B40 Takes Effect on 1 January 2025: 15.6 Million kL Allocated, Incentives Only for 7.55 Million kL

Jakarta — Indonesia's 40% biodiesel mandate (B40) officially took effect on 1 January 2025 under ESDM Ministerial Decree No. 341.K/EK.01/MEM.E/2024. The 2025 biodiesel allocation is set at 15.6 million kL, of which 7.55 million kL goes to the public service obligation (PSO) segment and 8.07 million kL to non-PSO users. Only the PSO volume will have its price gap covered by the palm oil fund managed by BPDPKS.

Energy and Mineral Resources Minister Bahlil Lahadalia announced the decision at a press conference at the Ministry of Energy and Mineral Resources (ESDM) in Jakarta on Friday, 3 January 2025. According to the ministry's press release, the decree governs the use of biodiesel as a 40% blend in diesel fuel within the BPDPKS financing framework. It raises the blend from the B35 level in force throughout 2024.

15.6 million kL allocated, more than half without incentives

ANTARA news agency reported that biodiesel volume rises from about 12.09 million kL under B35 to 15.62 million kL under B40. The decree also sets allocations for each fatty acid methyl ester (FAME) producer and for each company that carries out blending.

The most notable change is in the incentive scheme. As quoted by Bloomberg Technoz, Bahlil said the PSO share of the 15.6 million kL total is around 7.55 million kL. He defined PSO as the volume whose price gap is borne by the state. For non-PSO volume, Bahlil said market prices would be the same, but the state would not cover the incentive. Bloomberg Technoz wrote that the split was made because BPDPKS funds are insufficient to cover incentives for the entire B40 volume.

Note that the official ESDM figures — 7.55 million kL PSO and 8.07 million kL non-PSO — add up to 15.62 million kL, matching the figure cited by ANTARA, while officials often round it to 15.6 million kL.

Supply chain and transition period

According to ESDM, B40 distribution involves 24 biofuel producers (BU BBN) supplying biodiesel. Downstream, 2 fuel companies distribute B40 to both PSO and non-PSO segments, while 26 fuel companies distribute B40 to non-PSO customers only.

Although the mandate applies from 1 January, full implementation is not immediate. Deputy Minister Yuliot Tanjung, quoted by ANTARA, said the government is allowing about 1.5 months to use up existing stock and adjust blending technology, so full B40 use is expected only in February 2025. Speaking to Listrik Indonesia, Yuliot said the 15.6 million kL quota will be distributed gradually through the end of the year, after the government verified that biofuel producers can meet technical specifications.

Claimed benefits and the next target

EBTKE Director General Eniya Listiani Dewi presented the programme's projected benefits at the same event. Based on ESDM data, the government's estimates for B40 are:

• Foreign exchange savings of IDR 147.5 trillion, about IDR 25 trillion more than the B35 projection of IDR 122.98 trillion.
• Added value from processing CPO into biodiesel of IDR 20.9 trillion.
• Employment for more than 14,000 off-farm workers and 1.95 million on-farm workers.
• Emission reductions of 41.46 million tonnes of CO2e per year.

These figures are government projections, not realised outcomes. Bahlil linked the policy to President Prabowo Subianto's energy security agenda and the 2060 net zero emission target. He also said that if B40 performs well, the government will push for B50 in 2026 and aims for Indonesia to stop importing diesel that same year.

For industry, the PSO/non-PSO split is the key issue this year: buyers of non-PSO volume must still use B40, but without the price gap being covered by the palm oil fund. Related regulations are listed on the biodiesel regulations page.