Palm oil biodiesel helps Indonesia save $3.68 billion in foreign exchange

Indonesia recently reported that a nationwide palm oil-based biodiesel program has saved the country at least $3.68 billion in foreign exchange this year.

Indonesia, the world’s largest palm oil producer, has mandated the use of biodiesel made by blending the food crop with regular diesel. The percentage of palm oil in the blend has been steadily increasing. Indonesia currently mandates 40 percent palm oil in the blend under a policy better known as B40, which took effect in early 2025. That figure is equal to the amount of palm oil Indonesia uses in fuel.

“In the first half of 2025, we distributed about 6.8 million kiloliters of biodiesel [B40],” Energy Minister Bahlil Lahadalia said at a press conference on Monday.

As a result, Indonesia has managed to reduce fuel imports, saving US$3.68 billion in foreign exchange as of June this year.

The biodiesel program is also one of Indonesia’s larger strategies to extract more value from its abundant natural resources, namely by processing raw materials into finished products. The government said that processing crude palm oil into biodiesel has created an added value of Rp 9.51 trillion (US$583.4 million).

According to Bahlil, Indonesia has already halfway achieved its target of distributing 13.5 million kiloliters of B40 biodiesel by 2025.

National biodiesel adoption has been gaining momentum in recent years.

The mandatory palm oil content has been reduced to 30% between 2020 and 2023. In 2020, the country distributed 8.4 million kiloliters of biodiesel, then in 2021, the figure was finally increased to 9.3 million kiloliters, and a year later to 10.4 million kiloliters.

The government gradually raised the mandatory rate to 35% in 2023 and maintained this B35 policy for two years. According to the data, Indonesia produced 12.3 million kiloliters of B35 palm oil-based biofuel in 2023 and another 13.2 million kiloliters the following year. The biodiesel program saved about $9.3 billion in foreign exchange last year.

Tags: Indonesia, palm oil