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Indonesia Approves Allocation of 15.6 Million Kiloliters of Biodiesel for 2025 Implementation

Biodiesel Boost: Indonesia will allocate 15.6 million KL of biodiesel in 2025, up from 12.98 million KL in 2024.

Higher Fuel Mix: By February 2025, the required biodiesel blend increases to 40% (B40), with a possible increase to 50% in 2026.

Market Impact: Palm oil futures initially fell 2.6% as a result of the policy change, but after the decree, they rose 1%.

Indonesia’s Energy and Mineral Resources Minister, Bahlil Lahadalia, signed a decree allocating 15.6 million kilolitres (KL) of biodiesel for 2025, raising the biodiesel blend to 40% (B40) by February.

Implementation Details: According to senior ministry official Eniya Listiani Dewi, biodiesel manufacturers and fuel merchants have until February 28, 2025, to adjust to the new B40 blend because of technical difficulties with fuel subsidies.

Market Reaction: Although prices increased by 1% upon the signing of the decree, Malaysia’s palm oil benchmark contract fell 2.6% on Thursday due to the delay in implementing B40.

The allocation for biodiesel in 2025 includes:

  • Public service obligations (PSO), which include subsidized sectors like public transportation, are 7.55 million KL.
  • There is no subsidy to address the price differential between palm oil and fossil fuels; 8.07 million KL is allotted at market value.

This strategy demonstrates Indonesia’s will to lessen its reliance on fossil fuels while continuing to support the growth of biodiesel and domestic palm oil production.

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