Indonesia may raise palm oil export levy to support expanding biodiesel program

Indonesia is preparing to increase its palm oil export levy as the government seeks additional funding to support its expanding biodiesel program, according to Energy Ministry official Eniya Listiani Dewi, Reuters reported.

The world’s largest palm oil producer currently enforces a mandatory 40% biodiesel blending requirement (B40), the highest such mandate globally. Authorities are aiming to raise the blending rate to 50% (B50) later in 2026 as part of efforts to reduce reliance on fossil fuels and strengthen energy security.

Indonesia finances its biodiesel subsidies through export levies on palm oil products. At present, the levy on crude palm oil is set at 10% of the government’s monthly reference price, while charges on processed palm oil products range from 4.75% to 9.5%.

Speaking to reporters, Dewi said studies by the coordinating ministry for economic affairs indicate that levy rates will need to be increased regardless of whether the country maintains the B40 mandate or moves to B50. She added that funds held by the national plantation fund agency, which supports the biodiesel scheme, are gradually declining.

Government officials are expected to meet next week to discuss possible adjustments to the levy. Meanwhile, energy ministry data show Indonesia consumed 14.2 million kilolitres of palm-based biodiesel in 2025, up 7.6% year on year, with a 2026 biodiesel allocation set at 15.65 million kilolitres. Road trials of the B50 blend, launched in December, are ongoing and represent a key step ahead of a nationwide rollout.

Tags: biofuel, Indonesia, palm oil