Scenario Analysis of Indonesian Biodiesel Policy for Reducing GHG Using System Dynamics

Abstract

The issue of renewable energy development has become a major issue in many countries in the context of efforts to reduce the impact of global warming and climate change. Indonesia as the biggest CPO producing country certainly has enormous potential to develop biodiesel as a type of renewable energy CPO producing country certainly has enormous potential to develop biodiesel as a type of renewable energy. A system dynamics model was developed and applied to asses several scenarios in order to generate the appropriate policy of biodiesel for reduce the need of diesel import and CO2 emissions produced by burning fossil fuels. The system dynamics models contain Five sub-systems, including biodiesel demand, biodiesel production, Co2 emission, diesel production and diesel import submodel. Simulation of the current biodiesel policy in Indonesia showed that the Indonesian government support is urgently required to increase the adoption of the use of biodiesel as a renewable energy, as well as of the incentives and mandatory policy. The result of this study showed that increasing of biodiesel incentives and mandatory policies can significantly reduce the need of diesel import and the result of carbon emissions.