Indonesia on track to launch B50 biodiesel program on July 1
- B50 fuel tests showed encouraging results, minister said
- Ministry estimates this year's biodiesel mandate could save 157 trillion rupiah in fuel import costs
- Biodiesel subsidies expected to fall to 32 trillion rupiah despite higher consumption
Indonesia is on track to launch its B50 biodiesel mandate - blending 50% palm oil-based biodiesel with 50% conventional diesel - on July 1, energy minister Bahlil Lahadalia said on Thursday, after fuel tests showed positive results.
Indonesia revived its plan to raise the biodiesel ratio to 50% from the current 40% in March, in a response to the oil supply disruptions that followed the U.S. and Israel attacks on Iran.
"Tests have been carried out by the energy ministry's team and the results are encouraging ... B50 implementation will be launched on July 1, 2026," Bahlil told reporters. "Thus, we will reduce or even stop diesel imports, especially cetane 48 gasoil.”
The biodiesel mandate for this year, a mix of B40 in the first six months and B50 from July to December, is estimated to save Indonesia around 157.28 trillion rupiah ($8.89 B) in import costs, the energy ministry said, compared to an estimated 139.8 trillion rupiah saved if the B40 scheme was maintained over the whole year.
Financing concerns eased. The B50 plan was shelved earlier this year as a result of financing concerns, but a ministry official estimated that the biodiesel subsidy for 2026 will be lower than previously budgeted after a surge in crude oil prices in the last few months.
Biodiesel subsidies will fall from the previous 47 trillion rupiah to 32 trillion rupiah, said Eniya Listiani Dewi, director general of renewable energy at the energy ministry.
Indonesia provides subsidies for its biodiesel mandate, using proceeds from a levy on palm oil exports to bridge the gap between gasoil and palm-based diesel prices.
Palm oil typically sells at a premium over gasoil, but the war in the Middle East has inflated crude oil prices and made palm oil cheaper in relative terms.
A recent parliamentary hearing showed that over the January–May period, Indonesian plantation fund BPDP, which is responsible for the palm oil export levy, collected 17.4 trillion rupiah, or 64% of its full year target of 26.84 trillion rupiah.
The energy ministry is preparing regulations for the implementation of B50, Eniya said, including an additional biodiesel quota required to meet the mandate.
At a parliamentary hearing earlier this month, Eniya projected that palm-based biodiesel demand for the year could increase to 17.6 million kilolitres (kL) to meet the needs of the B50 mandate in the second half, higher than the previous allocation of 15.65 million kL.
($1 = 17,700 rupiah)
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