• Biodiesel Boost: Indonesia’s 2025 biodiesel allocation increases to 15.6 million KL, up from 12.98 million KL in 2024.
• Higher Fuel Mix: The mandatory biodiesel blend rises to 40% (B40) by February 2025, with a potential increase to 50% in 2026.
• Market Impact: The policy adjustment initially caused a 2.6% drop in palm oil futures but saw a 1% rebound following the decree.

Indonesia’s Energy and Mineral Resources Minister Bahlil Lahadalia signed a decree allocating 15.6 million kilolitres (KL) of biodiesel for 2025, increasing the biodiesel blend to 40% (B40) by February.

“The ministerial regulation has been signed,” Lahadalia announced, adding that the government aims to increase the mix to 50% in the future.

Implementation Details:

Biodiesel producers and fuel retailers have until February 28, 2025, to adapt to the new B40 blend due to technical challenges related to fuel subsidies, according to senior ministry official Eniya Listiani Dewi.

Related Article: Scania Launches Biodiesel Pilot in Côte d’Ivoire, Slashing Emissions and Creating Jobs

Market Reaction:

The delay in implementing B40 caused a 2.6% drop in Malaysia’s palm oil benchmark contract on Thursday, though prices rebounded by 1% after the decree’s signing.

The 2025 biodiesel allocation comprises:

• 7.55 million KL for public service obligations (PSO), covering subsidized sectors such as public transportation.
• 8.07 million KL allocated at market price, with no subsidy to bridge the price gap between palm oil and fossil fuels.

Lahadalia clarified:

“The fund cannot subsidize the price gap for the entire allocation.”

This policy underscores Indonesia’s commitment to reducing fossil fuel dependence while maintaining support for domestic palm oil production and biodiesel expansion.

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