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Biodiesel plays a strategic role, contributing 35% of the national renewable energy mix in 2020, with a target of reaching 18 million kiloliters by 2030. However, heavy dependence on palm oil makes the biofuel industry fragile, suboptimal, and neglectful of other potential feedstocks.

CPO production continues to increase, reaching 45.12 million tons in 2021, while domestic consumption stood at 15.4 million tons. The biofuel industry has functioned primarily as an absorber of surplus CPO stocks (with a projected surplus of 5 million tons between 2021-2024), rather than being positioned as a priority within energy transition scenarios.

Diversifying biofuel feedstocks is therefore highly urgent, considering the competing uses of palm oil and the significant potential of non-palm alternatives. Options such as used cooking oil, jatropha, and nyamplung have a potential production capacity of around 8.6-23.4 million kiloliters. Appropriate incentive mechanisms are needed to support this transition.