Jakarta. Indonesia's nationwide B50 biodiesel mandate will require 23.3 million metric tons of crude palm oil (CPO) each year, an increase of 8.5 million tons from the previous B40 program, according to the Agriculture Ministry.

The B50 policy, which took effect this month, requires diesel fuel to contain 50% palm oil-based biodiesel, up from 40% previously.

“With B50 now in force, Indonesia no longer needs to import diesel because the fuel now consists of 50% domestically produced fossil diesel and 50% biodiesel made from Indonesian palm oil. We only need an additional 8.5 million tons of CPO to move from B40 to B50,” Deputy Agriculture Minister Sudaryono said earlier this week.

To meet the higher demand, the government estimates Indonesia will need about 5 million additional hectares of oil palm plantations capable of producing around 20 million tons of CPO annually, with the potential to generate 11.5 million tons of exports.

Part of the expansion could come from land recently transferred to state-owned plantation company Agrinas Palma Nusantara. The company has taken control of 4.11 million hectares of land confiscated by the government's Forest Area Enforcement Task Force from illegal plantation and mining operations on state-owned land.

About 730,000 hectares of the confiscated land have already been verified as oil palm plantations.

Sudaryono said the Agriculture Ministry, which is responsible for ensuring sufficient CPO supplies for the B50 program, is evaluating the land as part of broader efforts to increase palm oil production.

“Our task is to raise palm oil productivity per hectare while identifying available land suitable for new plantations, including oil palm areas transferred by the Forest Area Enforcement Task Force,” he said.

The biodiesel subsidy program is expected to cost Rp 32.3 trillion ($1.8 billion) this year. It will be financed by the Oil Palm Plantation Fund Management Agency (BPDP) through levies collected on palm oil exports.