ESI: B50 implementation must be accompanied by affordable fuel prices
Energy Shift Institute (ESI) Managing Director Putra Adhiguna has said the implementation of the B50 biodiesel mandate must be accompanied by efforts to keep fuel prices affordable for the public.
According to Putra Adhiguna, B50 has the potential to reduce diesel imports while saving foreign exchange. Nevertheless, the benefits of foreign exchange savings need to be balanced against the interests of the public as energy consumers.
“It should be remembered that domestic products are good, but the public certainly needs affordable fuel,” Putra told ANTARA in Jakarta on Thursday.
The government is implementing the B50 Biodiesel Programme, which aims to reduce dependence on oil imports, increase domestic palm oil consumption and strengthen national energy security.
The programme officially came into effect on 1 July 2026 and is currently in a three-month transition period towards full national implementation on 1 October 2026.
Putra said the use of domestically produced energy products is viewed positively, but fuel prices must remain at an affordable level.
On the other hand, the increased use of B50 will drive higher demand for CPO for domestic biodiesel needs. This condition could potentially provide an additional market for the palm oil industry while increasing the utilisation of domestic raw materials.
However, Putra cautioned that the increase in CPO demand for energy must remain balanced with food needs. According to him, the government needs to ensure that the increased use of CPO for biodiesel does not disrupt stability in the food consumption sector, because the impact could be felt directly by the public.
“The rising domestic CPO demand needs to be anticipated so that it does not create instability for the food consumption sector, because the impact on the public is quite significant,” Putra said.
Putra assessed that the success of B50 implementation cannot be measured solely by the increase in biodiesel volume used, but also needs to consider its impact on the economy, the state budget, the palm oil industry, and the public as fuel users.
Putra also assessed that vehicles and engines can essentially adapt to the use of B50. Nevertheless, engine readiness and vehicle compatibility still need to be considered, including the potential change in fuel consumption after using a biodiesel blend with a higher content.
“Technology can adapt, but the impact on public and industrial users is important to anticipate, including the more wasteful fuel consumption with B50 and engine compatibility,” Putra said.
In addition to fuel prices, the fiscal aspect is also a concern in the implementation of B50. Over a period of about 10 years, Indonesia is said to have spent around Rp250 trillion on biodiesel subsidies.
Along with the increase in biodiesel volume, Putra said the government needs to carefully calculate the impact on the state budget, including the potential reduction in export levy revenues as well as costs ultimately borne by the government, industry and the public.
With proper management, B50 is considered capable of becoming an instrument to strengthen energy security while increasing the utilisation of domestic raw materials.
The challenge is to ensure that the benefits of foreign exchange savings and industrial strengthening continue to go hand in hand with affordable fuel prices, food stability and fiscal sustainability.
The government has positioned the B50 Mandatory Biodiesel Programme as one of the instruments to strengthen national energy security.
Through the blending of 50 percent biofuel into diesel, the programme offers a number of benefits, ranging from ending diesel imports, foreign exchange savings of up to Rp170 trillion, increased CPO absorption, job creation, to reduced greenhouse gas emissions.