Pupuk Indonesia to Build Two Methanol Plants to Support B50 Program

April 09, 2026

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by Alfitria Nefi Pratiwi (Tempo English) Indonesia-owned fertilizer company Pupuk Indonesia is planning to build two methanol facilities to support the government's biodiesel program, or B50, said president director Rahmad Pribadi.

"We will build one in Lhokseumawe and another in Bontang," Rahmad said during a meeting with the House of Representatives' Commission IV at the parliamentary complex in Senayan, Jakarta, on Tuesday, April 7, 2026.

According to Rahmad, the methanol facilities will focus on converting crude palm oil or CPO into biofuel, as Indonesia currently relies heavily on imports, which take up around 1.5 million tons.

Without the facilities, methanol import volumes could bloat up to 5.2 million tons, Rahmad said.

Rahmad said the construction of the methanol facilities was mandated by the Ministry of Agriculture, with the approval from the sovereign wealth fund Danantara.

For now, according to Rahmad, feasibility studies for the facilities have been completed, with an MoU for the Lhokseumawe plant in Aceh inked between Pupuk Indonesia and the energy firm Mubadala.

Meanwhile, the process is underway for the facility in Bontang, East Kalimantan.

Rahmad said the two locations are chosen for their gas resources necessary for production. Pupuk Indonesia, he said, has established industrial areas in both regions to fast-track the construction. READ MORE

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Excerpt from ESG News:

Indonesia will require all diesel users to adopt a 50% palm oil biodiesel blend (B50) by 2028, accelerating its energy transition strategy
Policy aligns with national priorities to reduce fuel imports, stabilise energy supply, and expand domestic biofuel production capacity
Parallel mandates for ethanol blending and sustainable aviation fuel position Indonesia as a regional leader in biofuel deployment

Indonesia has formalised one of the most ambitious biofuel policies globally, setting a binding timeline to transition all biodiesel users to a 50% palm oil blend by 2028. The move, confirmed through a newly issued ministerial decree, places bioenergy at the centre of the country’s energy security and climate strategy.

The policy builds on Indonesia’s existing biodiesel programme, which has already scaled blending requirements over the past decade. Under the new roadmap, the country will first implement a 40% palm oil blend (B40) before moving to B50, with an accelerated rollout beginning July 1 this year.

The shift reflects both domestic and geopolitical considerations. Officials have linked the earlier introduction of B50 to broader efforts to manage energy market volatility and reduce exposure to global supply disruptions.

Phased implementation balances ambition and capacity

The decree outlines a staggered approach to ensure supply chains and infrastructure can keep pace. Subsidised diesel will adopt the B50 blend by 2027, while non-subsidised diesel may temporarily remain at B40 depending on production capacity.

By 2028, however, B50 will become mandatory across all diesel consumption.

“Through more comprehensive regulations and clear phasing, we want to ensure that biofuel utilisation can be implemented optimally, while still considering the readiness of raw materials, infrastructure, and industrial support,” said Eniya Listiani Dewi, director general of renewable energy, in an official statement.

To support the transition, the government will issue further allocation guidelines later this year. Indonesia had previously earmarked 15.65 million kilolitres of biodiesel for 2026 under the B40 programme, a figure expected to increase significantly as blending requirements rise.

Expanding beyond biodiesel into aviation and gasoline

The biodiesel mandate is part of a broader push to embed biofuels across multiple transport segments.

Indonesia plans to introduce ethanol blending into gasoline, starting with a minimum 5% mix in Java between 2026 and 2027. This will increase to 10% by 2028, targeting the country’s largest fuel consumption market.

In aviation, the government will roll out a sustainable aviation fuel mandate beginning in 2027. Flights departing from Jakarta’s Soekarno Hatta International Airport and Bali’s I Gusti Ngurah Rai International Airport will be required to use fuel containing at least 1% SAF.

Together, these measures position Indonesia among a small group of emerging economies implementing cross-sector biofuel mandates at scale.

Governance and economic stakes for investors

For policymakers, the mandate addresses three converging priorities: energy independence, rural economic development, and emissions reduction. As the world’s largest palm oil producer, Indonesia is leveraging domestic feedstock to displace imported fossil fuels while supporting its agricultural sector.

For investors, the policy creates long-term demand certainty across the biofuel value chain, from palm oil production to refining and logistics infrastructure. It also introduces new risks tied to execution, including feedstock availability, land use pressures, and sustainability compliance.

The expansion of palm-based biofuels continues to draw scrutiny from global stakeholders concerned about deforestation and biodiversity loss. This places pressure on Indonesia to align its biofuel growth with international ESG frameworks and traceability standards.

Regional and global implications

Indonesia’s decision to mandate B50 at a national level sets a new benchmark for biofuel adoption in Southeast Asia. It signals a shift among emerging markets toward domestically anchored energy transition strategies that prioritise resilience as much as decarbonisation.

The inclusion of ethanol and SAF mandates further broadens the scope, indicating that biofuels will play a central role across road and air transport rather than serving as a transitional solution. READ MORE

Excerpt from CRecTech: PT Pertamina Power Indonesia (PNRE), the renewable and clean energy arm of Pertamina Group, has signed a Memorandum of Understanding with CRecTech to explore a pilot biogas-to-bio-methanol facility at the Sei Mangkei Special Economic Zone in Sumatra, Indonesia.

The collaboration will begin with a joint piloting study and, subject to satisfactory outcomes, potential deployment of CRecTech's proprietary CRecREF catalytic technology at PNRE's Sei Mangkei Biogas Power Plant. The pilot is intended to convert biogas derived from palm oil mill effluent into crude bio-methanol.

"This MOU reflects our commitment that PNRE must be at the forefront of Indonesia's energy transition. Sei Mangkei represents an exceptional location of abundant biogas feedstock and strategic infrastructure. We believe that partnering with CRecTech's proven catalytic platform positions us to unlock a genuinely new green fuel value chain, one that is grounded in Indonesian assets and aligned with the global shift toward maritime decarbonisation. We expect this collaboration to move forward and to be scaled up to a much larger, commercial level as soon as possible, so it can deliver real impact for Indonesia's green energy ecosystem." - John Anis, CEO, PT Pertamina Power Indonesia

This marks an important step toward Indonesia's first integrated biogas-to-bio-methanol value chain. The parties will assess whether Sei Mangkei can become a scalable and commercially viable production origin for bio-methanol aimed at export markets as demand grows for lower-carbon marine fuels.

CRecTech's modular catalytic platform is designed to upgrade distributed biogas resources into higher-value green chemicals without the capital intensity of conventional large-scale methanol plants. A successful pilot at Sei Mangkei could also provide the technical and commercial basis for wider rollout opportunities across PNRE and Pertamina's broader affiliate network in Indonesia.

"CRecTech's CRecREF technology was purpose-built for this type of application, converting low-grade biogas streams into high-value green chemicals at the point of production, without the capital intensity of conventional methanol plants. Indonesia's biogas endowment is enormous, and PNRE is the ideal partner to translate that resource advantage into a commercially meaningful bio-methanol supply. We are pleased to formalise this collaboration and look forward to demonstrating what is possible at Sei Mangkei." - Kang Hui Lim, CEO, CRecTech Pte. Ltd. READ MORE