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Indonesia's Biodiesel Consumption to Jump 17% in 2026, USDA Says

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The US Department of Agriculture estimated in its Global Agricultural Information Network report on Friday that biodiesel consumption would reach 17.5 billion liters in 2026, a 17% increase over 2025.

In July 2026, the Government of Indonesia raised the blending mandate from B40 to B50, with a three-month transition period.

The government revised the 2026 biodiesel allocation from 15.6 billion liters to 17.6 billion liters.

Indonesia relies almost exclusively on palm oil as biodiesel feedstock, according to the USDA.

Indonesia continues to advance its biofuels program in 2026, driven by energy self-sufficiency goals, greenhouse gas emission reduction targets, and the national energy transition agenda.

Bioethanol remains an emerging market, the USDA report stated.

Indonesia is working to reactivate its bioethanol mandate program, with the new roadmap setting an E5 mandate for non-public service obligation gasoline beginning in 2026 and scaling to E10 by 2028, with a geographically phased rollout starting in Java, the report showed.

As of early July 2026, the E5 rollout timeline remains unclear. Fuel ethanol blending volumes reached 800,000 liters in 2025 and are forecast at 1.5 million liters in 2026, representing a negligible share of Indonesia's 37-billion-liter gasoline market.

In May 2026, the Ministry of Finance issued PMK 34/2026, exempting fuel ethanol from alcohol-related excise taxes, a key step towards lowering production costs and supporting the expansion of blending.

The USDA views sustainable aviation fuel as being in an early stage of market development, with a 1% blend mandate scheduled for 2027, initially limited to two major airports.

Pertamina, Indonesia's sole SAF producer, faces significant hurdles including feedstock quality variability, high production costs, and a fragmented supply chain, the USDA stated.

On trade policy, Indonesia tightened ethanol import controls under Ministry of Trade Regulation 32/2025, requiring import approval beginning October 2025. Ethanol exports are forecast at 52 million liters in 2026, a 13% decline from the prior year, driven by tighter competition.

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