Despite Soaring Palm Oil Prices, Indonesia’s B30 Program will continue

About 85% of the world's palm oil supply comes from Indonesia and Malaysia combined. These countries use palm oil as a biodiesel blend, with Indonesia adopting a mandated B30 - a biodiesel containing 30% palm-based fuel - since early 2020, the highest mandatory mix in the world, to reduce diesel imports and boost domestic production. Indonesia, being the world's largest producer and exporter of palm oil, has gradually increased the bio content of its biodiesel in order to absorb rising palm oil supply while reducing the cost of imported fuel. Fatty acid methyl esters (FAME) manufactured from palm oil have been required in the 20 percent bio mix of biodiesel marketed across Indonesia since late 2018.

"Indonesia is the first country in the world to implement B30," as per an industrial expert. According to Indonesian President, so-called "B30" biodiesel will allow the country to save 63 trillion rupiah ($4.5 billion) per year on fossil fuel imports, up from 43.8 trillion rupiah saved in 2019 from existing B20 fuels. "This scheme would also assist the country preserve a market for a critical item rather than relying on exports," he continued. Indonesia will be the key driver for boosting the use of vegetable oil as a feedstock for biodiesel in the decades ahead, according to the Organization for Economic Cooperation and Development (OECD) and the United Nations Food and Agriculture Organization (FAO).

Biodiesel consumption is expected to grow by 7% over the next ten years, with Indonesia accounting for two-thirds of the growth. The Indonesian government had planned to increase its palm oil blending rule to 40%, or 'B40,' in 2021, but due to record-high palm oil prices and decreasing fuel usage, the implementation date has been moved back to 2022. Indonesia's biodiesel blending rate is expected to remain around 30% for the projected period of 2021-2030.