Indonesia has announced its plans to gradually increase the mandatory blending of palm oil-based biodiesel in the coming years. While the blending rate currently stands at 35%, the country aims to raise it to 40% in the future, according to a report by Reuters on June 26. In February, Indonesia introduced the B35 biodiesel program, which replaced the previous B30 program and required a blend of 35% plant-based biodiesel and 65% fossil diesel in the transportation sector. The government’s objective is to leverage domestic resources and reduce reliance on imported crude oil. The Indonesian Ministry of Energy is working towards full implementation of the B35 mandate by August 1, which requires upgrades to blending facilities in certain regions.

Indonesia is the biggest producer and exporter of palm oil, the most heavily consumed vegetable oil found in various industries, including food and cosmetics. The introduction of the B35 program, along with plans for B40 and more ambitious biodiesel blending plans is intended to reduce greenhouse gas (GHG) emissions and decrease dependence on costly imported crude oil. However, the rising demand for biofuel raises concerns about potential deforestation risks associated with expanding oil palm plantations. The Institute for Essential Services Reform (IESR), an Indonesian policy think tank, estimates that by 2024, Indonesia may need to convert an additional 4 to 6 million hectares of land into oil palm plantations, in addition to the existing 16 million hectares, to meet domestic and export demands.

Sources:

https://www.reuters.com/business/energy/indonesia-plans-hike-biodiesel-mandate-next-few-years-2023-06-26/

https://www.bloomberg.com/news/articles/2023-03-30/indonesia-maintains-biodiesel-target-despite-slow-start-to-b35#xj4y7vzkg

https://asia.nikkei.com/Business/Markets/Commodities/Indonesia-shakes-palm-oil-market-again-eyeing-biodiesel-over-exports

https://news.mongabay.com/2023/01/indonesias-biofuel-push-must-go-beyond-palm-oil-to-reduce-risk-experts-say/