Biodiesel Programme Deemed Effective in Curbing Fuel Oil Imports

The Indonesian government has implemented a mandatory biodiesel policy that has successfully reduced dependence on imports of petroleum-based fuels (BBM), particularly diesel. Professor Rhenald Kasali from the Faculty of Economics and Business at the University of Indonesia (FEB UI) stated that the mandatory biodiesel policy has great potential as a substitute for diesel. This is supported by the abundant availability of palm oil raw materials domestically and the readiness of processing technology. “The biodiesel programme is indeed effective in curbing diesel imports and improving the energy trade balance through significant reductions in diesel imports. The programme could save up to $8-10 billion in foreign exchange per year,” he said, quoted in Jakarta on Tuesday (14/4/2026). Rhenald hopes for good governance of the palm oil industry to support the sustainability of the biodiesel programme. This includes efforts to prevent deforestation, preserve the environment, and respect the rights of indigenous communities. He noted that the biodiesel programme can minimise the potential for conflict between food and energy needs (trade-off fuel-food). “It should be remembered that palm oil is not a homogeneous product for energy. Increasing the allocation of crude palm oil (CPO) to energy can reduce food supplies, triggering difficulties for household substitutes, namely shortages and rising prices of cooking oil,” Rhenald said. Executive Director of the Palm Oil Agribusiness Strategic Policy Institute (Paspi), Tungkot Sipayung, stated that the development of bioenergy through the mandatory biodiesel policy contributes significantly to reducing imports of fossil-based BBM. Tungkot detailed that Indonesia has consistently developed the mandatory biodiesel programme from B1 to B50, targeted for July 2026. The programme is capable of reducing dependence on diesel imports by around 50 percent. The implementation of B40 biodiesel has reduced diesel imports from 8.3 million kilolitres (kl) in 2024 to 5 million kl in 2025, a reduction of 3.3 million kl. From the perspective of foreign exchange savings on imports, according to Tungkot, the 2025 biodiesel policy succeeded in saving Rp 130.21 trillion and reducing emissions by 38.88 million tons of CO2 equivalent. Furthermore, the B40 programme increased the added value of CPO to biodiesel by Rp 20.43 trillion.