Indonesia’s Energy and Mineral Resources Minister signed a decree on Friday allocating 15.6 million kiloliters of biodiesel for 2025 and asking the industry to adjust to a higher percentage of the blend by the end of next month. “The ministerial regulation has been signed,” Minister Bahlil Lahadalia told reporters, revealing that the government plans to increase the mandatory biodiesel ratio to 50 percent next year.

Eniya Listiani Dewi, a senior official at the Ministry of Health, said biodiesel producers and fuel retailers have until February 28 to adapt to the B40 blend. She cited technical challenges associated with fuel subsidies as the reason for the extension.

Of this year’s total allocation, KL7.55 million is for Public Service Obligation (PSO), covering areas such as public transportation, and sales will be subsidized by the country’s palm oil fund.

Translated with DeepL.com (free version)

The recent reversal of the upward trend in palm oil prices could affect Indonesia’s B40 biodiesel policy, which is scheduled to be introduced in January 2025, according to MAS. High palm oil prices have weakened Indonesia’s export competitiveness, leading to lower revenues from export taxes, a key source used to subsidize domestic biodiesel prices.

In response to this challenge, Indonesia may slow down the pace of implementation of the B40 policy to avoid an excessive shock to the market. This decision reflects the potential impact of high feedstock costs on the sustainability of the biodiesel policy and highlights the dilemma the government faces in balancing export revenue generation with the domestic energy transition.

The Minister of Energy and Mineral Resources, Balil Rahadarya, recently stated that the Government of Indonesia will not only emphasize the independence of oil and gas in achieving energy self-sufficiency, but will also vigorously promote the development of renewable energy. He emphasized that Indonesia aims to be a country that achieves independence in both conventional and renewable energy.

In line with President Prabowo Subianto’s Asta Cita vision for national development, the government is taking a number of strategic measures and plans to significantly increase renewable energy capacity over the next few years to support the global transition to cleaner and greener energy. Among them, a mandatory 40% biodiesel (B40) program will be implemented in 2025, followed by a B50 program in 2026, with the goal of reducing diesel imports and achieving energy independence.

In 2023, Indonesia’s biodiesel use reached 12.2 million kiloliters, with plans to increase to 12.5 million kiloliters by 2025. This move not only saves about US$7.9 billion in foreign exchange, but also adds Rp 15.82 trillion in value added by processing crude palm oil into biodiesel.

Minister Rahadaria placed special emphasis on the development of geothermal energy, which is expected to increase the share of renewable energy in the country’s energy mix to 14.1% by the end of 2024, with geothermal energy contributing 40%. Currently, geothermal power generation has made Indonesia the second largest geothermal power producer in the world, with an installed capacity of 2.6 GW.

In addition, the government is committed to increasing oil and gas extraction, optimizing energy block development, accelerating the penetration of electric vehicles, and improving energy efficiency. The Minister noted that cooperation with the private sector and communities was crucial to achieving national energy security. Through these comprehensive measures, Indonesia was on the path to stronger and more sustainable energy independence.

Brazil is significantly increasing its soybean processing capacity to meet biodiesel demand. Driven by the “Future Fuels” law, by 2027, the vegetable oil content of biodiesel will increase from 14% to 17%, driving a 34% surge in soybean oil demand. Biodiesel consumption is expected to increase from 9.3 billion liters in 2024 to 12.3 billion liters in 2027, underscoring its determination to promote clean energy and reduce dependence on fossil fuels. In order to secure the supply of soybean oil, the plant will expand its production capacity, while exports will be maintained at an average of 1 million tons per year, demonstrating the strategy of shifting to domestic consumption.