Indonesia's 50% biodiesel blending rate takes effect

JAKARTA — Indonesia's new 50 per cent biodiesel blending mandate took effect on Wednesday (July 1), requiring a fuel blend of half palm-based diesel and conventional diesel known as B50, even as stakeholders await a revised biodiesel allocation from the government.

In an effort to achieve energy independence, Indonesia increased the mandated blending rate to 50 per cent from 40 per cent, effective July 1. 

The programme, however, faces feasibility challenges in the wake of retreating crude oil prices and high prices of palm oil, which typically trades at a premium to diesel.

"Implementation (of B50) is proceeding in accordance with the applicable regulations," energy ministry official Noor Arifin Muhammad said in a text message.

While the government has provided a three-month transition period to allow fuel retailers to clear out B40 stocks according to a decree issued in June, producers must now deliver higher-quality palm-based diesel for retailers to blend into biodiesel.

The new standards include lower water content and longer oxidation stability than in B40.

While the higher blending rate is likely to increase demand, the government has not announced the amount of palm-based diesel that producers must supply to fuel retailers to mix with conventional diesel to make B50.

Under the B40 mandate, initially planned throughout 2026, the ministry had allocated 15.64 million kilolitres of biodiesel.

"The (new) allocation is not available yet. Yesterday we had a meeting with the energy ministry and they said it is still being prepared," said Catra De Thouars, vice chair of the Indonesian Biofuel Producers Association. 

"For now, we are using the old allocation as it can still be used."

Between January and April, 4.61 million kilolitres of biodiesel were distributed, energy ministry data shows.

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