Indonesia plans to increase the use of palm oil in biodiesel production to 50% by 2026, a move that will have significant implications for the global market. Starting January 1, 2025, the country will require biodiesel production to include 40% palm oil, an increase from 35% in 2024.

This mandate is expected to reduce the availability of palm oil for food production and exports, potentially leading to a rise in the global price of edible oils.

To implement this, the Indonesian government signed a decree allocating 156 lakh kilometers of biodiesel for distribution in 2025.

The biodiesel manufacturing industry has been given until the end of February 2025 to comply with the 40% palm oil requirement. If successful, Indonesia plans to increase the use of palm oil to 50% by 2026.

The Indonesia Palm Oil Association (Gapki) has expressed concern that if domestic production of crude palm oil (CPO) does not increase in line with the rising demand for palm oil in biodiesel, there could be a significant reduction in palm oil exports.

However, the Indonesian government is shifting its focus toward increasing the export of processed palm oil rather than crude palm oil (CPO).