Indonesia implements B50 biodiesel program amid palm oil supply concerns

Indonesia is expanding its use of palm oil in the energy sector, notably through the B50 biodiesel program launched in July. While biodiesel blends are applied to diesel, gasoline products like Pertalite and Pertamax currently rely on fossil fuels or bioethanol derived from sugarcane and cassava. However, Pertamina has conducted research into ‘green gasoline,’ which uses refined palm oil processed through refinery technology to create hydrocarbon compounds equivalent to gasoline.

Despite the goal of reducing import dependency and strengthening national energy security, the B50 program faces significant challenges. Analysts from Traction Energy Asia and Universitas Padjajaran have identified hidden costs and risks, including raw material availability, infrastructure readiness, and the need for export incentives. Experts from Universitas Indonesia also warned that the program could reduce the domestic supply of crude palm oil (CPO), potentially impacting food prices and forest preservation. Recommendations include policy reforms, involving independent smallholders in the supply chain, and exploring alternative feedstocks like used cooking oil.