Advertise
Thailand is aggressively accelerating the adoption of bio-based fuels through strategic fiscal measures. Effective from October 28, 2026, until January 27, 2027, the government has implemented excise tax cuts on two key blended fuels: B20 biodiesel and E20 gasohol. Announced by Prime Minister Anutin Charnvirakul, the policy aims to alleviate energy costs for households and transport operators while stimulating domestic agricultural-based fuel production.
The impact has been immediate. According to government figures, daily B20 consumption surged from approximately 5–6 million litres to 9 million litres following the tax reduction. B20, a diesel blend containing roughly 20% biodiesel, is primarily palm-based in Thailand. Meanwhile, E20 consists of petrol blended with 20% ethanol derived from sugar cane, molasses, and cassava. The tax cut has widened the price gap, making B20 about 10 baht (IDR 4,800–5,000) cheaper per litre than regular diesel, incentivising fleet operators to switch.
While the headline consumption figures are impressive, analysts note that the implied volume of neat biodiesel is around 1.8 million litres per day. The USDA Biofuels Annual projects Thai biodiesel production to reach 1.77 billion litres in 2026, a 22% increase from the previous year and the highest level since 2020. This recovery follows an earlier shift in the national blend standard from B5 to B7 in March 2026. Consequently, the demand for Crude Palm Oil (CPO) as a feedstock is expected to rise from 1.09 million tonnes in 2025 to 1.35 million tonnes in 2026.
To ensure domestic supply security, Thailand has tightened export controls, requiring approval from the Department of Internal Trade (DIT) for CPO exports since April 2026. The government is also considering maintaining a 20% national CPO stockpile to mitigate production risks related to El Niño. With Indonesia producing 47 million tonnes of palm oil annually—roughly twelve times Thailand’s output—stronger Thai demand could create significant export opportunities for Indonesian CPO and derivatives if local Thai supply falls short.
However, the extent of the impact on the Indonesian market will be shaped by three critical factors: the price spread between palm oil and gas oil, global supply availability, and the logistics of regional trade. For now, Thailand’s policy shift serves as a bullish signal for regional palm oil demand sentiment.
Source: Indonesian Palm Oil Association (GAPKI)