Palm oil-based biodiesel industry sustainability model using dynamic systems to balance food, energy, and export allocations

Abstract

Indonesia stands as one of the foremost global palm oil producers, contributing to 85 % of the world's total production. Given the substantial output of Crude Palm Oil (CPO), these raw materials find diverse applications in daily life. In a bid to decrease reliance on fossil fuels, Indonesia initiated the blending of fossil fuels with biodiesel in 2006. Beyond energy purposes, CPO raw materials are crucial for both domestic consumption and exportation. However, improper management could lead to raw material shortages. This study employs dynamic system modeling to assess the availability of biodiesel, CPO production, and their equilibrium concerning Indonesia's blended biodiesel target. Key parameters, such as available land, anticipated land expansion, optimized CPO production on less productive land, Indonesian CPO exports, and the mandatory biodiesel program, will be considered. Various scenarios or tests will be applied to gauge the continuity of CPO and biodiesel production. The results will undergo validation using the MAPE method. The simulation's results reveal that the rate of new land expansion and the optimization of unproductive land have negligible effects on meeting the blended diesel target. Intensified optimization of unproductive land, particularly in community plantations, is crucial, necessitating incentives for enhanced replanting funds. A reduction of 8 % in CPO export level, in turn, has a noteworthy impact on achieving the blended diesel target in Indonesia.