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MarketScreener reported that an official from Indonesia's Ministry of Energy and Mineral Resources said on Tuesday that the ministry had issued a decree allocating 15.65 million kilolitres of palm oil-based biodiesel for the country's fuel-blending programme in 2026.
Of that total volume, 7.45 million kilolitres has been earmarked for the Public Service Obligation (PSO) sector, which covers areas such as public transport. Fuel sold under this category will be subsidised through Indonesia's palm oil fund.
Eniya Listiani Dewi of the Ministry of Energy and Mineral Resources said the remaining 8.20 million kilolitres would be supplied outside the PSO scheme and sold at market prices.
Indonesia's 2026 allocation is slightly higher than the 15.6 million kilolitres set for 2025.
The country currently mandates a 40% palm oil-based biodiesel blend in diesel fuel, known as B40, and plans to raise that share to 50% from next year, as part of efforts to cut reliance on imported fossil fuels.
Road tests for the proposed 50% blend, known as B50, began in early December and are expected to run for around six months. Energy Minister Bahlil Lahadalia said the mandatory rollout of the higher blend is likely to begin in the second half of 2026.
According to the Indonesian Biodiesel Producers Association (APROBI), implementing the B50 mandate could require as much as 19 million kilolitres of palm oil-based fuel annually.
APROBI Secretary General Ernest Gunawan said the plan would move forward if vehicle test results are satisfactory and sufficient feedstock is available. He added that the ministry may revise the current allocation decree in the second half of the year to align with the higher blending requirements.
Indonesia's palm oil stocks fell 10% in October from the previous month to 2.33 million tonnes, despite higher production. Domestic consumption rose 8.5% to 2.22 million tonnes, driven by strong demand growth for both biodiesel and food use.
As the world's largest palm oil producer, Indonesia may also consider regulating crude palm oil exports to ensure sufficient domestic supply to meet biodiesel production needs.
Source: MarketScreener