Indonesia launches mandatory 50% biodiesel blend to cut imports and boost palm oil sector

On 9 July 2026, President Prabowo Subianto officially launched Indonesia’s mandatory biodiesel program (B50) at Rest Area KM 57 in Karawang, West Java. The policy requires a 50 percent blend of palm‑oil‑based biodiesel with diesel fuel, replacing the previous B40 blend.

The government projects that B50 will cut diesel‑fuel imports, saving roughly Rp 170 trillion in foreign exchange each year and increasing the domestic demand for crude palm oil (CPO) to 16–17 million tonnes, up from about 15 million tonnes under B40. The program is also expected to create up to 2.1 million jobs, raise the CPO sector’s added‑value to Rp 23.5 trillion, and reduce greenhouse‑gas emissions by about 44 million tonnes of CO₂ annually.

Legal backing comes from Minister of Energy and Mineral Resources Regulation No 4/2025 and Ministerial Decree No 257/2026. A transition period runs until 30 September 2026 to clear existing B40 stocks. The biodiesel will be sold at Rp 6 800 per litre, the same price as subsidised solar. Additional measures include plans for a solar‑power capacity boost to 100 GW, a future bio‑ethanol mandate, and the issuance of honour stars to officials who helped implement B50.

Critics such as the Indonesia Strategic and Economic Action Institution warn the higher CPO demand could cut export volumes, potentially reducing foreign‑exchange earnings from palm‑oil exports by about US$ 2.7 billion per year. Nevertheless, officials stress B50’s role in strengthening energy sovereignty and supporting the palm‑oil industry’s domestic value chain.