B50 Biodiesel Programme Set to Proceed, Here's How Parliament and Business Leaders Have Responded
The Indonesian government will soon implement a biodiesel programme mixing solar diesel fuel with 50% plant-based biodiesel derived from palm oil, known as B50. This policy is expected to significantly influence the trajectory of the nation’s palm oil industry and transportation sector.
Deputy Chair of the People’s Consultative Assembly (MPR), Eddy Soeparno, views the upgrade from B40 to B50 as a critical component of the national energy transition agenda. However, he cautioned that implementation must align with core principles of energy security alongside national capability and needs assessment.
The rationale behind biodiesel implementation is to strengthen national energy resilience. Through this approach, Indonesia can reduce its dependence on diesel imports and potentially achieve a surplus in diesel fuel production.
“Secondly, capability and need. What is our capacity? To increase the B40 blend to B50, including considering our current needs and whether such needs might compromise other priorities,” Soeparno stated during the Energy Forum B50 Edition.
Meanwhile, a member of the National Energy Council (DEN), Satya Widya Yudha, explained that the B50 policy represents part of a broader roadmap towards achieving Net Zero Emission targets by 2060. The industrial and transportation sectors are among the largest contributors to carbon emissions.
The biodiesel programme has followed a gradual trajectory, progressing through stages from B5, B10, B20, B30, B40, and now to B50. This phased approach ensures that industry adaptation, raw material availability, and technological readiness proceed in tandem.
“We are trying to determine how we can ensure that programmes already established within the National Energy Policy (KEN) can be achieved collectively,” Yudha said.
He noted that the B50 programme should maintain equilibrium between two primary objectives: reducing carbon emissions through renewable energy use whilst preserving state revenue from palm oil and crude palm oil (CPO) exports.
Mukti Sardjono, Executive Director of the Indonesian Palm Oil Producers’ Association (Gapki), stated that a 50% biodiesel mixture in diesel could expand subsidies from the Plantation Fund Management Agency (BPDP). If the price differential between biodiesel and solar widens, subsidies would correspondingly increase.
“Clearly, with BPDP it might be better, but if the spread between biodiesel and solar increases, subsidies would certainly grow larger,” he explained.
One solution to prevent subsidy escalation is for the government to raise levies to cover biodiesel subsidy needs. “The government has no choice but to increase levies, as it must now do, to meet subsidy requirements. This is indeed a dilemma, not an impossible situation, but a dilemma we must confront,” he added.
Additionally, Sardjono believes that if B50 is implemented, domestic biodiesel production must increase. Failure to boost production could reduce CPO export shares, potentially affecting other sectors.
Kukuh Kumara, Secretary General of the Indonesian Automotive Industry Association (Gaikindo), stated that applying a 50% palm oil mixture to diesel fuel should not present problems for vehicles, provided the composition is properly calibrated.
He noted that using fatty acid methyl ester (FAME) at 50% concentration is difficult if used in isolation. Therefore, an additional blend of Hydrotreated Vegetable Oil (HVO) is required.
“If we want to use 50% FAME, it is also challenging. It must be mixed with HVO,” Kumara stated.
However, the primary challenge with HVO is its expensive production cost. If HVO usage increases diesel prices, it could potentially reduce consumer interest.
Beyond pricing, Kumara also warned of potential efficiency declines. In certain cases, increased biodiesel blends can result in higher fuel consumption.
Consequently, coordination between the Indonesian Biofuel Producers Association (Aprobi) and Gaikindo is essential during B50 implementation. DEN member Fadhil Hasan stated that such coordination ensures biodiesel mixing levels comply with government specifications whilst guaranteeing that B50 implementation does not create risks to vehicle performance.
“A commission will ensure that if this programme is implemented at a particular blend ratio, it will not endanger or reduce the performance of vehicles,” Hasan concluded.