Indonesia's mandatory change towards B50 Biodiesel: what it means for palm oil workers

Kristin, 30, gets her equipment ready before heading to the palm oil plantation on her motorbike. Using her own motorbike, she leaves the house at 7am. Besides the distance, she has to watch for potholes and ride through rain. She has already slipped once and lost weeks of work recovering. She's careful not to let that happen again.

Kristin has worked for three years as a daily-wage worker (commonly called BHL, or Buruh Harian Lepas) on a palm oil plantation in Sanggau, West Kalimantan, Indonesia. As a fertiliser applicator, her daily target is 10–12 bags, totalling 500 to 600 kg, spread by hand. She earns IDR 10,000 per bag, over 12–20 working days a month, which puts her income anywhere between IDR 1,200,000 and IDR 2,400,000 a month. It means her income only reached 70% of Sanggau District Minimum Wage, which is IDR 3,121,747.

To make ends meet, Kristin's husband works at the same company as a harvester. His daily target can reach 1,000 kg, covering 2–3 hectares. When he hits it consistently, he brings home about IDR 4,500,000 a month.

Kristin, her husband, and millions of other palm oil workers work in what the government calls a national strategic industry. This contributes 3.5 percent to GDP and central to Indonesia's palm oil exports, domestic supply, and now, its energy security ambitions.

Pathways to National Energy Resilience and the Green Energy Transition

Despite international climate commitments, the Indonesian government struggles with fossil fuel dependency. About 85 percent of national energy comes from fossil fuels. In fact, Indonesia has spent IDR 713.5 trillion on energy subsidies, with 90% of it allocated to fossil fuel in 2024. In the oil and gas sectors, import dependency is the key challenge. Diesel is the clearest example. At least 3-4 million kiloliters were imported annually against 38-40 million kiloliters of total annual demand, according to the Ministry of Energy and Mineral Resources.

As a result, Indonesia has run an oil-and-gas trade deficit even as its overall trade balance stayed in surplus from 2020–2024. However, the oil and gas sector shows a trade deficit of 3.49 million US dollars. Palm oil and coal are the two commodities that have kept the overall trade balance positive.

Against this backdrop and amid geopolitical volatility, the Prabowo administration has moved to mandate B50 biodiesel, up from B40. The number refers to the percentage of palm oil-based biodiesel blended into conventional diesel fuel, from 40% to 50%. Biodiesel is a liquid biofuel derived from vegetable oil or animal fats that can be added to conventional diesel to create a blend or used on its own. Within Indonesia, the government blends conventional diesel with Fatty Acid Methyl Ester or FAME derived from palm oil. “As the policy was already issued, Indonesia is now officially becoming the first country in the world to implement the mandatory B50 biodiesel,” said President Prabowo. On the same day B50 was launched, diesel import was officially stopped on July 1, 2026 according to the Ministry of Energy and Mineral Resources.

The History of Mandatory B50 Biodiesel

B50 didn't arrive overnight. Indonesia's mandatory blending program began at B1 and B2.5 in 2008, and climbed gradually reaching a B20 target by 2025 under the Ministry of Energy and Mineral Resource, before the government concluded that rising palm oil productivity made a faster jump to B50 feasible.

Indonesia is the first country to mandate blending at this rate. Others are moving more slowly: Malaysia sits at B15, Thailand at B7, Brazil at a soy-based B15, the European Union at B7–B10, and India at B1, with a B50 target of its own set for 2030.

To support the new B50 ambition, the government set up the Palm Oil Plantation Fund Management Agency (BPDPKS), which reports to the Ministry of Finance and is mandated to collect, manage, and disburse plantation funds to support the industry's sustainability, productivity, and competitiveness. Between 2015 and 2019, BPDPKS collected a total of IDR 51 trillion, 92 percent of it from export levies.

Zooming in on Palm Oil Productivity Factor for B50

According to the Indonesian Palm Oil Association (IPOA or GAPKI in Bahasa), Indonesia produces 51 million tons of crude palm oil, accounting for 57 percent of global production in 2025. Most of this production goes to global export markets with 32.34 million tons, while the rest, 24.77 million tons, went for domestic consumption. The country is the world’s leading crude palm oil producer for more than twenty years.

To meet B50 demand, IPOA estimates put the additional CPO need at roughly 14 million tons for 2026, rising to 16.2–17 million tons a year once the program is fully operational in 2027 — with the incremental increase for this year alone estimated at around 1.74 million tons above the B40 baseline. Current productivity is roughly flat, at 48–51 million tons a year. The IPOAI has flagged that export volumes are at risk as domestic demand for CPO rises. Against ambitious productivity, the palm oil industry requires significantly huge land and massive labour.

Palm oil plantations covered 16 million hectares in 2024, roughly the land area of Greece. Oil palm is mainly concentrated in a few regions: Riau (21%), Central Kalimantan (15%), North Sumatera (13%), and East Kalimantan (8%) and South Sumatera (8%). Data from Satya Bumi revealed that the B50 policy will require about 5.36 million additional hectares of land by 2039. New land acquisition potentially destroys 1.5 million hectares of natural forest.

The labour side is still larger. The Ministry of Agriculture estimated total labour absorption in the palm oil sector at 16.5 million people in 2024, made up of 9.7 million workers as direct labour. Another eight million workers are indirect labour, such as transportation for oil palm, pesticide, agricultural tools, and other supporting relevant industries. After B50 is implemented, the government predicts labour absorption will reach 2.1 million workers. It means, a total of 18.6 million workers will be actively working in palm oil and contribute to the ambitious B50 policy.

Workload, Production Target, and (In)decent Working Conditions

Ismet Inoni, coordinator of the Palm Oil Workers Coalition (KBS), says rising productivity in the industry depends heavily on the workers themselves , but higher output hasn't translated into better pay or working conditions. That's one of the core findings of WageIndicator’s “Wages and Labour Rights in the Palm Oil Sector” research project conducted in cooperation with KBS, commissioned by the International Palm Oil Workers United (IPOWU), and funded by Mondiaal FNV, 2025–2026.

The research found high daily targets across the board: harvesters face targets of up to 1,902 kg in high season, fertiliser applicators cover 2.5 hectares a day, and pollinators up to 3 hectares. About 38 percent of workers surveyed in Indonesia still earn below minimum wage. Kristin, a fertiliser applicator at a palm oil company in West Kalimantan, said she's paid IDR 10,000 per 50 kg bag and spreads 10–12 bags a day on average.

Maintenance work such as fertilising and spraying is dominated by women, who are paid less than men despite the higher health risk. This work carries heavy exposure to agrochemicals. A 2024 study commissioned by IPOWU, Occupational Health and Safety in the Palm Oil Plantations: Worker's Risk of Exposure to Agrochemicals in Colombia, Ghana, and Indonesia, found this exposure linked to cancer, respiratory illness, and skin disease. In West Kalimantan, some plantations still use paraquat, a herbicide banned in most countries, including the EU.

From the company side, Sumarjono Saragih, Head of Human Resource Development at IPOA, argues occupational health and safety (OHS) is a business sustainability issue, not just a compliance one. He explained, "OHS is rarely seen as an important factor for productivity. One single accident can harm work and business sustainability. It's not only about using the best seeds or fertilisers, but also concerns about physical and mental well-being."

Workers describe a different reality. Maria said companies routinely fail to provide even basic personal protective equipment (PPE). She said, "What happened in the palm oil plantation, the price kept rising, but the company could not even provide the cheapest equipment such as PPE. Harvesters' tools are paid in installments by the workers themselves, and deducted from their monthly wages. So who benefits the most?.”

Many women are concentrated in lower-paid and less secure roles with less indefinite contracts (WageIndicator/IPOWU research, 2026). This segregation leads to women earning about 42% less than men overall. The research found that in high season, 81% of harvesters had wages deducted for missing targets; in low season, when yields drop, targets shift to a land-based measure instead of a weight-based one.

Ismet argues that rising productivity and the higher B50 blending rate haven't improved worker welfare, if anything, they risk eroding it further. He added, “based on past experience, whoever benefits most from raising palm oil productivity, there hasn't been better working conditions for the workers."

Behind Mandatory B50 Ambition, Are Workers Left Behind?

In shaping the B50 policy, the government consulted employers, including the IPOA. Sumarjono says the association has consistently backed the policy while flagging concerns: "We truly appreciate that the government sees IPOA as a big institution. We have always been asked for opinions and consulted on relevant policy." He named the balance between domestic and export demand, against largely stagnant productivity, as the central challenge.

Workers and unions, by contrast, say they've never been part of that consultation. "The ones who will actually produce the CPO for biodiesel, and carry the country's interest on their backs, are the workers themselves. This isn't fair," Ismet told WageIndicator.

Maria, a union official with the Palm Oil Workers Federation (FSBKS) in West Kalimantan, says the pattern holds. "To this day, we never get invited, unless we invite them for a dialogue,” she added. On a once in a lifetime occasion, they invited and finally met the Regional Manpower Agency to file labour rights violations cases.

From what Maria and Ismet explained, meaningful participation practices are not in place yet. The palm oil workers - the rights-holders and the ones that drive the industry productivity - are often left behind in consultations, dialogue and shaping the industry’s future. That’s why international standards emerge to fill in the gap. The EU's Corporate Sustainability Due Diligence Directive (CSDDD) and Corporate Sustainability Reporting Directive (CSRD) both require companies to identify and address human rights risks across their supply chains. This includes the workers’ voices producing the raw materials, like palm oil, that feed into products sold in the EU. For Indonesia's palm oil sector, it’s an opportunity to strengthen worker and union participation into due diligence processes from the start, while B50 is still scaling up.

Meaningful public participation in Indonesia started with transparent public information, based on the Law of No. 14 of 2008. The law protects civil rights to information on planning, programme, process, and rationale behind public policy, and encourages public participation in the process. The Law No. 13 of 2022 on Law Formulation reinforces this by providing citizens the right to input, verbally or in writing, at every process. However, these laws exist on paper, and yet the key is to enforce them.

As Sumarjono puts it: "Existing rules and standards are more than enough such as ISPO, RSPO, ISO, HRDD, the Guidance from The Ministry of Human Rights, and all laws and regulations. The question is who's actually going to drive the change."

What B50 Means for Palm Oil Workers

Back in Sanggau, Kristin will keep spreading fertiliser bags before dawn, watching the road for potholes, hoping the rain holds off. Whatever B50 does for Indonesia's energy balance sheet, none of the policy conversations driving it have included her, or the millions of workers like her whose labour makes the target achievable. Ismet is direct about what KBS actually needs: not a seat at the table for its own sake, but the groundwork to use one well. He stated, "the most important thing is building awareness of why unions and organising workers matters, then building the capacity to negotiate". This includes training, organising, and campaigning capacity.

He also points to a specific, concrete gap: of roughly 200 union branch leaders (Pimpinan Basis) under KBS, fewer than 10 percent are covered by a Collective Bargaining Agreement (CBA or PKB in Bahasa). "It matters to have records or data on PKBs on palm oil plantations," he said. The CBA data that KBS could use to track and push for compliance. On B50 itself, his read is blunt: "It's explicit: mandatory B50, with no incentive at all for palm oil workers whose participation is what makes the productivity happen."

Maria's federation faces another structural challenge. The union isn't recognised as a party to consult in the first place. Her union has never been included in minimum wage setting discussions either, she says, because it doesn't yet meet the formal criteria to qualify as a federation. What it needs most urgently is organising and recruiting new members and officials. The federation has just over 1,000 members but only a handful of officials running it.

Ismet and Maria aren't asking to stop B50; they're describing what it would actually take for workers to have a voice in how it's carried out and to ensure meaningful human rights due diligence takes place in this important and ever growing sector in Indonesia: union capacity and training, compliance data on collective agreements, and guaranteed freedom of association and collective bargaining for federations like Maria's.

References:

• Hasjanah, K. “Promoting Renewable Energy Utilization Amidst Fossil Fuel Dominance”, 16 Februari 2026: IESR
• “Indonesia ends diesel imports with mandatory B50 biodiesel rollout”, 9 July 2026: Antara News
• “Indonesia spent IDR 713.5 trillion on energy subsidies in 2024”, mostly for fossil fuels, 9 February 2026: The International Institute for Sustainable Development.
• “IPOAI: Replanting Program Can Double RI’s Palm Production,” 18 March 2026: IPOA
• “Indonesia Top Five Provinces as Leading CPO Producers”, 4 July 2023: Palm Oil Magazine
• “Keselamatan dan kesehatan kerja di perkebunan kelapa sawit: risiko paparan pekerja terhadap bahan kimia pertanian di Kolombia, Ghana, dan Indonesia”, 6 September 2024: Profundo, commissioned by the International Palm Oil Workers United (IPOWU).
• WageIndicator Foundation, IPOWU, & Mondiaal FNV (2026) “Country Report Indonesia: Wages and Labour Rights in The Palm Oil Sector, May 2026 [Unpublished]
• “Keselamatan dan kesehatan kerja di perkebunan kelapa sawit: risiko paparan pekerja terhadap bahan kimia pertanian di Kolombia, Ghana, dan Indonesia”, 6 September 2024: Profundo, commissioned by International Palm Oil Workers United (IPOWU).
• Keputusan Menteri ESDM Nomor 257/EK.01/MEM.E/2026 tentang Kewajiban Pencampuran Bahan Bakar Nabati Jenis Biodiesel dengan Bahan Bakar Minyak diesel sebesar 50% dalam Kerangka Pembiayaan oleh Badan Pengelola Dana Perkebunan