Posts Tagged Energy Transition

“Change is easy to purpose, hard to implement and especially hard to sustain”

-Andy Hargreaves

As we know, biodiesel or Fatty Acid Methyl Ester (FAME) is one type of biofuel produced as a substitution of diesel fuel. In Indonesia, biodiesel is produced using crude palm oil by trans-esterification process. The usage of crude palm oil is performed because it sees that Indonesia is a nation with the biggest yield of crude palm oil in the Earth. In summation to the potential of its natural resources, the role of biodiesel as a substitute of diesel fuel is caused because it considers the benefits generated by biodiesel itself. Benefits include the so-called “carbon neutral”, the fuel produced biodiesel does not raise the output of carbon dioxide (CO2). The issue occurs because when the oil crop grows, it absorbs CO2 at the same amount as releasing fuel. In addition, biodiesel has biodegradable compounds that are firm and completely non-toxic, having in mind that biodiesel spills have less risk than diesel fuel. Biodiesel also has a higher flash point than diesel fuel, can be determined from its higher cetane value (> 57) than diesel fuel.

Still, the condition of biodiesel production in Indonesia faces complex problems. The concentration of biodiesel has never been fully attained, with the concentration of non-subsidized biodiesel that has not been carried out optimally. There are four major problems facing biodiesel production. Firstly, the concentration of biodiesel production is not maximal, especially in non-subsidized biodiesel production. Second, the condition of Indonesia’s domestic biodiesel production that began to decline from 2014 to 2015 due to lower oil costs. Tierce, the number of business entities that are abundant, but relatively small to fulfill the objective of production capability in 2025 amounted to 10.22 million KL. And the last and most important is the increasing CPO price, condition that causes the Biodiesel Market Index Price to be less frugal. This problem becomes the consideration of the biodiesel industry to continue to sell its biodiesel in Indonesia.

To avoid such problems, agent-based modeling can be used to predict the impact of policies on influential actors to gain a deep understanding of the behavior and decisions made by the biodiesel industry by looking at the types of biodiesel industry in Indonesia that are differentiated by the type of production capacity that can be handled by the biodiesel industry, decision-making that depends on the type of industry, how the biodiesel industry calculates the expenditure and income as well as the learning gained by the biodiesel industry after large-scale production. This agent-based modeling is done with two policy alternatives, namely price determination of biodiesel market index and subsidy of installed capacity of the biodiesel plant.

The results obtained from this agent-based modeling show that the policy of adding the biodiesel plant installed capacity has a good impact in increasing the fulfillment of biodiesel production, the adoption and competition that occurs in the tender, and the profits gained by the biodiesel industry. Even so, the government should count the costs to be incurred and the net income from biodiesel industry, so the biodiesel production targets can be successfully accomplished.

This research is conducted by Vicky Larasvasti Respati and Akhmad Hidayatno