Indonesia, the world’s largest palm oil producer, is set to increase its biodiesel production in 2025, impacting overall export volumes. Despite a projected rise in crude palm oil production to 50 million metric tons from 48.16 million metric tons in 2024, exports are expected to decline by 7.3% to 27.35 million metric tons due to increased domestic demand.
The full implementation of Indonesia’s B40 biodiesel program, which blends 40% palm oil fuel, is a key driver of this shift. The government has been working to reduce reliance on imported diesel while strengthening the country’s renewable energy initiatives. This transition, alongside rising biodiesel consumption—forecasted to reach 13.6 million metric tons in 2025—has tightened supplies and influenced global pricing dynamics.
Indonesia funds its biodiesel program through an export levy, which helps subsidize production and support market stability. For 2025, the government has allocated 35.47 trillion rupiah ($2.2 billion) to sustain the initiative without requiring adjustments to existing export levies.
As Indonesia strengthens its position in the global biofuel industry, international markets will closely watch how shifting supply and demand influence trade flows and price trends in the edible oil sector.
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