NUSA DUA, BALI – The Indonesian government\u2019s plan to implement the mandatory program of biodiesel 50 percent (B50), as an upgrading of the current B40 program, has again triggered a public debate, especially among the analysts and vegetable oil industry players.<\/p>\n
On one side, Indonesia is pushing for acceleration of the B50 program as a way to strengthen its national energy resilience. But on the other side, accelerating the biodiesel mandatory program has started pressuring the stability of palm oil market and creating a significant fiscal risk.<\/p>\n
A number of analysts have stated that instead of accelerating it, the government should consider its flexibility in such a way not to create new pressures on the palm oil market.<\/p>\n
During an interview on the sidelines of IPOC 2025 at BICC The Westin Nusa Dua, Bali, Managing Director of Glenauk Economics, Julian Conway McGill said that the acceleration rate from B30 to B40, and to B50, has created an over-expectation in the global market.<\/p>\n
As a result, the price of palm oil is still high as the market is anticipating the demand increase due to the expected implementation of B50 program.<\/p>\n
\u201cIndonesia\u2019s biodiesel program has been very successful, even too successful,\u201d he said on Friday (14\/11\/2025).<\/p>\n
He pointed out the success had triggered the price increase of CPO when the price of diesel fuel at global market reached the lowest, creating an widening spread.<\/p>\n
According to McGill, such condition had resulted in the increasingly heavy burden of financing B40. It will further increase if the government rushes to implement the B50 in the near future.<\/p>\n
The increase of export levy is also inevitable, and it will reduce the competitiveness of palm oil export while reducing the incentive to invest in the upstream oil palm sector.<\/p>\n
He highlighted the more basic condition: the stagnant productivity of Indonesia\u2019s palm oil. The problem of legality and high levy will discourage investors to do expansion. \u201cIt\u2019s impossible for productivity to increase if the tax burden continues to pressure prices,\u201d he said.<\/p>\n
McGill warns that if production not increase, while the need for biodiesel production continues to rise, \u00a0Indonesia will enter a difficult cycle: Exports decrease, income from levy drops when it is expected to rise.<\/p>\n
Such condition will be increasingly felt in sensitive markets like those of India and Pakistan, where consumers will quickly turn to other vegetable oils when the palm oil price increase. Palm oil is also less competitive in China and Europe, which had been flooded with soybean and affected by tight regulations.<\/p>\n
From industrial perspective, McGill sees the local production capacity of biodiesel is not yet enough to fully support the B50 program. \u201cAdditional investments are needed before the B50 can be fully implemented,\u201d he said.<\/p>\n
But despite the fact, he admitted the technical capability of Indonesia in realizing high level of biodiesel mixture from B10 to B40 in a relatively short time as a big achievement. He urged the government to adopt a more flexible approach, instead of seeking to accelerate the implementation of B50.<\/p>\n
McGill offers a model of flexible mandatory, such as the sugar \u2013 ethanol model adopted by Brazil. When the price of CPO is high, the government can reduce the absorption of biodiesel to maintain the cost under control. Conversely, when the price drops, the absorption can be raised. \u201cWith the choice of right time, Indonesia can get the volume of biodiesel four times higher with the same cost,\u201d he said.<\/p>\n
He said the success of B50 is not measured by how quickly the program is implemented. \u201cThe question is not whether Indonesia is capable or not, but whether it is the right time or not,\u201d he said.<\/p>\n
According to McGill, the resilience of energy can be far more effectively achieved through policies that are adjusted to momentum, not acceleration without calculation.<\/p>\n
Amid the great ambition of Indonesia to strengthen its energy resilience, McGill\u2019s warning is seen as an important message that the success of biodiesel program is not only determined by the high level of biodiesel mixture, but by the ability to maintain the balance between energy, fiscal, industry, and the global market. (*)<\/p>\n","protected":false},"excerpt":{"rendered":"
NUSA DUA, BALI – The Indonesian government\u2019s plan to implement the mandatory program of biodiesel 50 percent (B50), as an upgrading of the current B40 program, has again triggered a public debate, especially among the analysts and vegetable oil industry players.<\/p>\n","protected":false},"author":1,"featured_media":30698,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"neve_meta_sidebar":"","neve_meta_container":"","neve_meta_enable_content_width":"off","neve_meta_content_width":70,"neve_meta_title_alignment":"","neve_meta_author_avatar":"","neve_post_elements_order":"","neve_meta_disable_header":"","neve_meta_disable_footer":"","neve_meta_disable_title":"","neve_meta_reading_time":"","footnotes":""},"categories":[3708,3709],"tags":[],"class_list":["post-30697","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-publication","category-recent-news"],"yoast_head":"\n