Indonesia’s B40 Biodiesel mandate to be implemented gradually

In Indonesia, Indonesia Business Post reported that Indonesia’s plan to increase the palm oil blend in biodiesel to 40 percent (B40) starting January 1, 2025 appears to be implemented gradually after industry players voiced the need for a transition period despite the government’s readiness for the policy rollout.

President Prabowo Subianto, in his speech at the BNI Investor Summit in Jakarta on October 9, 2024, set an ambitious target to increase the biodiesel blend to B50 or B60. This policy is in line with his vision for energy independence. However, with various technical, logistical, and funding challenges, accelerating the B40 rollout remains a major puzzle, according to the report.

As the world’s largest palm oil producer and exporter, the B40 policy aims to increase energy independence and reduce fuel imports by up to $20 billion per year. However, technical challenges and high costs are major obstacles to full implementation in the country.

The report highlighted thatstate-owned energy company PT Pertamina said that several fuel terminals need to be modified to blend and store B40.

“We need a transition period after the mandate is set,” Pertamina spokesman Fadjar Djoko Santoso previously said.

The plan to increase the biodiesel blend has triggered a spike in palm oil prices on the futures market. Market observers predict that this policy will tighten global supply and push prices even higher in 2025, the report added.

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