Indonesia Struggles to Implement B50 Biofuel Plan
06-Aug-2025 06:21 PM
Jakarta. In Indonesia, the world's leading palm oil producer and exporter, there is currently a mandatory rule of using 40 percent palm oil in the manufacture of biofuel.
A plan has been made to increase it to 50 percent, but there is a possibility of many serious obstacles in the way of implementation of this ambitious plan. It has been planned to implement this plan from next year.
This plan of Indonesia has increased the concern of major palm oil importing countries, including India. Some leading industry and trade analysts believe that it will not be easy for Indonesia to implement this plan. Although there will be no special problem of supply of palm oil, but many obstacles may arise in its operation and on financial basis.
In May 2025, the Indonesian government announced to remove 53 lakh tonnes of crude palm oil (CPO) from export purpose and use it in the manufacture of biofuel under the B50 plan.
As a result, the export of palm oil from Indonesia may decline from 26 million tonnes in 2024 to 21 million tonnes in 2026.
If there is a good increase in the production of crude palm oil and the government's supportive policy remains intact, then Indonesia will face less challenge in implementing the B50 plan,
but if there is stability or decline in the domestic production of CPO, then the crisis may increase there. The B40 program is in place for the year 2025 and its progress is seen to be satisfactory.
If a decision is taken to implement the B50 program in Indonesia next year, then the supply and availability of palm oil and its products for the global export market may decrease, which may give impetus to the rise in prices.
This will increase the difficulty of major importing countries like India and China. If the price of palm oil increases, the prices of soybean oil, sunflower oil and rapeseed-canola oil may also improve.
India is the most prominent buyer country of Indonesian palm oil. Malaysia is expected to benefit heavily from Indonesia's B50 plan.