Indonesia launches B50 biodiesel with 50% palm oil content – experts warn of price hikes
When a country blessed with abundant natural resources decides to use them for its own energy independence, it seems like a logical and bold move. But any shift in the fuel balance has consequences that extend far beyond petrol stations. Indonesia, the world's largest palm oil producer, has decided to raise the bar to 50% biodiesel, betting on sustainability and self sufficiency. Yet experts warn that soaring demand for palm oil will inevitably push up prices both domestically and globally, while placing strain on the entire supply chain.
On Thursday, President Prabowo Subianto officially launched the B50 biodiesel programme in Karawang, West Java, making Indonesia the first country in the world to fully implement the standard. The move aims to boost national energy self sufficiency and reduce reliance on imported fuel. While many drivers at petrol stations have expressed support for the plan, concerns remain over possible diesel price hikes. "It's half vegetable fuel, half oil based; I think it's great. It's more environmentally friendly. But most importantly, diesel prices must not rise further," said Sofian, a truck driver.
Indonesia is the world's largest palm oil producer and has implemented blending standards B2.5, B30 and B40 since adopting the fuel blending policy in 2008. Data from the Ministry of Energy and Mineral Resources shows that palm oil consumption for biodiesel production will rise from 15.2 million tonnes last year to 16.3–17 million tonnes under the B50 programme. Experts warn the move will drive up palm oil prices, even beyond Indonesia. "But I think with the B50 programme, demand for palm oil is really high, and it will increase by 40–50 percent. Moreover, I think El Niño is approaching, and that means heat.
Every time El Niño occurs in Indonesia, the risk of forest fires often increases. That will also affect supply. So prices for palm oil here and, I think, internationally will certainly rise," said Dipa Satria Ramli, a researcher at the Indonesian Centre for Economic Reform. Beyond price hikes, experts note that the B50 programme creates additional challenges across the supply chain. Citing persistent gaps in methanol supply, fuel storage, logistics and infrastructure in Indonesia, experts said sustained investment would be crucial to ensuring the plan's continued success.
The B50 biodiesel programme is part of Indonesia's broader strategy to achieve energy independence and reduce greenhouse gas emissions. However, critics argue that expanding palm oil use for fuel could exacerbate deforestation and climate change. The transition to B50 also requires modernisation of fuel infrastructure and could affect the food market, as palm oil is also used in the food industry.
As CCTV+ reports. The success of the programme will depend on the government's ability to balance energy goals, economic stability and environmental risks.
