Expansion-Share Threshold for Indonesia's B50 Palm Biodiesel

Abstract

Indonesia raised its mandatory biodiesel blend to B40 in January 2025 and has outlined a pathway toward B50, primarily to strengthen energy security, reduce diesel- import dependence, and absorb domestic crude palm oil. Higher blending, however, increases demand for palm-based fatty acid methyl ester (FAME), making the climate value of B50 dependent on how the marginal feedstock is sourced. This study evaluates the B40-to-B50 switch using a scenario-based operational fuel-cycle screen based on published lifecycle emission factors. The two blends are compared on an equal-energy basis, with land-use change (LUC) treated as a forward-looking sensitivity on incremental feedstock. Coal-mine overburden is used purely as an arbitrary arithmetic placeholder to express volume displacement per bank cubic metre (bcm); the break-even is scale-invariant and independent of this proxy. B50 displaces 0.0335 L of fossil diesel per bcm, independent of LUC assumptions, allocation rules, and emission-factor choices. Under low-LUC sourcing, B50 reduces fuel-cycle greenhouse-gas intensity by 2.8% to 5.6%, depending on engine efficiency penalties; the central estimate is 5.6% under idealised conditions. This benefit is bounded by marginal-feedstock LUC intensity: the break-even is about 44 g CO?e MJ?¹ under marginal allocation and 9 g CO?e MJ?¹ under precautionary full attribution. Measured mineral-soil forest conversion at 156 g CO?e MJ?¹ exceeds both thresholds. Expressed as a sourcing condition, the caps are 28% (marginal) and 6% (full attribution). Crucially, when the European Commission's provisional indirect LUC value for oil crops (55 g CO?e MJ?¹) is included, the marginal threshold (44 g) is exceeded before any direct conversion is counted, implying that under comprehensive accounting the climate case for B50 is likely negative unless indirect effects are explicitly excluded. Because the national B40-to-B50 step requires about 4.06 Mt yr?¹ of additional CPO, low-LUC supply cannot be assumed by default. Fossil-diesel displacement is therefore robust, whereas the greenhouse-gas benefit is constrained by the expansion share of marginal feedstock, not by any claim that mining itself becomes low-carbon. The study's contribution is the expansion-share limit: a theoretical benchmark against which future empirical estimates of Indonesian expansion share can be compared. It