Minister of Energy and Mineral Resources Decree Number 257.K/EK.01/MEM.E/2026: Implementation of the B50 Biodiesel Blending Mandate

Introduction

On 17 June 2026, the Ministry of Energy and Mineral Resources issued Minister of Energy and Mineral Resources Decree Number 257.K/EK.01/MEM.E/2026 on the Mandatory Blending of Biodiesel Biofuel with Diesel Fuel at a Rate of 50% (Fifty Percent) under the Financing Framework of the Plantation Fund Management Agency (“MEMR Decree 257/2026”). MEMR Decree 257/2026 was issued to support the accelerated implementation of the Government’s policy by establishing a mandatory minimum blending target of 50% biodiesel (“B50”) for all diesel fuel products. This obligation takes effect on 1 July 2026.

The issuance of MEMR Decree 257/2026 is driven by the Government’s commitment to strengthening national energy independence and energy security through increased utilization of biofuels and reduced dependence on imported petroleum fuels. The policy also implements Article 9 paragraph (2) letter b point 4 of Government Regulation Number 40 of 2025 on the National Energy Policy, which identifies increasing the national energy mix through the utilization of biofuels as one of the strategies for strengthening national energy security.

Comparison

MEMR Decree 257/2026 revokes and declares no longer effective Minister of Energy and Mineral Resources Decree Number 341.K/EK.01/MEM.E/2024 concerning the implementation of B40 (“MEMR Decree 341/2024”). The principal substantive difference between MEMR Decree 257/2026 and MEMR Decree 341/2024 is the increase in the mandatory biodiesel blending percentage from 40% (B40) to 50% (B50) for all diesel fuel products. In addition, MEMR Decree 257/2026 regulates these obligations in greater detail by introducing annexed technical quality and specification parameters for B50 and administrative sanctions for business entities that fail to comply with the implementation requirements, whereas such testing standards and sanction provisions were not set out in the operative provisions of MEMR Decree 341/2024.

Key Provisions

Mandatory 50% (B50) Blending Requirement

First Dictum establishes the mandatory implementation target requiring biodiesel biofuel to be blended with diesel fuel at a minimum percentage of 50% (fifty percent).

Compliance with and Maintenance of Quality Standards

Second Dictum and Fourth Dictum require biofuel business entities, distributors, and fuel business entities to implement and ensure that the biodiesel they produce, distribute, and/or market complies with the prescribed technical specifications and quality standards.

Financing Incentive Scheme

Pursuant to Fifth Dictum, the Government establishes an incentive mechanism through a financing scheme administered by the Plantation Fund Management Agency. The distribution of such incentives is carried out in accordance with the policy direction of the Steering Committee for Plantation Fund Management to support the implementation of the biodiesel program.

Administrative Sanctions

Pursuant to Sixth Dictum, fuel business entities that fail to implement the mandatory biodiesel blending requirement, as well as biofuel business entities that fail to fulfill their biodiesel distribution obligations in accordance with the prescribed implementation targets, are subject to administrative sanctions in the form of:

·      written warnings;

·      temporary suspension of business activities; and

·      revocation of their Business Licenses.

Technical Specification Standards (Annex)

The Decree includes an Annex establishing strict quality testing parameters for B50 biodiesel.

Among other things, the technical specifications require:

·      a minimum cetane number of 51;

·      a minimum methyl ester content of 96.5%;

·      a maximum water content of 300 ppm; and

·      a minimum closed-cup flash point of 130°C.

Transitional Provision

Ninth Dictum provides transitional relief for fuel business entities that still possess inventories of biodiesel blended at the previous 40% (B40) specification.

Such inventories may continue to be distributed within the domestic market in accordance with the previous specifications until 30 September 2026.

Closing

MEMR Decree 257/2026 increases the mandatory biodiesel blending requirement from B40 to B50 as part of the Government’s strategy to accelerate the energy transition and strengthen national energy security. This amendment not only raises the mandatory utilization target for biofuels but also strengthens the compliance framework by introducing more detailed technical quality standards, financing incentive mechanisms, and administrative sanctions for business entities that fail to comply with the implementation requirements.

Accordingly, biofuel business entities, fuel business entities, and distributors should ensure their operational readiness, compliance with the technical specifications applicable to B50, and fulfillment of all obligations prescribed under MEMR Decree 257/2026, while making appropriate use of the transitional period permitting the distribution of B40 until 30 September 2026.