Indonesia Progresses Toward B40 Biodiesel Target

21-Jul-2025 05:47 PM

Jakarta. Indonesia, the world's largest producer and exporter of palm oil, has a rule of mandatory use of 40 percent palm oil in the production of biodiesel, which is called the B40 program. It is also moving fast towards achieving the target set under this program.

According to the information received, a total of 156.20 lakh kilo liters of palm oil has been allocated for the year 2025 under this B40 program, out of which about 74.20 lakh kilo liters or 48 percent has already been consumed.

In view of this, the Indonesian government is now considering implementing the B50 blending program, which means that the use of palm oil in the production of biodiesel will be increased to 50 percent. However, no decision has been taken on this at the moment.

During the first half of the year 2025, 35 lakh kilo liters of subsidized biodiesel was consumed in Indonesia. Initial indications suggest that Indonesia will achieve the B40 blending target in 2025, which will increase domestic palm oil consumption by 2 million tonnes and reduce the burden on millers. The reduction in surplus stocks of palm oil for export purposes may have some positive impact on prices.

If the B50 blending program is implemented, Indonesia's consumption of palm oil for biodiesel production could increase to 190 kilolitres, which will add an additional 3 million tonnes to its domestic palm oil consumption,

which is 6.2 per cent of the total production in 2024. This will help neutralise the increased tariff rates in the US. It is worth noting that the US has announced to impose import duty of 19 per cent on Indonesian products and 25 per cent on Malaysian products from August 1, 2025, which also includes palm oil.

Malaysia has set the base price of crude palm oil (CPO) at 3,864 ringgit per tonne for August 2025 and raised the export duty on this basis to 9 per cent from 8.5 per cent in July.