Research Brief: USDA — Indonesia's 2026 Biodiesel Use Seen at 17.5 Billion Litres, BPDP Fund Halved

The US Department of Agriculture (USDA) attaché office in Jakarta projects Indonesia's biodiesel consumption at 17.5 billion litres (17.5 million kL) in 2026, up 17% from 2025, driven mainly by the switch to B50 in July 2026. The projection appears in the GAIN report "Indonesia: Biofuels Annual" (ID2026-0033), published by the USDA Foreign Agricultural Service (FAS) on 14 August 2026. The same report says the palm oil fund managed by the Plantation Fund Management Agency (BPDP) shrank by half to IDR 18.5 trillion at the end of 2025.

Key findings

• Consumption and production. Biodiesel consumption is expected to reach 17.5 billion litres in 2026, while production is forecast at 17.6 billion litres, up 2.6 billion litres from 2025. The attaché expects actual consumption to land at 92–98% of the total allocation.
• Allocation and effective blend. According to the report, the government raised the 2026 biodiesel allocation from 15.6 billion to 17.6 billion litres. Because B50 only took effect in the second half with a three-month transition, the average on-road blend rate for 2026 is projected at 41.0%, with on-road diesel use of about 39 billion litres.
• Plant capacity. Nameplate capacity is projected to reach 22 billion litres in 2026, 12% higher than the previous year, across 36 biodiesel refineries running at 80.0% utilisation.
• BPDP fund under strain. Over the past two years, biodiesel subsidy payments exceeded export levy collections. The fund balance fell from IDR 36 trillion at the end of 2024 to IDR 18.5 trillion (USD 1.1 billion) at the end of 2025. The government responded by raising export levy rates in March 2026.
• Exports and feedstock. Biodiesel exports are expected to be virtually zero in 2026, and crude palm oil (CPO) use for biodiesel is projected at 16,191 thousand tonnes. After waste-feedstock export curbs, used cooking oil (UCO) exports plunged 78% to 69,000 tonnes in 2025, while POME exports fell nearly 98% from 1.5 million tonnes (2024) to 22,000 tonnes.
• Off-road use and HVO. Off-road biodiesel consumption is expected to fall 14% to 1.5 billion litres because the 2026 coal output target was cut to 600 million tonnes from 790 million tonnes in 2025. HVO/HDRD consumption is expected to be virtually zero because no incentive scheme covers it.

Methodology

The Biofuels Annual is a mandatory yearly report from USDA's Jakarta office. This edition was prepared by Arif Rahmanulloh and approved by Kristina Schammel. It combines a regulatory review, including ESDM Regulation 4/2025 and ESDM Ministerial Decree 113/2026 on the blending roadmap, with supply-and-use balances for biodiesel and ethanol covering 2017–2026. Historical data come from the Ministry of Energy and Mineral Resources (ESDM), the Indonesian Biofuel Producers Association (APROBI) and Statistics Indonesia (via Trade Data Monitor). The 2026 figures are the attaché's own estimates. The report covers biodiesel, bioethanol and sustainable aviation fuel (SAF), as well as trade and sustainability policy.

Limitations

• Stated in the report: it reflects assessments by USDA staff and not official US government policy.
• Stated in the report: part of the market picture is as of early July 2026, before the B50 transition period ended on 30 September 2026.
• Editor's note: the 17.6 billion-litre allocation differs from the 16.7 million kL B50 allocation for 26 producers set by the government. The report also puts 2025 consumption at 14,940 million litres, while ESDM, as quoted by ANTARA, put 2025 biodiesel use at 14.2 million kL. The report does not explain the gap.
• Editor's note: the report's text says levies on crude products rose "from 9.5 percent to 12 percent", while a table in the same report lists 12.5% for CPO under Finance Ministry Regulation (PMK) 9/2026.
• Editor's note: UCO and POME use as biodiesel feedstock is listed as "na" (not available) in the balance table.

Relevance for B50/B60 policy

The report does not address B60 directly. Its relevance to the debate over higher blends lies in three areas. The first is financing: the attaché describes the BPDP funding mechanism as under mounting strain. The report also expects the agency's expanded remit for coconut and cocoa, which came without a dedicated export levy, to modestly weaken its finances.

The second is the roadmap. According to USDA's summary, ESDM Decree 113/2026 schedules B50 for the PSO segment from 2027 and for all segments in 2028. The decree also makes implementation conditional on three readiness factors: feedstock availability, financing and infrastructure. In practice, the government brought B50 forward to July 2026.

The third is capacity. Last year's edition (ID2025-0029, 13 August 2025) estimated that B50 would require 19–20 billion litres of biodiesel, plus significant additional capacity and subsidies. The 2026 edition now projects 22 billion litres of nameplate capacity and 17.6 billion litres of output.