Indonesia’s President-elect Prabowo Subianto has set an ambitious target to implement a 50% palm oil-based biodiesel (B50) blending mandate by 2025. This move aims to reduce Indonesia’s reliance on fuel imports, bolster domestic palm oil consumption, and support energy independence. The initiative comes as Indonesia, the world’s largest palm oil producer, seeks to enhance its green energy transition while leveraging its vast palm oil resources.
Prabowo’s plan to elevate this to 50% is expected to significantly reduce fuel imports by up to $20 billion annually. The increase in biodiesel blending will also raise domestic palm oil consumption from 11 million metric tons under B35 to an estimated 18 million metric tons for B50.
Indonesia’s palm oil consumption has grown steadily in recent years, with an average annual increase of 7.6% since 2019. However, palm oil production has risen by less than 1% per year during the same period. The expansion of the biodiesel mandate is likely to divert more palm oil for domestic use, resulting in reduced export volumes, which could affect global palm oil supply and prices.
Despite the potential benefits, the move has sparked debates regarding its environmental impact, particularly concerning deforestation and the sustainability of palm oil cultivation. However, Prabowo remains confident that the increased blending will drive Indonesia’s energy transition forward and provide economic benefits for rural communities involved in palm oil production.
Indonesia is also exploring the development of palm-based jet fuel, with flight tests already conducted. While initial plans to introduce a 3% biofuel blending for jet fuel were delayed, the government continues to push forward with its efforts to diversify the use of palm oil in the energy sector. Prabowo’s biodiesel plan could position Indonesia as a leader in biofuel development, ensuring both economic growth and progress toward greener energy sources.