Indonesia intends to finish research into biodiesel fuels with a 40% bio-content (B40) by November 2020 and to implement the mandatory use of B40 in July 2021. The country originally planned to start road tests using biodiesel fuels with a 40% bio-content (B40) in March 2020 and to impose its use in January 2021, but that was delayed because of the coronavirus outbreak. With biodiesel development, Indonesia seeks to reduce its energy imports and promote new opportunities for its palm oil industry.
In May 2020, Indonesia decided to inject US$186m in the Estate Crop Fund as well as to increase the levy on palm export by 10% to US$55/t, in a bid to fix its biodiesel support programme funding issues. The fall in global crude oil prices has more than doubled the gap between the costs of fatty acid methyl ester (FAME) and diesel between January and May 2020, making biodiesel more expensive to subsidise for Estate Crop Fund, which subsidises the cost difference between the two fuels. The levy on palm oil exports applies when palm price exceeds US$619/t.