Indonesia Restricts Crude Palm Oil Exports Waste

Why It Matters

Retaining crude palm‑oil residues strengthens Indonesia’s biofuel supply chain, reducing import reliance and positioning the country as a regional SAF exporter, which could reshape global aviation‑fuel markets.

Key Takeaways

• Ban on crude POME and UCO stays indefinitely
• Supports domestic biodiesel and aviation fuel ambitions
• Refined palm oil residues still allowed for export
• Traders expect no expansion to refined grades
• SAF blending mandate targets 1% by 2027

Pulse Analysis

Indonesia’s decision to keep crude palm‑oil mill effluent (POME) and used cooking oil (UCO) out of export markets reflects a broader strategy to secure domestic energy supplies. By retaining these low‑value residues, the government can feed its expanding biodiesel program and lay the groundwork for a sustainable aviation fuel (SAF) industry that President Prabowo envisions as a regional hub. The policy, first introduced in early 2025, aligns with the country’s ambition to become one of the world’s largest producers of bio‑based jet fuel, leveraging its status as the planet’s top palm‑oil producer.

The restriction targets only crude feedstocks; refined POME and UCO continue to flow abroad, a nuance that traders have welcomed. Market participants in Singapore and Jakarta say the certainty around crude bans helps them recalibrate supply chains without fearing sudden price spikes. However, any future move to curb refined exports could tighten regional availability and amplify volatility, especially as Southeast Asian vegetable‑oil markets already face tightening margins. For import‑dependent nations, the policy underscores the need to diversify feedstock sources or secure longer‑term contracts with Indonesian refiners.

Looking ahead, Indonesia’s feedstock retention is a cornerstone of its SAF blending mandate, which aims for a 1 % inclusion rate on international flights by 2027 and higher targets thereafter. As new conversion plants come online, the country is poised to export higher‑value bio‑jet fuel rather than raw residues, potentially reshaping global aviation fuel pricing. Investors should monitor policy signals, plant capacity roll‑outs, and the evolution of domestic biodiesel subsidies, all of which will dictate the profitability of downstream biofuel projects and the attractiveness of related commodity futures.