Jakarta: Indonesia’s Ministry of Energy and Mineral Resources has issued a decree allocating 15.65 million kilolitres of palm oil-based biodiesel for the country’s fuel blending programme in 2026, a ministry official said on Tuesday, reports Market Screener.
Of the total volume, 7.45 million kilolitres have been set aside for the public service obligation segment, which includes sectors such as public transport. Fuel sold under this category will be supported through subsidies from Indonesia’s palm oil fund.
The remaining 8.20 million kilolitres will be supplied outside the public service obligation scheme and sold at market prices, said Eniya Listiani Dewi from the Energy and Mineral Resources Ministry.
Indonesia’s allocation for 2026 is slightly higher than the 15.6 million kilolitres set aside for 2025.
The country currently requires diesel to contain 40% palm oil-based biodiesel and plans to raise this share to 50% from next year, as part of efforts to cut dependence on imported fossil fuels.
Road tests for the proposed 50% blend, known as B50, began in early December and are expected to run for about six months. Energy Minister Bahlil Lahadalia has said the mandatory use of the higher blend is likely to start in the second half of 2026.
According to the biodiesel producers association APROBI, rolling out the B50 mandate could require as much as 19 million kilolitres of palm oil fuel each year.
APROBI secretary general Ernest Gunawan said the plan would move ahead if vehicle testing results are satisfactory and enough raw materials are available. He added that the ministry may revise the current allocation decree in the second half of the year to match the needs of the higher blending requirement.
Indonesia’s palm oil stockpiles fell by 10% in October from the previous month to 2.33 million metric tonnes, even as production increased. Domestic use rose 8.5% to 2.22 million tonnes, driven by stronger demand for biodiesel and food.
As the world’s largest palm oil producer, Indonesia may also consider regulating crude palm oil exports to make sure there is sufficient supply at home to meet biodiesel production needs.
