Indonesia’s Minister of Energy and Mineral Resources, Bahlil Lahadalia, has signed a decree that allocates 15.6 million kilolitres (KL) of biodiesel for 2025, with plans to raise the biodiesel blend to 40% (B40) by February.
Lahadalia confirmed the signing of the ministerial regulation, stating that the government aims to eventually increase the blend to 50% in the future.
Implementation Details:
Biodiesel producers and fuel retailers are required to adjust to the new B40 blend by February 28, 2025. The timeline has been extended due to technical challenges related to fuel subsidies, as noted by senior ministry official Eniya Listiani Dewi.
Market Impact:
The announcement of the delayed B40 implementation initially led to a 2.6% decline in Malaysia’s palm oil benchmark price on Thursday. However, prices saw a 1% recovery following the official signing of the decree.
Allocation Breakdown:
The 2025 biodiesel allocation is divided into two segments:
- 7.55 million KL for public service obligations (PSO), which includes subsidized sectors like public transportation.
- 8.07 million KL at market price, with no subsidies, aimed at bridging the price gap between palm oil and fossil fuels.
Lahadalia also clarified that the government will not be able to subsidize the price gap for the entire allocation, emphasizing the need for a sustainable approach to energy transition.
This policy reflects Indonesia’s ongoing efforts to reduce its reliance on fossil fuels while supporting the growth of domestic palm oil production and expanding the biodiesel industry.
