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Opportunities to Optimize the Palm Oil Supply Chain in Sumatra, Indonesia

Author

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  • Fumi Harahap

    (Energy and Climate Studies Unit, Department of Energy Technology, KTH Royal Institute of Technology, SE-100 44 Stockholm, Sweden
    International Institute for Applied Systems Analysis (IIASA), A-2361 Laxenburg, Austria)

  • Sylvain Leduc

    (International Institute for Applied Systems Analysis (IIASA), A-2361 Laxenburg, Austria)

  • Sennai Mesfun

    (International Institute for Applied Systems Analysis (IIASA), A-2361 Laxenburg, Austria)

  • Dilip Khatiwada

    (Energy and Climate Studies Unit, Department of Energy Technology, KTH Royal Institute of Technology, SE-100 44 Stockholm, Sweden)

  • Florian Kraxner

    (International Institute for Applied Systems Analysis (IIASA), A-2361 Laxenburg, Austria)

  • Semida Silveira

    (Energy and Climate Studies Unit, Department of Energy Technology, KTH Royal Institute of Technology, SE-100 44 Stockholm, Sweden)

Abstract

Significant amounts of biomass residues were generated in Indonesia. While untreated, residues emit greenhouse gases during the decomposition process. On the other hand, if efficiently utilized, these residues could be used to produce value-added products. This study investigates opportunities for harnessing the full potential of palm oil residues (i.e., empty fruit bunches, kernel shells, fiber, and mill effluent). As far as we are aware, the study is the first attempt to model the palm oil supply chain in a geographically explicit way while considering regional infrastructures in Sumatra Island, Indonesia. The BeWhere model, a mixed integer linear programming model for energy system optimization, was used to assess the costs and benefits of optimizing the regional palm oil supply chain. Different scenarios were investigated, considering current policies and new practices leading to improved yields in small-scale plantations and power grid connectivity. The study shows that a more efficient palm oil supply chain can pave the way for the country to meet up to 50% of its national bioenergy targets by 2025, and emission reductions of up to 40 MtCO 2 eq/year. As much as 50% of the electricity demand in Sumatra could be met if residues are efficiently used and grid connections are available. We recommend that system improvements be done in stages. In the short to medium term, improving the smallholder plantation yield is the most optimal way to maximize regional economic gains from the palm oil industry. In the medium to long term, improving electricity grid connection to palm oil mills could bring higher economic value as excess electricity is commercialized.

Suggested Citation

  • Fumi Harahap & Sylvain Leduc & Sennai Mesfun & Dilip Khatiwada & Florian Kraxner & Semida Silveira, 2019. "Opportunities to Optimize the Palm Oil Supply Chain in Sumatra, Indonesia," Energies, MDPI, vol. 12(3), pages 1-24, January.
    • Handle: RePEc:gam:jeners:v:12:y:2019:i:3:p:420-:d:201638
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    References listed on IDEAS

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    Cited by:

    1. Jaka Isgiyarta & Bambang Sudarmanta & Jalu Aji Prakoso & Eka Nur Jannah & Arif Rahman Saleh, 2022. "Micro-Grid Oil Palm Plantation Waste Gasification Power Plant in Indonesia: Techno-Economic and Socio-Environmental Analysis," Energies, MDPI, vol. 15(5), pages 1-23, February.
    2. Suckling, Ian D. & de Miguel Mercader, Ferran & Monge, Juan J. & Wakelin, Steve J. & Hall, Peter W. & Bennett, Paul J. & Höck, Barbara & Samsatli, Nouri J. & Samsatli, Sheila & Fahmy, Muthasim, 2022. "Best options for large-scale production of liquid biofuels by value chain modelling: A New Zealand case study," Applied Energy, Elsevier, vol. 323(C).
    3. Harahap, Fumi & Leduc, Sylvain & Mesfun, Sennai & Khatiwada, Dilip & Kraxner, Florian & Silveira, Semida, 2020. "Meeting the bioenergy targets from palm oil based biorefineries: An optimal configuration in Indonesia," Applied Energy, Elsevier, vol. 278(C).
    4. Tan, Yue Dian & Lim, Jeng Shiun & Andiappan, Viknesh & Wan Alwi, Sharifah Rafidah, 2022. "Systematic optimisation framework for a sustainable multi-owner palm oil-based complex," Energy, Elsevier, vol. 261(PA).
    5. Mohd Idris, Muhammad Nurariffudin & Hashim, Haslenda & Leduc, Sylvain & Yowargana, Ping & Kraxner, Florian & Woon, Kok Sin, 2021. "Deploying bioenergy for decarbonizing Malaysian energy sectors and alleviating renewable energy poverty," Energy, Elsevier, vol. 232(C).
    6. Andrea Lazzaretto & Andrea Toffolo, 2019. "Optimum Choice of Energy System Configuration and Storages for a Proper Match between Energy Conversion and Demands," Energies, MDPI, vol. 12(20), pages 1-6, October.
    7. Hoo Poh Ying & Cassendra Bong Phun Chien & Fan Yee Van, 2020. "Operational Management Implemented in Biofuel Upstream Supply Chain and Downstream International Trading: Current Issues in Southeast Asia," Energies, MDPI, vol. 13(7), pages 1-26, April.
    8. Jian Wong, Khai & Keat Ooi, Jun & Sin Woon, Kok & Ren Mong, Guo & Shadman, Saleh & Lam Ng, Wai, 2022. "A country-level Pareto-optimal palm waste utilisation network for economic and environmental sustainability," Energy, Elsevier, vol. 260(C).
    9. Marcelo Elias & Lara Bartocci Liboni & Luciana O. Cezarino & Flavio Pinheiro Martins & Márcio Lopes Pimenta & Per Hilletofth & Olli-Pekka Hilmola, 2022. "Shedding Light on the Brazilian Amazon Biotrade: A Study on Sustainable Development in Native Communities," Sustainability, MDPI, vol. 14(19), pages 1-18, October.
    10. Olli-Jussi Korpinen & Mika Aalto & Raghu KC & Timo Tokola & Tapio Ranta, 2023. "Utilisation of Spatial Data in Energy Biomass Supply Chain Research—A Review," Energies, MDPI, vol. 16(2), pages 1-23, January.
    11. Lo, Shirleen Lee Yuen & How, Bing Shen & Leong, Wei Dong & Teng, Sin Yong & Rhamdhani, Muhammad Akbar & Sunarso, Jaka, 2021. "Techno-economic analysis for biomass supply chain: A state-of-the-art review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 135(C).
    12. Zailan, Roziah & Lim, Jeng Shiun & Manan, Zainuddin Abdul & Alwi, Sharifah Rafidah Wan & Mohammadi-ivatloo, Behnam & Jamaluddin, Khairulnadzmi, 2021. "Malaysia scenario of biomass supply chain-cogeneration system and optimization modeling development: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 148(C).
    13. Handaya & Marimin & Dikky Indrawan & Herri Susanto, 2022. "A Comparative Life Cycle Assessment of Palm Kernel Shell in Ceramic Tile Production: Managerial Implications for Renewable Energy Usage," Sustainability, MDPI, vol. 14(16), pages 1-15, August.
    14. Sani, L. & Khatiwada, D. & Harahap, F. & Silveira, S., 2021. "Decarbonization pathways for the power sector in Sumatra, Indonesia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 150(C).

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