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Keputusan Menteri ESDM No. 341.K/EK.01/MEM.E/2024 mandates that all diesel (solar) fuel sold in Indonesia must contain at least 40% fatty acid methyl ester (FAME) derived from crude palm oil, raising the mandatory blend from the B35 level that had applied since February 2023. The mandate is administered through Badan Pengatur Hilir Minyak dan Gas Bumi (BPH Migas) and funded via the CPO support fund managed by BPDP-KS (Badan Pengelola Dana Perkebunan Sawit). The 2025 programme involves 24 registered biodiesel producers supplying two distribution channels: 7.55 million kL under the PSO (subsidised public service obligation) channel and 8.07 million kL under the non-PSO channel.
The FAME production itself is the classic hilirisasi linkage: Indonesia retains CPO domestically for industrial conversion rather than exporting raw palm oil, capturing the refining margin and price-formation power that would otherwise accrue to consuming-country processors. The B40 step absorbs an incremental ~1.5m kL of CPO over B35, tightening global CPO availability and underpinning palm oil prices on the world market. Indonesia supplies approximately 60% of global palm oil exports; a domestic mandate of this scale is the largest agri-commodity demand-side intervention globally by absorbed export volume.
The minister stated at the January 3 launch: "Kami telah memutuskan peningkatan biodiesel dari B35 ke B40, dan hari ini kami umumkan sudah berlaku mulai 1 Januari 2025" ("We have decided to increase biodiesel from B35 to B40, and today we announce it is effective January 1, 2025").
biofuel annually reduces exportable surplus and sets a structural price floor for the global edible-oils complex (palm, soybean, rapeseed, sunflower), where palm is the marginal barrel.
foreign-exchange saving vs B35; full B50 implementation by 2026 would theoretically eliminate net diesel imports.
methodology; life-cycle accounting contested in EU RED III context).
in 2026, which would absorb a further ~5–8m kL CPO and would trim palm oil exports to approximately 20m MT by 2030 (from 29.5m MT in 2024 per Jakarta Post analysis).
EU renewable-energy accounting under the high-ILUC risk classification for palm oil, reducing European offtake as Indonesia ramps domestic consumption — reinforcing the domestic absorption rationale.
downstream energy and plantation names; PALM / related agriculture ETFs reflect CPO price dynamics.
differential between CPO and diesel at B40 volumes, which is key to producer economics for the 24 registered suppliers.
raised compatibility concerns; timeline slippage risk.
seek a bilateral carve-out during ongoing EU–Indonesia CEPA negotiations.