A system dynamics approach to biodiesel fund management in Indonesia
Indonesia, which is strongly supportive of renewable energy development, meets its obligation to extensively employ renewable energy through the mandatory mixing of palm oil-derived biodiesel with diesel, a fossil fuel. The success of the program is inseparable from the government's provision o...
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| Format: | Article |
| Language: | English |
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AIMS Press
2020-12-01
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| Series: | AIMS Energy |
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| Online Access: | http://awstest.aimspress.com/article/doi/10.3934/energy.2020.6.1173?viewType=HTML |
| _version_ | 1818178953393733632 |
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| author | Fitriani Tupa R. Silalahi Togar M. Simatupang Manahan P. Siallagan |
| author_facet | Fitriani Tupa R. Silalahi Togar M. Simatupang Manahan P. Siallagan |
| author_sort | Fitriani Tupa R. Silalahi |
| collection | DOAJ |
| description | Indonesia, which is strongly supportive of renewable energy development, meets its obligation to extensively employ renewable energy through the mandatory mixing of palm oil-derived biodiesel with diesel, a fossil fuel. The success of the program is inseparable from the government's provision of incentives which involve paying the difference in cost between biodiesel and diesel through export taxes collected from producers of palm oil and its derivatives. However, the increase in the government's mandatory target is not in line with the higher revenue obtained with the result that under current policy conditions the government will not be able to provide incentives for the B30 plan during the next few years. This research presents a dynamic simulation modelling of Indonesia's biodiesel program and analyzes the policy applied in support of that program. A system dynamics model is proposed to enable decision-makers to understand the relationship between the different variables inherent in the system and the impact of different variables on the continuity of the biodiesel program in Indonesia. The system dynamics model consists of three sub-models: the palm oil production sub-model, the biodiesel demand and production sub-model and the biodiesel fund management sub-model. Fund management of biodiesel is specifically discussed, starting with the source of funds, through fund management, to the impact of fund availability on the biodiesel mandatory program's continuity. The simulation shows that increasing palm oil production capacity is insufficient in order to ensure the success of the government program. Simulations indicate that the biodiesel program will operate optimally if two prerequisites are satisfied; first, that the levy policy adopted is not dependent upon crude palm oil (CPO) prices and, second, that the provision of incentives is limited solely to those required by the prevailing Public Service Obligation (PSO). |
| first_indexed | 2024-12-11T20:56:10Z |
| format | Article |
| id | doaj.art-8618218d9aaf4145a4c1a39027f42839 |
| institution | Directory Open Access Journal |
| issn | 2333-8326 2333-8334 |
| language | English |
| last_indexed | 2024-12-11T20:56:10Z |
| publishDate | 2020-12-01 |
| publisher | AIMS Press |
| record_format | Article |
| series | AIMS Energy |
| spelling | doaj.art-8618218d9aaf4145a4c1a39027f428392022-12-22T00:51:06ZengAIMS PressAIMS Energy2333-83262333-83342020-12-01861173119810.3934/energy.2020.6.1173A system dynamics approach to biodiesel fund management in IndonesiaFitriani Tupa R. Silalahi0Togar M. Simatupang1Manahan P. Siallagan21. School of Business and Management, Bandung Institute of Technology, Indonesia 2. Department of Engineering Management, Del Institute of Technology, Indonesia1. School of Business and Management, Bandung Institute of Technology, Indonesia1. School of Business and Management, Bandung Institute of Technology, IndonesiaIndonesia, which is strongly supportive of renewable energy development, meets its obligation to extensively employ renewable energy through the mandatory mixing of palm oil-derived biodiesel with diesel, a fossil fuel. The success of the program is inseparable from the government's provision of incentives which involve paying the difference in cost between biodiesel and diesel through export taxes collected from producers of palm oil and its derivatives. However, the increase in the government's mandatory target is not in line with the higher revenue obtained with the result that under current policy conditions the government will not be able to provide incentives for the B30 plan during the next few years. This research presents a dynamic simulation modelling of Indonesia's biodiesel program and analyzes the policy applied in support of that program. A system dynamics model is proposed to enable decision-makers to understand the relationship between the different variables inherent in the system and the impact of different variables on the continuity of the biodiesel program in Indonesia. The system dynamics model consists of three sub-models: the palm oil production sub-model, the biodiesel demand and production sub-model and the biodiesel fund management sub-model. Fund management of biodiesel is specifically discussed, starting with the source of funds, through fund management, to the impact of fund availability on the biodiesel mandatory program's continuity. The simulation shows that increasing palm oil production capacity is insufficient in order to ensure the success of the government program. Simulations indicate that the biodiesel program will operate optimally if two prerequisites are satisfied; first, that the levy policy adopted is not dependent upon crude palm oil (CPO) prices and, second, that the provision of incentives is limited solely to those required by the prevailing Public Service Obligation (PSO).http://awstest.aimspress.com/article/doi/10.3934/energy.2020.6.1173?viewType=HTMLmandatory biodiesel programpalm oilsystem dynamics modelingbiodiesel incentivesrenewable energy |
| spellingShingle | Fitriani Tupa R. Silalahi Togar M. Simatupang Manahan P. Siallagan A system dynamics approach to biodiesel fund management in Indonesia AIMS Energy mandatory biodiesel program palm oil system dynamics modeling biodiesel incentives renewable energy |
| title | A system dynamics approach to biodiesel fund management in Indonesia |
| title_full | A system dynamics approach to biodiesel fund management in Indonesia |
| title_fullStr | A system dynamics approach to biodiesel fund management in Indonesia |
| title_full_unstemmed | A system dynamics approach to biodiesel fund management in Indonesia |
| title_short | A system dynamics approach to biodiesel fund management in Indonesia |
| title_sort | system dynamics approach to biodiesel fund management in indonesia |
| topic | mandatory biodiesel program palm oil system dynamics modeling biodiesel incentives renewable energy |
| url | http://awstest.aimspress.com/article/doi/10.3934/energy.2020.6.1173?viewType=HTML |
| work_keys_str_mv | AT fitrianituparsilalahi asystemdynamicsapproachtobiodieselfundmanagementinindonesia AT togarmsimatupang asystemdynamicsapproachtobiodieselfundmanagementinindonesia AT manahanpsiallagan asystemdynamicsapproachtobiodieselfundmanagementinindonesia AT fitrianituparsilalahi systemdynamicsapproachtobiodieselfundmanagementinindonesia AT togarmsimatupang systemdynamicsapproachtobiodieselfundmanagementinindonesia AT manahanpsiallagan systemdynamicsapproachtobiodieselfundmanagementinindonesia |