B35 to Spur 2 Million-Ton Increase in Domestic Palm Oil Demand

Jayanty Nada Shofa
February 19, 2023 | 10:14 pm
SHARE
B20, B30, and B100 biofuel samples seen in Jakarta on Feb. 26, 2019. (Antara Photo/Aprillio Akbar)
B20, B30, and B100 biofuel samples seen in Jakarta on Feb. 26, 2019. (Antara Photo/Aprillio Akbar)

Jakarta. The B35 policy -- which increases the palm-oil based biodiesel blend from 30 percent to 35 percent -- could increase domestic demand for palm oil by 2 million tons, an industry executive has said.

“Switching from B30 to B35 will potentially spur a 2 million ton increase in [domestic palm oil] demand,” Santosa, the chief executive officer at the palm oil giant Astra Agro Lestari said at a recent media brief in Salatiga.

According to Santosa, domestic palm oil demand will rise between 3 and 3.5 million tons every time the government increases the biodiesel blend by 10 percent.

“Indonesia is the world’s largest producer and consumer of palm oil, especially now with the B35 mandate,” Santosa said. 

Advertisement

When asked by reporters if the biodiesel has an impact on Astra Agro’s profitability, Santosa replied: “We sell our palm oil at home, but also export them. It all comes down to which market gives the best price.”

This means that Astra Agro Lestari has the option to pick the market in which the company can make the most money.

Indonesia is implementing the biodiesel program in a bid to cut diesel fuel imports, among others. The Oil Palm Plantation Fund Management Agency (BPDPKS) collects palm oil export levies. As biodiesel costs more than diesel, the BPDPKS will chip in from the collected levies to cover the price gap. Santosa revealed Indonesia’s annual palm oil exports topped 30 million tons or about two-thirds of the country’s total production. 

“It is best to stop at B40. Indonesia should allocate most of its palm oil for export because we need to provide subsidies [for biofuel]. There are times when palm oil and diesel prices differ. That would call for subsidies, but who will provide them if there are no exports and levies?” Santosa said.

Read More:

The B35 mandate came into force on Feb. 1, 2023. 

Government data showed the distributed biodiesel during the B30 program last year stood at more than 10.5 million kiloliters. B30 has helped Indonesia to save $8.34 million in foreign exchange, which would have otherwise been used on oil imports. The government claimed the B30 program absorbed more than 1.3 million workers and slashed 27.8 million tons of carbon dioxide emissions. 

With B35 now in effect, the disbursed biodiesel is expected to reach 13.15 million kiloliters this year. The 35-blend mandate will likely save up to $10.75 billion in foreign exchange, and bring added value worth Rp 16.76 trillion (about $1 billion) to the downstream industry. The reduced carbon emission is forecast to reach 34.9 million tons.

The government has already concluded the road tests for the B40 blend last year.

Tags: Keywords:
SHARE

Related Articles


Business Mar 17, 2025 | 3:04 pm

Indonesia's Palm Oil Export Soars 58 Pct to $2.27 Billion

Indonesia's palm oil exports also jumped 89.54 percent year-on-year in February, according to BPS.
Business Feb 18, 2025 | 10:14 am

Indonesian Palm Oil Export Sees Double-Digit Drop to $1.44 Billion

Indonesian CPO exports had fallen 24.1 percent from $1.89 billion in December 2024 to $1.44 billion the following month.
News Feb 14, 2025 | 3:34 pm

Climate Change Costs Palm Oil Industry Billions in Lost Yields

Climate change threatens palm oil yields in Indonesia and Colombia. Scientists develop drought-resistant varieties to secure production.
News Feb 14, 2025 | 8:31 am

Indonesia’s Palm Oil at Risk as Rising Temperatures Kill Pollinating Beetles

Climate change is endangering Elaeidobius kamerunicus, the primary pollinating beetle for oil palm.
News Feb 13, 2025 | 12:56 pm

ICOPE 2025: Government Urges Sustainable Palm Oil Practices to Curb Deforestation

At ICOPE 2025, officials called for integrating palm oil cultivation with forest conservation to curb deforestation.
News Feb 12, 2025 | 12:18 pm

WWF-Indonesia: Conservation and Palm Oil Can Coexist

WWF-Indonesia pushes for sustainable palm oil with traceability, conservation, and certification efforts at ICOPE 2025 in Bali.
Business Feb 12, 2025 | 10:38 am

ICOPE 2025: Striking a Balance Between Palm Oil Growth and Sustainability

Indonesia pushes for sustainable palm oil at ICOPE 2025, balancing growth & environment with ISPO certification & eco-friendly practices.
Business Jan 31, 2025 | 1:45 pm

Indonesia to Set Up Watchdog for B40 Biodiesel 

The team will make sure whether the biofuel has a 40 percent palm oil blend.
Business Jan 2, 2025 | 8:43 am

Indonesian Gov't Told to Rethink CPO Export Levy Hike

World’s largest palm oil producer Indonesia is currently mulling raising the export levy on CPO from 7.5 percent to 10 percent.
Business Dec 5, 2024 | 11:47 am

Indonesia Targets End to Diesel Imports by 2026

According to data, Indonesia imported nearly 27 million kiloliters of oil fuel in 2023, including 5.1 million kiloliters of diesel.

The Latest


News 19 hours ago

What to Know About the Funeral and Burial of Pope Francis

ope Francis, the first Latin American pope, will be buried at St. Mary Major after a Vatican funeral, marking the end of his 12-year papacy.
News 21 hours ago

Norwegian Man Found Dead in River in West Sumatra

A 71-year-old Norwegian man was found dead in a West Sumatra river after reportedly falling from a bridge while cycling.
Lifestyle 21 hours ago

W. Java Governor Proposes China-Inspired Military Rehab for Depok Teens

Dedi Mulyadi proposes military-style rehab for troubled Depok teens, citing rising student brawls and parental frustration.
News Apr 26, 2025 | 12:32 am

Doctors or Sexual Predators?

To whom do we turn to when we fall sick when a number of doctors are sexual predators?
News Apr 25, 2025 | 10:06 pm

Gaza's Food Stocks Depleted Under Israel Blockade

The UN’s World Food Program says its food stocks in Gaza have run out, deepening the humanitarian crisis as Israel's blockade persists.
COPYRIGHT © 2025 JAKARTA GLOBE. ALL RIGHTS RESERVED