Indonesia keeps 2026 biodiesel quota flat, raising doubts over B50 target

Indonesia has set its biodiesel production quota for 2026 at 15.646 million kiloliters, Ernest Gunawan, secretary general of the Indonesian Biofuel Producer Association or APROBI, said Dec. 23, largely unchanged from 2025.

The quota reflects the 2025 target of 15.62 million kiloliters under the current biodiesel blending mandate of 40% or B40 program and has raised questions from traders and analysts about Indonesia's ability to meet its ambitious B50 goal set for 2026, as outlined in government and presidential announcements.

The 2026 mandate is just 29,800 kiloliters higher than the 2025 mandate. This indicates minimal growth, and the demand increase will mainly come from a higher blending mandate rather than just allocation growth, an India-based trader said Dec. 23.

Indonesia is the world's largest palm oil producer and also has the highest blending target for palm oil-based biodiesel.

Palm oil-based biodiesel is a key component of Jakarta's plan for energy self-sufficiency. President Subianto said Dec. 16 that the government will begin by ending diesel imports from 2026, followed by a phased reduction of other fuel imports through 2030.

Allocation details for 2026

Each year, the Ministry of Energy and Mineral Resources sets annual quotas for biodiesel production, assigning volumes to producers based on installed capacity, feedstock availability, and national demand projections.

The total biodiesel allocation for 2026 is divided into 7.38 million kiloliters for Public Service Obligation (PSO), which is subsidized by the government, and 8.265 million kilolitres for non-PSO sectors, according to the advance review copy sent by APROBI to traders and seen by Platts, part of S&P Global Energy.

In 2025, allocations for PSOs were 7.55 million kiloliters and 8.07 million kiloliters for non-PSOs.

According to earlier estimates by APROBI, if fully implemented, a B50 mandate would increase annual biodiesel demand by 19 million kiloliters in 2026 and would require between 17 million mt and 18 million mt of crude palm oil (CPO) feedstock.

The mandate would also require the construction of additional production facilities, Gunawan had said earlier in 2024.

Indonesia's installed biodiesel capacity stands at about 19.6 million kiloliters, but plants typically operate at only 85% due to maintenance downtime. Gunawan said the country would need an additional 4 million kiloliters of capacity to meet the B50 goal.

"Expect Indonesia to implement B45 instead of B50 in 2026, as the current biodiesel production cannot fulfill the B50 demand," a Singapore-based trader said.

The B50 program was expected to absorb an additional estimated 3.5-4 million mt. If the B45 program were to occur in Q3, it could see an additional pull of between 750,000 mt and 850,000 mt, the India-based trader said.

Industry groups, including the Indonesian Mining Association, have urged the government to evaluate B40 implementation before raising blend levels further, citing cost pressures on fuel-intensive sectors such as mining.