Indonesia says B50 biodiesel rollout hinges on crude oil and palm oil prices

The launch of Indonesia’s B50 biodiesel mandate will depend on the price gap between crude oil and crude palm oil, Coordinating Minister for Economic Affairs Airlangga Hartarto said on Tuesday.

Indonesia, the world’s largest producer of palm oil, has previously stated that it plans to introduce the B50 mandate in the second half of 2026. The policy would require a 50-50 blend of palm-based biodiesel and conventional diesel fuel. Currently, the country enforces a B40 mandate, which requires biodiesel to contain 40% palm-based fuel.

The government subsidises its biodiesel programme using proceeds from palm oil export levies. The level of subsidy is determined by the difference between crude oil prices and crude palm oil prices, making market conditions a key factor in any transition to a higher blending mandate.

“This year, the president’s guidance is to maintain B40,” Airlangga said. “For B50, reviews are being carried out continuously, and we need to closely monitor the difference between crude oil and crude palm oil prices.”

According to the minister, preparations are underway for potential implementation in the second half of the year. However, under current price conditions, the government’s directive is to keep the B40 mandate in place while remaining ready to shift to B50 when conditions allow.

Rising palm oil prices have added pressure to the decision. On Tuesday, Malaysian crude palm oil futures for February delivery were trading at a premium of around $370 per metric ton over ICE Brent gasoil futures for the same delivery month, widening from a premium of about $300 in October and November last year.

Indonesia’s energy ministry has allocated 15.65 million kilolitres of palm-based biodiesel for this year’s mandate, of which 7.45 million kilolitres will be subsidised by the country’s plantation fund. Airlangga also said testing is ongoing to assess the fuel’s impact on automotive engines, while the government is considering an increase in palm oil export levies, with a decision expected in the coming days.

Tags: Indonesia, palm oil, biofuel