Indonesia’s Shift to B50 Biodiesel Reduces Diesel Import Reliance

RRI.CO.ID, Jakarta - The government is strengthening palm oil–based biodiesel production as part of efforts to boost the domestic energy share and reduce dependence on imported fossil fuels. This initiative is marked by the implementation of the 50 percent biodiesel (B50) mandate, which will officially take effect in July 2026.

Energy and Mineral Resources Minister Bahlil Lahadalia said the B50 program will increase the use of domestic raw materials, particularly crude palm oil (CPO) derivatives, while reducing diesel imports.

“In July, we will officially launch B50. Starting this year, we will no longer import diesel,” Bahlil said in Jakarta on Thursday, June 25, 2026, as quoted by Antara.

National diesel consumption currently stands at around 39 million kiloliters per year. Under the existing B40 scheme, 40 percent of the diesel blend is biodiesel derived from Fatty Acid Methyl Ester (FAME).

FAME is produced by processing CPO with methanol to create biofuel, which is then blended with diesel in accordance with the government-set mandate.

The mandatory increase from B40 to B50 is expected to raise national biodiesel demand, driving greater absorption of CPO for domestic energy needs. The policy is also expected to support palm oil farmers by stabilizing the price of fresh fruit bunches (FFB).

Minister Bahlil said processing palm oil into biodiesel is one of the government’s strategies to maintain the domestic market when palm oil prices come under pressure.

“Palm oil farmers’ prices are falling. To ensure a good market price for our farmers, we are implementing downstreaming for domestic consumption,” he said.

The government estimates that implementing B50 could replace about 300,000 barrels of fuel consumption per day with biodiesel, significantly reducing the need for imported crude oil and fuel.

Technical preparations for B50 are ongoing. Automotive sector testing began on December 2, 2025, and is expected to be completed by June 2026. The government is also testing agricultural machinery, heavy mining equipment, railway systems, and power plants to ensure optimal use of B50 across sectors. ***