Indonesia’s biodiesel mandate could boost palm oil consumption by 3 million metric tons
Ministry of Energy and Mineral Resources of Indonesia says five additional biodiesel plants will be needed
JAKARTA, Indonesia (MNTV) – Palm oil consumption in Indonesia could surge by about three million metric tons should the government implement its biodiesel mandate, reports UkrAgroConsult.
CIMB Securities said in a research report that this potential increase accounts for about 6.2% of Indonesia’s estimated 2024 crude palm oil (CPO) production of 48.2 million metric tons, based on figures from the Indonesian Palm Oil Association (GAPKI).
“We believe that if Indonesia implements B50, it would be supportive of CPO (crude palm oil) prices in 2026, as the additional demand would likely offset any negative impact from the higher US import tariffs on palm oil (19% for Indonesia and 25% for Malaysia, effective Aug 1, 2025),” it added.
Eniya Listiani Dewi, director general of new and renewable energy at Indonesia’s Ministry of Energy and Mineral Resources, said the government is evaluating the feasibility of raising the biodiesel blend to 50% under the B50 programme.
However, no firm decision has been made to implement B50 in 2025, as the government is still consulting experts and assessing feedstock availability and processing capacity. To support the potential rollout, the ministry says, five additional biodiesel plants will be needed, with three currently under construction.
CIMB Securities said it is positive on the implementation of B40 in Indonesia, which appears to be on track to meet its 2025 biodiesel target.
“We are also encouraged by the availability of funding for biodiesel subsidies. To recap, out of the 15.62 million kilolitres (kls) allocated, 7.55 million kls, or 48 %, is earmarked for public service obligation (PSO) sectors such as public transport and is fully subsidised.
“The remaining 8.07 million kls will be sold at market prices without subsidy, which explains why subsidised biodiesel consumption of 3.5 million kls is lower than total biodiesel consumption,” it noted.
“The Indonesian Biofuel Producers Association (APROBI) projects that B50 would raise annual biodiesel demand from 15.6 million kls (B40) to approximately 19 million kls, while the Indonesian Ministry of Energy similarly estimates a need for about 19.7 million kls of biodiesel to run B50.
“To achieve this, Indonesia will need to add new plants as current installed capacity stands at around 19.6 million kls,” it noted.
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