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<\/p>\nJAKARTA – The Indonesian Palm Oil Association (GAPKI) Chairman Eddy Martono recommends that the government should first improve the implementation of the mandatory program of biodiesel 50 percent (B50) before moving to the B60 program, which is targeted for January 2027.<\/p>\n
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Eddy Martono made the statement during an interview on Metro TV\u2019s \u201cZona Bisnis\u201d<\/em> program regarding the opportunities and challenges associated with B60 biodiesel adoption.<\/p>\n The interview takes place amidst the government’s push to accelerate down-streaming process in the palm-based energy sector including plans to blend crude palm oil (CPO) with hydro-treated vegetable oil (HVO) as a potential B60 formulation option as well as efforts to convert coal into methanol to meet the demand for FAME feedstock, a sector currently facing a supply deficit of 2\u20133 million tons annually, according to the Deputy Minister of Investment and Down-streaming Process.<\/p>\n Eddy emphasized that the implementation of B50 in 2026 is proceeding without significant issues, given the two-month transition period following its launch in July 2026 and the fact that the supply of CPO feedstock remains sufficient.<\/p>\n However, he acknowledged that FAME (Fatty Acid Methyl Ester) production capacity is not yet operating optimally, with current utilization rates hovering between 70% and 80% of maximum capacity a situation whose full impact, he noted, will only become truly apparent in 2027.<\/p>\n Eddy explained that the real challenge would actually emerge in 2027 not regarding the implementation of B60 itself, but concerning the sustainability of the B50 mandate.<\/p>\n He noted that the impact of El Ni\u00f1o hindered fertilization efforts in several plantation areas. However, regions such as Aceh, North Sumatra, West Sumatra, Bengkulu, and parts of North Kalimantan continued to receive rainfall, meaning the decline in production was not as drastic as initially predicted.<\/p>\n He mentioned that while early projections had estimated a production drop of up to 5 million tons, the latest reports suggest the decline will be in the range of 3 million tons. With production in 2025 standing at 32 million tons\u2014and 2026 expected to remain relatively stable or see a slight increase production in 2027 could potentially fall to around 27 million tons, even assuming the mandate remains at the B50 level.<\/p>\n Eddy noted that a decline in production has direct implications for export volumes, which in turn affects revenue from export levies the primary source of funding for biodiesel program incentives or subsidies. He estimated that if the B60 scheme is implemented, the potential drop in exports could be even more severe, with projections indicating a decline to around 23 million tons, meaning revenue from export levy would be further eroded.<\/p>\n Responding to the proposal that the government should prudently consolidate the implementation of B50 first including addressing shortfalls in CPO capacity, FAME production, and distribution infrastructure through 2027 rather than immediately jumping to B60, Eddy expressed his firm agreement. “I agree; that is indeed the right approach,” he stated.<\/p>\n He explained that if Indonesia’s palm oil supply to the global market were to decrease due to the prioritization of meeting domestic mandates, global vegetable oil prices including those for palm oil could rise.<\/p>\n This situation would ultimately impact Indonesia itself, given its position as the world’s largest producer and consumer of palm oil. It is not only the price of cooking oil that could increase, but also the costs of various other derivative products that rely on palm oil as a raw material.<\/p>\n Regarding concerns about the impact of B50 on the engine performance of both passenger vehicles and trucks, Eddy noted that the reports he received actually showed positive results, with no significant issues observed in engines using B50.<\/p>\n However, he emphasized that the implementation of B60 cannot proceed immediately without comprehensive testing, particularly because the planned formulation is not derived solely from Crude Palm Oil (CPO) but also incorporates Hydrotreated Vegetable Oil (HVO). Such changes to the blending composition could potentially affect engine performance, thereby requiring a lengthy testing period.<\/p>\n \u201cIt seems impossible for it to be implemented in January 2027; it simply isn’t feasible because testing must be conducted first,\u201d Eddy asserted. (*)<\/p>\nB50 has no problem this year, but FAME capacity not yet maximum <\/strong><\/h2>\n
Production projection 2027 potential to drop due to El Nino<\/strong><\/h2>\n
Risk of export levy decline<\/strong><\/h2>\n
Endorsing Proposal: Fix B50 first Before Moving to B60<\/strong><\/h2>\n
B50 proven safe for engines, B60 needs testing<\/strong><\/h2>\n
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