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In 2024, the total size of oil palm plantations in Indonesia was around million hectares. This was expected to increase in the future to meet growing domestic consumption of palm oil, largely from biodiesel.

Increasing capacity to meet domestic biodiesel demand

Since 2015, the Indonesian government has heavily subsidized producers of biodiesel blends using palm oil to keep the prices of such biofuels competitive. This has contributed to an exponential increase in biodiesel consumption in Indonesia. The government’s biofuels program aims to eventually replace conventional diesel with a biofuel blend derived completely from palm oil, or B100. According to a government assessment, to meet the B100 demand, additional ** million hectares of oil palm planted would be needed, more than double the current area of oil palm planted.

Environmental costs of palm oil plantations

The clearing of forested land for palm oil has led to loss of wildlife, environmental degradation, and contributes to climate change. Efforts to regulate the palm oil sector and mitigate the environmental costs have been minimal. The sweeping omnibus laws introduced in October 2020 has made it easier for palm oil plantations in forest areas operating illegally to escape punishment, by allowing them a grace period of three years to obtain the required permits. As of 2019, only a fraction of oil palm production areas in Indonesia were certified sustainable.