Indonesia mulls palm oil export levy hike to support biodiesel mandate

JAKARTA: Indonesia will likely increase its palm oil export levy to support the country’s biodiesel mandate, energy ministry official Eniya Listiani Dewi told reporters on Thursday, citing tightening funds.

Indonesia, the largest palm oil producer, has implemented a mandatory 40% palm-based biodiesel blend, known as B40, the highest blending rate in the world. It seeks to increase the blend to 50% later this year.

Indonesia subsidises its biodiesel programme using proceeds from palm oil export levies, which are currently set at 10% of its monthly reference price for crude palm oil (CPO), with the levy on more refined products ranging between 4.75% and 9.5%.

“Whether it is B40 or B50, it has to be raised, according to an economic affairs ministry study,” Eniya told reporters, adding that the cash reserves managed by the country’s plantation fund were dwindling.

A meeting to discuss the levy hike will be held next week, she added.

Indonesia consumed 14.2 million kilolitres of palm-based biodiesel in 2025, a 7.6% increase compared to the previous year, energy ministry data showed on Thursday.

A road test for B50, which typically takes six months, has started in December, the energy minister said.

The energy ministry has allocated 15.65 million kilolitres of palm-based biodiesel for this year’s blending mandate.