Indonesia launches mandatory B50 biodiesel blend to cut fuel imports

Indonesia’s government mandated a 50 percent palm‑oil biodiesel blend (B50) for all diesel fuel, officially launching the program on 9 July 2026. Coordinating Minister for Economic Affairs Airlangga Hartarto said the policy could save up to Rp 177 trillion in foreign‑exchange costs, eliminate diesel imports and cut carbon emissions by about 44 million tonnes of CO₂‑equivalent per year.

State oil company Pertamina estimates the transition from the previous B40 blend to B50 could reduce diesel imports by roughly 18 million kiloliters in 2026 – about 310 000 barrels a day – and has prepared infrastructure and a phased rollout through 30 September 2026. Experts warn that the program may require up to Rp 65 trillion in subsidies if global oil prices fall while palm‑oil prices stay high, and they recommend a flexible “dynamic blending” mechanism to adjust the blend ratio as market conditions change.

The biodiesel mandate is also expected to boost the domestic palm‑oil sector, generate around Rp 23.5 trillion of added value, create about 2.1 million jobs and support the national budget (APBN). Analysts caution that excessive demand for crude palm oil could strain food‑oil supplies, potentially affecting inflation, and stress the need for sustainable plantation practices and robust logistics to avoid deforestation and price spikes.