The B50 Paradox: Bolstering Energy Security While Risking Environmental Harm?

The Indonesian government under President Prabowo is targeting strengthened national resilience through the development of renewable energy, specifically the implementation of B50 biodiesel. This significant leap positions Indonesia as a global leader in the energy transition with the highest percentage of biofuel blend. B50 refers to a fuel mixture consisting of 50 percent fossil-based diesel and 50 percent crude palm oil processed into Fatty Acid Methyl Ester. Prior to B50, the government implemented B20, B30, and B35 programmes. The utilisation of palm oil-based biodiesel can positively impact the domestic economy, the environment, and energy security. This urgency grows alongside the annual increase in domestic energy consumption, serving as a strategy to break dependence on diesel imports, which have historically made the state budget vulnerable to global price fluctuations.

From an international relations perspective, the B50 policy is not merely about fuel savings; it symbolises a manifestation of energy security strategy amidst current geopolitical uncertainty. For years, Indonesia has relied on imports to meet its substantial domestic diesel needs. Energy security is measured by four aspects: Availability, Accessibility, Affordability, and Acceptability. Regarding availability, Indonesia benefits from being the world’s top palm oil producer, with plantations covering approximately 16.8 million hectares. For accessibility, the programme ensures 100 percent domestic access, bypassing international shipping lanes vulnerable to geopolitical conflict. In terms of affordability, B50 is projected to save the state hundreds of trillions of rupiah in foreign exchange. Finally, on acceptability, the programme serves as Indonesia’s green diplomacy tool to honour its Paris Agreement commitments towards Net Zero Emission.

In practice, this energy security strategy not only strengthens the nation’s geopolitical position but also contributes to economic and environmental gains. It promotes energy sovereignty by reducing import dependency, aligns with mercantilist economic principles by minimising reliance on external actors for survival, and absorbs domestic palm oil production, thereby boosting the plantation sector and increasing farmers’ incomes. Environmentally, the higher biofuel blend is expected to lower carbon emissions compared to pure diesel, based on the concept of a closed carbon cycle where emissions are reabsorbed by palm plants, provided production does not involve deforestation or peatland conversion.

However, this ambition faces significant dilemmas. The primary concern is the food versus fuel conflict, where diverting 50 percent of CPO to energy could threaten cooking oil supplies and drive up domestic prices. The government counters this by pointing to the BPDPKS agency, which funds replanting and research to increase yields without expanding land, and the Domestic Market Obligation and Domestic Price Obligation policies, which require producers to supply the domestic cooking oil market at affordable prices before exporting or selling to the energy sector. A second major concern is land expansion and deforestation. The government highlights a moratorium on new palm oil plantations in primary forests and peatlands, which, although the specific presidential instruction has expired, its principles have been incorporated and tightened within the Job Creation Law and forestry regulations. Furthermore, the mandatory Indonesian Sustainable Palm Oil certification requires the entire supply chain to be deforestation-free and respect indigenous rights.