Jakarta. Indonesia’s plan to implement B50 biodiesel in 2026 will partially reduce palm oil exports but create up to 2.5 million new jobs, Energy and Mineral Resources Minister Bahlil Lahadalia says. Most of the employment gains are expected in palm oil plantations and processing plants.

B50 biodiesel, which contains a 50 percent blend of crude palm oil (CPO), is designed to boost domestic palm oil demand, cut reliance on imported diesel, and strengthen the national economy. “If we convert to B50 biodiesel, we no longer need imports. This will retain foreign exchange and create more jobs in the palm oil sector because demand for CPO will rise,” Bahlil says during a press briefing at the Energy Ministry in Jakarta on Tuesday.

To meet the increased CPO demand, the government plans three strategies: intensifying existing plantations, opening new plantations, and partially reducing exports. Any export reduction will be managed through a domestic market obligation (DMO) policy with competitive pricing to balance domestic supply and stimulate regional economies. “Some exports will be reduced, applying DMO with prices appropriate for domestic markets. The President instructs that prices benefit our country, which also triggers local economic growth,” Bahlil adds.

Indonesia’s CPO exports already show signs of adjustment. In 2024, export volume dropped to 21.6 million tons, down 17.3 percent from 2023, while export value fell to $20.01 billion, a decline of 11.8 percent. The decrease is attributed to higher domestic demand for consumption and biodiesel, as well as stagnant production due to the effects of El Nino and plantation rejuvenation programs.

The B50 program is also intended to replace the remaining diesel imports under the current B40 policy. In 2025, Indonesia is projected to import around 4.9 million kiloliters of diesel, about 10.6 percent of total national demand. Increasing the share of fatty acid methyl ester (FAME) in diesel through B50 allows the country to meet domestic fuel needs entirely from local resources.

Indonesia is currently conducting road tests on B50 to evaluate its performance in vehicles. Bahlil says the tests, which may take six to eight months, aim to ensure that the fuel is ready for national use. If successful, the country could stop importing diesel as early as next year.

Using palm oil-based biodiesel has already helped Indonesia save at least $40.71 billion in foreign exchange between 2020 and 2025, as the mandate gradually increased from B30 to B40. Government estimates show that B50 alone could save $10.84 billion in 2026, while supporting energy independence and driving economic growth in rural areas.

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