JAKARTA – Indonesia’s mandatory program of biodiesel 40 (B40) production, which has been implemented since January 2025, is facing a number of serious challenges, especially with regard to the limited production capacity of biodiesel plants in the country.
Bioenergy Director at the ministry of energy and mineral resources (KESDM), Edi Wibowo said in Jakarta on Tuesday (6/5/2025) that the challenges emerged after the government upgraded the implementation of biodiesel mandatory program based on blending of diesel fuel and fatty acid methyl ester (FAME) from palm oil from B35 to B40 since January 2025.
He said that currently the production of biodiesel has reached the maximum limit of existing biodiesel industries. “Production has reached around 80 percent of the installed production capacity. It shows that our production capacity is now tightening and needs to be increased soon to secure supply of B40 in the future to meet the rising need,” he said in a press statement in Jakarta on Tuesday (6/5/2025).
To anticipate the rising demand, the government is seeking new investments from new partners to increase the production capacity of biodiesel and bioetanol plants.
Such a step is seen crucial to maintain the continuation of the national program of renewable energy.
Latest data shows that until April 2025, distribution of B40 had reached 4.3 million kiloliters. Interestingly, the distribution from non-public service obligation (non-PSO) sector surpassed the contribution from distribution under the PSO scheme.
Based on the government’s estimation, the implementation of B40 program has the potential to reduce Indonesia’s reliance on imports of fossil fuels and contribute to saving of foreign exchange up to Rp147.5 trillion, which is higher than the saving from B35 program at around Rp122.98 trillion.
Based on the energy and mineral resources minister decree No. 341.K/EK.01/MEM.E/2024, the implementation of biodiesel program is financed by the oil palm plantation fund management board (BPDPKS).
Currently, the distribution of biodiesel B40 is conducted by 24 biofuel companies, supported by two oil-gas companies for distribution of biodiesel under PSO and non-PSO schemes, and 26 oil-gas companies for distribution of biodiesel under non-PSO scheme.
Meanwhile, the market price index (HIP) of biodiesel in May 2025 is set at Rp13,742 per liter, excluding cost of transportation. The conversion of crude palm oil (CPO) to biodiesel is set at US$85 per ton. (*)
