Indonesia is making steady progress on its ambitious B40 biodiesel program, which mandates a 40% palm-based biodiesel blend, with nearly half of its annual allocation already consumed. As of July 16, the nation had utilized approximately 7.42 million kiloliters (kls) of biodiesel, representing 48% of the total 15.62 million kls allocated for 2025.
Eniya Listiani Dewi, Director General for New and Renewable Energy at Indonesia’s Ministry of Energy and Mineral Resources, confirmed the consumption figures and indicated that the government is actively evaluating the feasibility of increasing the blend to 50% under a B50 program. While no firm decision has been made for 2025 implementation, consultations with experts and assessments of feedstock availability and processing capacity are underway. The ministry noted that five additional biodiesel plants would be required to support a B50 mandate, with three already in development.
Eddy Abdurrachman, head of the state plantation fund management agency (BPDPKS), reported that subsidized biodiesel consumption in the first half of 2025 reached an estimated 3.5 million kls. He expressed confidence in the agency’s ability to support the B40 rollout, expecting to collect IDR30 trillion (US$1.8–1.9 billion) from palm oil export levies in 2025. Additionally, BPDPKS aims to replant around 50,000 hectares of smallholder plantations this year.
CIMB Research maintains a positive outlook on Indonesia’s B40 implementation, anticipating it will meet its 2025 biodiesel target. This is expected to boost Indonesia’s domestic palm oil consumption by 2 million tonnes and consequently reduce its exportable surplus. The availability of funding for biodiesel subsidies is also seen as encouraging. Of the 15.62 million kls allocated for B40, 7.55 million kls (48%) is earmarked for Public Service Obligation (PSO) sectors, such as public transport, and is fully subsidized, explaining why subsidized consumption (3.5 million kls) is lower than total consumption.
B50: A Game Changer for Palm Oil Prices in 2026?
The potential implementation of B50 is considered a key factor to watch, as it could significantly tighten palm oil exports from Indonesia in 2026. The Indonesian Biofuel Producers Association (APROBI) projects that B50 would raise annual biodiesel demand from 15.6 million kls (under B40) to approximately 19 million kls. Similarly, the Indonesian Ministry of Energy estimates a need for about 19.7 million kls of biodiesel to support a B50 program. To achieve this, Indonesia would need to expand its current installed capacity of around 19.6 million kls.
Should Indonesia proceed with B50, CIMB Research estimates that domestic palm oil consumption could increase by approximately 3 million tonnes. This is equivalent to 6.2% of Indonesia’s 2024 crude palm oil (CPO) output of 48.2 million tonnes, according to the Indonesian Palm Oil Association (GAPKI). CIMB believes that B50 implementation would be highly supportive of CPO prices in 2026, as the additional demand would likely offset any negative impact from the higher U.S. import tariffs on palm oil (19% for Indonesia and 25% for Malaysia, effective August 1, 2025).
In a separate development, Malaysia has set its August gazetted CPO price at RM3,864/tonne, leading to an increase in its CPO export tax to 9% (from 8.5% in July). This higher Malaysian export tax, combined with the upcoming higher U.S. import duties, could stimulate palm oil exports in July, potentially supporting CPO prices in the near term. CIMB Research maintains its average CPO price forecast of RM4,200/tonne for 2025 and continues to favor IOI Corp and Hap Seng Plantations as its top picks in the plantation sector.
