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Biodiesel produced from palm oil in Indonesia: Current status and opportunities

1 School of Business and Management, Bandung Institute of Technology, Indonesia 40132
2 Department of Engineering Management, Faculty of Industrial Technology, Del Institute of Technology, Indonesia 22381

Biodiesel is one potential solution to the challenge of sustainable energy development, especially in the industrial and transportation sectors. Since 2006, Indonesia has issued regulations regarding the use of biofuel as a substitute for fossil fuels. In 2018, the Indonesian government approved regulations regarding the use of biodiesel as a substitute for fossil fuel across all economic sectors. However, there are only a few studies that are focusing on the current status, future potential, barriers and opportunities of biodiesel development in Indonesia. The research reported here reviews the history of governmental policy relating to biodiesel, while also analyzing the current status of this fuel and the opportunities for its exploitation in Indonesia. This study finds that Indonesia has been promoting biodiesel commercialization using national strategy by make government mandate and providing financial incentives. Biodiesel distribution mechanism and related actors in the Indonesian biodiesel supply chain have been described in this study. The study concludes that the recent Indonesian government mandate to mix 20% biodiesel with 80% fossil fuel (B20) produced a positive effect on the economic, social and environment. However, this policy still represents a work-in-progress which can be brought to the optimum conclusion, despite the numerous challenges ahead. One such challenge constituting the focus of this research relates to the respective delivery points of the biodiesel and fossil fuel industry distribution networks remaining problematic. This situation can influence the mode of transportation employed by the storage refinery resulting in variations of either transportation or investment costs. This research provides recommendations regarding current policy and future research relating to the successful implementation of the biodiesel mandate in Indonesia.
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