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Future Prospects and Policy Implications for Biodiesel Production in Malaysia: A System Dynamics Approach

Author

Listed:
  • Sahra Mohammadi

    (Institute of Agriculture and Food Policy Studies, Universiti Putra Malaysia)

  • Fatimah Mohamed Arshad

    (Institute of Agriculture and Food Policy Studies, Universiti Putra Malaysia)

  • Abdulla Ibragimov

    (Institute of Agriculture and Food Policy Studies, Universiti Putra Malaysia)

Abstract

Malaysia targets biodiesel as a renewable energy source to achieve its low carbon economy. This paper examines biodiesel and crude palm oil productions in Malaysia using a system dynamics approach. It aims to develop a model for the Malaysian biodiesel industry by capturing the relationship between major elements in the system such as supply, demand, inventory and price. The system dynamics approach is used as it enables one to capture feedback relationships, non-linearity, and delay in commodity markets including palm oil. The model has been simulated for 44 years, from 1982 to 2025 and the results indicate that crude palm oil demand for biodiesel will double requiring better strategy and policies to manage the stock and production of palm oil. Given biodiesel production in Malaysia is largely dependent on palm oil, Malaysia needs policies for development strategies of biodiesel production for coming years to meet its increasing demand.

Suggested Citation

  • Sahra Mohammadi & Fatimah Mohamed Arshad & Abdulla Ibragimov, 2016. "Future Prospects and Policy Implications for Biodiesel Production in Malaysia: A System Dynamics Approach," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 8(4), pages 42-57, October.
    • Handle: RePEc:umk:journl:v:8:y:2016:i:4:p:42-57
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    File URL: http://ijie.um.edu.my/filebank/published_article/10243/Future%20Prospects%20and%20Policy%20Implications%20for%20Biodiesel%20Production%20in%20Malaysia-A%20System%20Dynamics%20Approach.pdf
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    Citations

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    Cited by:

    1. Suhaiza Zailani & Mohammad Iranmanesh & Sunghyup Sean Hyun & Mohd Helmi Ali, 2019. "Barriers of Biodiesel Adoption by Transportation Companies: A Case of Malaysian Transportation Industry," Sustainability, MDPI, vol. 11(3), pages 1-15, February.
    2. Ida Farida & Faurani Santi Singagerda, 2021. "Volatilitiy of World Food Commodity Prices and Renewable Fuel Standard Policy," International Journal of Energy Economics and Policy, Econjournals, vol. 11(1), pages 516-527.

    More about this item

    Keywords

    Biodiesel; crude oil; crude palm oil; simulation; system dynamics;
    All these keywords.

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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