Global Oil Price Increase Evaluated to Strengthen the Urgency of Implementing B50 Biodiesel

JAKARTA - The increase in world oil prices triggered by the escalation of geopolitical tensions in the Middle East is considered to strengthen the urgency of accelerating the implementation of mandatory biodiesel 50 percent or B50 in Indonesia.

The Executive Director of the Palm Oil Agribusiness Strategic Policy Institute (PASPI) Tungkot Sipayung said that the acceleration of the policy could be a strategic instrument to reduce Indonesia's dependence on fossil energy imports.

According to him, the surge in global oil prices has the potential to increase pressure on the country's finances.

"Every increase in the price of imported petroleum by US$10 per barrel can add to the state budget burden of around Rp20 trillion to Rp30 trillion," he said in Jakarta, Tuesday, March 17.

He explained that the Middle East region, especially the energy distribution line in the Strait of Hormuz, supplies about 20-30 percent of the world's fossil energy needs.

This condition makes oil-importing countries such as Indonesia vulnerable to global energy price fluctuations.

In this context, the development of new and renewable energy, including palm oil-based biodiesel, is considered an important instrument to strengthen national energy resilience.

Indonesia itself has implemented a mandatory biodiesel policy since 2009, starting from a B1 mixture and continuing to increase until it reaches B40 in 2025.

Tungkot assessed that the national biodiesel industry ecosystem that has developed to the B40 stage is a strong capital to encourage the implementation of B50.

In terms of industrial capacity, national biodiesel production reaches around 22.5 million kiloliters per year, so it is considered capable of supporting the implementation of B50.

The program is estimated to require around 20 million kiloliters of palm biodiesel (fatty acid methyl ester/FAME), which requires a supply of crude palm oil (CPO) raw materials of around 16-18 million tons.

Meanwhile, the national CPO and CPKO production in 2025 was recorded at around 57 million tons.

However, the increase in the allocation of CPO for domestic biodiesel needs has the potential to reduce export volumes in the short term if production does not increase significantly.

Previously, Energy and Mineral Resources Minister Bahlil Lahadalia stated that the government was considering accelerating the implementation of B50 to anticipate the impact of the conflict in the Middle East and continue the mandatory B40 program.

According to the Ministry of Energy and Mineral Resources, the implementation of B40 has provided economic benefits in the form of reducing oil fuel imports and increasing the country's foreign exchange savings.