Jakarta. Indonesian palm oil producers said Wednesday that the feasibility of raising the biodiesel mix — even to a “B60” — would boil down to whether Jakarta could jump-start its stalling output.

Geopolitical tensions linked to Iran and the Strait of Hormuz have sent oil prices to surpass $100 a barrel for the first time since 2022. And this has fueled Jakarta’s biodiesel ambitions. Indonesia’s mandate for B40, which uses a blend of 40% palm oil-based biodiesel, has been in place over the past year. The number represents the quantity of the mandatory biodiesel mix. As push comes to shove, the government wants to raise it to B50, and is now even mulling raising it to B60.

The Indonesian Palm Oil Association (Gapki) has suggested it would be best to tread carefully on this plan. Gapki chairman Eddy Martono said Jakarta would need to produce crude palm oil (CPO) way beyond the current volumes if it sought to forge ahead with the higher biodiesel mandate. This way, the country will not have to sacrifice its exports for local supply if it doesn’t want the biodiesel program to lose its source of funding.

“Our production is stagnant. Forcing [a higher biodiesel mix] will only undermine our export. The only solution is to boost output by improving productivity,” Eddy told reporters.

Eddy went on to say how “no dime of the state budget has been spent on biodiesel”. All this time, Indonesia has been subsidizing biodiesel through palm oil export levies. The levy currently stands at 12.5% of the CPO reference price. Fewer exports would mean cuts to levy collection, thereby possibly fueling budget constraints for the biodiesel program. 

The B50 would require 16 million tons of crude palm oil, according to Gapki. The group estimated that the nationwide CPO output totaled 51 million tons throughout last year. The number reached 56 million tons with palm kernel oil included. 

Eddy said Indonesia actually possessed the potential to produce more palm oil. But output increases had mainly come from replanting efforts by larger firms. 

The world’s top grower has been running a subsidized replanting program for smallholders — an initiative locally known as Peremajaan Sawit Rakyat (PSR). It encourages farmers to replace ageing, non-productive trees with high-quality seeds to boost yield. However, the progress of this nearly decade-old PSR program has been “stagnant”.

“In some cases, the farmers don’t want to chop off their existing trees because they are worried they won’t be able to feed their families. … But this program actually benefits them. Maybe Indonesia should make replanting mandatory,” Eddy said.

Local news outlet Bloomberg Technoz, quoting Energy Minister Bahlil Lahadalia, wrote that Indonesia would conclude the tests for the B50 mandate in the second half of 2026. If geopolitical tensions persist, Indonesia would consider “pushing it up to B60” while offering little clarity on the timeline. 

“We are all putting our thinking caps on to use all of our domestic energy sources. Hopefully, this will enhance our national energy security,” Bahlil said on Tuesday.

Indonesia produced 14.2 million kiloliters of B40 biodiesel throughout 2025. The country was able to save Rp 130.2 trillion ($7.7 billion) in foreign exchange as diesel imports dropped 3.3 million kiloliters, government data showed.

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