Indonesia to switch to B50 biodiesel in 2026

Indonesia plans to transition to B50 biodiesel in 2026, increasing the share of palm oil in fuel from 40% to 50%. The announcement was made by President Prabowo Subianto during an official visit to Japan at a business forum ahead of a meeting with Prime Minister Sanae Takaichi. According to him, the country is actively advancing its biofuel strategy amid global energy challenges.

Indonesia had previously postponed the rollout of the B50 program due to technical and financial constraints, maintaining the B40 mandate instead. However, renewed momentum has emerged due to instability in energy markets caused by the Middle East conflict and supply disruptions through the Strait of Hormuz.

The shift to B50 implies a significant increase in domestic palm oil consumption — from 12.6–12.7 million tons to 14.5–15 million tons annually. This creates additional demand of up to 2.3 million tons per year, which is particularly significant given that Indonesia accounts for around 60% of global palm oil production.

Higher domestic consumption is expected to reduce the country’s export potential by 1.5–2.0 million tons annually, or approximately 8–10% of current levels. The biggest impact will be felt by key importers such as India, China, Pakistan, and the EU, which may face tighter supply and rising prices.

The decline in global palm oil availability is likely to trigger a substitution effect, boosting demand for soybean, sunflower, and rapeseed oils. This, in turn, is expected to support prices across the entire vegetable oils complex, including Ukrainian exports, which may benefit from increased demand.

From an energy perspective, Indonesia’s move reflects a broader long-term shift toward energy independence through biofuels. Amid high oil prices and geopolitical uncertainty, biodiesel is becoming a key component of national energy strategies.

At the same time, the implementation of the B50 program remains dependent on several factors, including technical readiness, funding availability, oil price dynamics, and weather conditions affecting palm yields. Market participants are also closely monitoring Malaysia’s response, as it may capitalize on the situation to expand its global market share.