JAKARTA, RAKYAT NEWS – Indonesia is on track to implement B40, a biodiesel fuel mix of 40% palm oil and 60% diesel, by 2025, but achieving this ambitious target requires a substantial financial investment.

The Palm Oil Plantation Fund Management Agency (BPDPKS) has projected that the initiative will need around Rp 47 trillion to cover the costs of producing the necessary biodiesel. This funding requirement stems from the higher cost of Fatty Acid Methyl Ester (FAME), or biodiesel, compared to regular diesel.

According to BPDPKS CEO Eddy Abdurrachman, the B40 program will require approximately 16 million kiloliters of biodiesel, up from the 13.4 million kiloliters needed for the B35 program, which is currently in effect.

As the demand for biodiesel increases, the costs of production are expected to rise as well, particularly if biodiesel prices remain above those of diesel. Eddy pointed out that the geopolitical situation could potentially alter diesel prices, as seen in 2023 when diesel was more expensive than biodiesel.

As of the end of 2024, BPDPKS expects to have a balance of Rp 32 trillion in its fund, with revenues from the palm oil export levy projected to reach Rp 21.5 trillion in 2025. This would bring the total available funds to Rp 53.5 trillion, helping to bridge the gap for the B40 program.

The Indonesian government remains optimistic about achieving this target, with Coordinating Minister for Economic Affairs Airlangga Hartarto reaffirming that the country is ready for B40 implementation by 2025.

The B40 initiative is part of Indonesia’s broader strategy to reduce reliance on fossil fuels and transition to renewable energy sources. The next step in this transition is the B50 biodiesel program, which is scheduled to launch in 2028.

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