Indonesia’s B50 biofuel mandate could boost palm oil demand by 3m tonnes

Indonesia’s domestic palm oil consumption could rise by around 3 million tonnes if the government implements the B50 biodiesel regulation, according to a study by leading Indonesian investment bank CIMB Securities.

The company notes that the potential demand growth would be an additional 6.2% of the projected crude palm oil (CPO) production of 48.2 million tonnes in 2024, according to the Indonesian Palm Oil Association (GAPKI).

The Indonesian government is preparing to implement the B50 standard, which is expected to provide additional support to CPO prices in 2026, as the additional demand is likely to offset any negative impact from higher US import duties on palm oil, which are currently 19% for Indonesia and 25% for Malaysia, effective from August 1, 2025, the study notes.

The country’s Ministry of Energy and Fuels has previously announced plans to adopt the B50 program, but has not yet set a final date for the 2025 blending mandate as the government is still consulting with experts and assessing feedstock availability and refining capacity. The ministry says the potential rollout would require five additional biodiesel plants, of which only three are currently under construction.

CIMB Securities says it is positive about the rollout of the B40 standard in Indonesia, which appears to be on track to meet its 2025 biodiesel production target. It is expected to increase Indonesia’s domestic palm oil consumption by 2 million tonnes and reduce the country’s export surplus, the bank said.

Of the 15.62 million kiloliters allocated, 7.55 million, or 48%, are earmarked for public service sectors such as public transport and are fully subsidized. The remaining 8.07 million tcf will be sold at market prices without subsidies.

CIMB Securities said the potential implementation of B50 is a key factor to watch as it could tighten Indonesia’s palm oil exports in 2026.

This could support CPO prices in the near term, the company said.

Earlier, Malaysia reportedly raises crude palm oil benchmark price in August and increases export duty to 9%

Tags: Indonesia, palm oil