biofuel