Biofuel: Amidst the rise in oil prices due to the war in Iran, Indonesia has announced the launch of biofuel B50. It is a blend of 50% palm oil-based biodiesel and 50% conventional diesel. This fuel is currently being tested and is expected to be in use by July.

Its impact on India

India imports more than 50 percent of its palm oil requirements from Indonesia. In such a situation, if its consumption increases in Indonesia, then the supply to India may decrease. If there is a reduction in supply, then edible oil or oil used for cooking will become more expensive in the country.

Palm oil is used for making biscuits and everyday items like namkeen, soap, shampoo etc. In such a situation, if the expenditure on import of palm oil will increase, then obviously the prices of all these products will also increase. This may increase inflation.

What is Indonesia’s plan?

By 2025, Indonesia’s net imports of crude oil will be about $7.8 billion. The proposed B50 biodiesel program aims to partially replace these imports with palm oil-based fuel. This policy initiative comes amid growing geopolitical uncertainties and the recent surge in global oil prices, which have crossed $100 per barrel in recent days.

The policy is also in line with Indonesia’s comprehensive Sustainable Aviation Fuel (SAF) Roadmap. From 2027, the government has indicated that flights operating out of Soekarno–Hatta International Airport and I Gusti Ngurah Rai International Airport may begin using approximately 1% of SAF blended aviation fuel, which will likely be derived from palm oil. However, the initial blending ratio is modest, indicating Indonesia’s intention to expand its biofuel strategy beyond road transportation to the aviation sector.

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