Indonesia plans to launch a B50 biodiesel blending program and completely stop importing the fuel

Indonesia continues road testing of B50, a biodiesel fuel containing a 50% palm oil blend, as the country seeks to end purchases of imported diesel fuel starting next year.

Increased biodiesel production could boost palm oil prices and lead investors to return to palm plantation stocks, according to CIMB Securities.

Currently, the mandatory palm oil content level in the blend is 40%. The research firm estimates that the introduction of the B50 standard could lead to an additional 4 million tonnes of increased crude palm oil consumption. If implemented, palm oil supply would decrease, which the company says would contribute to higher prices.

Indonesia, the world’s largest palm oil producer, plans to implement the mandate in the second half of 2026, thereby reducing reliance on imported diesel fuel and increasing domestic demand for edible oil.

The B50 program is currently in its final testing phase, including testing the fuel on ships, trains, heavy equipment, and vehicles.

CIMB Securities stated that oil demand could increase by approximately 5% of total consumption in 2024, but noted the risk of potential delays in B50 implementation, including due to a lack of funds to subsidize the program, biodiesel production and blending capacity, and food security concerns.

Prices for palm oil, which is used in everything from lipstick to baby formula, have risen more than 23% since May, driven by strong demand from key importers India and China, as well as concerns about adverse weather conditions that could limit supplies.

Earlier, global palm oil exports reached a historic high in the summer. According to OleoScope estimates, Indonesia increased its exports by more than one million tons by the end of the 2024/25 season, reaching 25.6 million tons by the end of the season.

Tags: Indonesia, biofuel