The rollout of Indonesia’s B50 biodiesel mandate, which would require a 50-50 blend of palm-based fuel and diesel, will hinge on the price gap between crude oil and crude palm oil, a senior official said on Tuesday.
Indonesia, the world’s largest palm oil producer, had previously targeted the second half of 2026 to implement the B50 mandate. Currently, the country’s biodiesel programme requires fuel with 40 per cent palm content (B40).
The government subsidises its biodiesel programme using funds generated from palm oil export levies. The size of the subsidy is tied to the difference between global crude oil prices and local crude palm oil prices.
“This year, the guidance from the president is to maintain B40,” Airlangga Hartarto, Indonesia’s coordinating minister for economic affairs, told reporters. “For B50, reviews are being continuously conducted, and we must monitor the difference between crude oil and crude palm oil prices.”
He added that while preparations are underway for a potential rollout in the second half of the year, “under current price conditions, the president’s directive is to maintain B40, but be ready for B50.”
On Tuesday, Malaysian crude palm oil futures for February delivery traded at a premium of roughly $370 per metric ton over ICE Brent gasoil futures for February delivery, up from a premium of about $300 in October and November 2025.
Indonesia’s energy ministry has allocated 15.65 million kilolitres of palm-based biodiesel for this year’s mandate, with 7.45 million kilolitres to be subsidised through the country’s plantation fund.
Airlangga noted that engine performance tests on B50 fuel are ongoing to assess its impact on automotive engines.
An energy ministry official also indicated that Indonesia is likely to raise its palm oil export levy, a decision that could be announced within days, Airlangga said.
The timing and implementation of B50 remain closely tied to market dynamics, reflecting the government’s careful balancing of energy policy, export revenue, and domestic fuel needs.
