Indonesia has officially launched its mandatory B50 biodiesel programme, a policy that is expected to have significant implications for the country's automotive and transport sectors by increasing the use of biofuel-powered vehicles while reducing dependence on imported diesel.

President Prabowo Subianto inaugurated the Mandatory B50 Biodiesel Programme at the KM 57 rest area in Karawang, West Java, on July 9th. The B50 programme, which took effect in July, requires diesel fuel to contain a 50% biodiesel blend. Under the policy, biofuel producers, fuel suppliers and distributors are required to comply with government specifications, technical requirements and quality standards.

The legal basis for the programme is Ministerial Regulation No. 4 of 2025 concerning the Business and Utilisation of Biofuels and Ministerial Decree No. 257.K/EK.01/MEM.E/2026 concerning the Mandatory Blending of Biodiesel with Diesel Fuel at 50%.

Diesel imports eliminated

Minister of Energy and Mineral Resources (ESDM) Bahlil Lahadalia stated that the implementation of the B50 mandate has enabled Indonesia to stop importing diesel fuel for the first time.

"With the implementation of B50, Alhamdulillah, we no longer import diesel products into our country. This is the first time, Mr. President," Lahadalia said during the launch ceremony.

According to Lahadalia, Indonesia consumes approximately 38 million to 40 million kilolitres of diesel fuel annually, much of it in the transportation, logistics and commercial vehicle sectors. The country previously imported between 3 million and 4 million kilolitres each year. Those imports have now been eliminated following the rollout of the B50 mandate.

Lahadalia described the programme as more than the introduction of a new fuel blend, characterising it as a step towards achieving national energy sovereignty. He stated that the policy supports President Prabowo's agenda of strengthening energy security by reducing dependence on imported fuels.

According to Lahadalia, President Prabowo has instructed the ministry to accelerate efforts to achieve greater energy independence.

"We interpret the President's directive not merely as implementing B50, but as a broader mission to strengthen our sovereignty, self-reliance, and national dignity by producing energy from our own resources," he said.

For the automotive industry, the policy is expected to support wider adoption of biodiesel-compatible vehicles while strengthening the domestic fuel supply chain. The government expects the B50 mandate to reduce fuel imports, increase the value added of Indonesia's natural resources, and strengthen the country's energy security, economic resilience and competitiveness.

Government highlights vehicle compatibility and fuel quality improvements

Lahadalia also stated that B50 biodiesel has demonstrated compatibility with vehicles produced by both Asian and European manufacturers, a key consideration as Indonesia expands the use of higher biodiesel blends across its vehicle fleet.

"It's not only tested on Toyota, but also good on Mercedes," he said.

Based on approximately six months of testing, Lahadalia stated that B50 demonstrated better performance than the previous B40 biodiesel blend. According to him, the assessment was based on the frequency of fuel filter replacements required during road testing.

Under the B40 programme, filters generally required replacement every 10,000km to 20,000km. However, during B50 testing, some vehicles reportedly travelled up to 40,000km without requiring a filter replacement. Lahadalia said the results indicate that B50 performed better than B40 and support its use across a range of passenger and commercial vehicles.

The government's emphasis on vehicle compatibility and durability is aimed at ensuring a smooth transition for motorists, fleet operators and logistics companies as the higher biodiesel blend becomes widely available.

Methanol industry expansion planned

To support the implementation of the B50 programme, the government plans to expand domestic methanol production capacity. Lahadalia said Indonesia requires approximately 2.5 million tons of methanol annually to support B50 biodiesel production.

"The need for methanol for B50 is around 2.5 million tons per year. The next step is to push for the immediate development of the methanol industry," he said after the programme's launch.

The government plans to begin preparations in July 2026 for the construction of a methanol plant in Bojonegoro, East Java, which will use natural gas as its feedstock. In addition, a second methanol facility will be developed in East Kalimantan using coal as its raw material as part of Indonesia's coal downstream processing strategy.

"The one in East Kalimantan is part of the downstream coal industry," Lahadalia said.

He added that the government expects the new facilities to enable Indonesia to meet domestic methanol demand associated with the B50 programme, supporting long-term fuel supply requirements for the transport sector.

Higher demand for biodiesel feedstocks

The transition from B40 to B50 is expected to increase demand for biodiesel feedstocks and related raw materials. According to Lahadalia, demand for fatty acid methyl ester (FAME), the primary biodiesel component, will increase from 14.9 million kilolitres under the B40 programme to between 16.7 million and 18 million kilolitres under B50.

At the same time, crude palm oil (CPO) demand is expected to rise from 13.6 million tons under B40 to between 15.2 million and 16.3 million tons under the new programme.

Lahadalia said the additional demand could provide greater market certainty for Indonesia's palm oil sector and strengthen the domestic biodiesel supply chain that supports the country's transport and automotive sectors.

"If the price of CPO abroad is low and other countries don't want it, we'll set aside some for the B50 programme. This will increase prices for farmers, improve industries, and improve the country's prosperity," he said.

The government views the programme as a key component of its broader strategy to increase the value added of domestic natural resources, support downstream industries, reduce fuel imports and strengthen Indonesia's long-term economic and energy resilience. For the automotive sector, the B50 mandate represents the latest step in Indonesia's efforts to expand the use of alternative fuels while maintaining compatibility with existing vehicle technologies.