A Conceptual System Dynamics Model of Enhancing Biodiesel Adoption in Indonesia

Abstract

To increase the renewable energy mix in Indonesia, the Indonesian government has implemented a mandatory policy for the use of a 20 percent biodiesel blend (B20). This policy is a part of an effort to realize Indonesia's commitment to reduce greenhouse gas emissions by 29% by 2030. This policy also aims to increase domestic palm oil consumption in Indonesia as the largest palm oil producer globally with a total land area of 14.99 million hectares or equivalent to 49.5% of the world's total oil palm land. However, the utilization of renewable energy that can be achieved currently is only around 11.5%, still far from the target of 23% by 2025. The low use of renewable energy is certainly a challenge for the Indonesian government to enhance biodiesel adoption as renewable energy by raising the percentage of biodiesel blended. However, such an enhancement is arduous to do due to the complexity of biodiesel adoption. While capturing biodiesel adoption complexity is important before moving to the next biodiesel blended plan, there is an insufficient effort on this matter. This paper aims to understand the complex structure of biodiesel adoption in Indonesia. For this purpose, a conceptual model of system dynamics approach is developed to analyze the biodiesel adoption complexity and its related policy. The result shows that many underlying factors affecting biodiesel development are considered in designing policies to increase the adoption of biodiesel in Indonesia. Further, the government mandates and subsidies seem to take the most determining factors as the government intervention for increasing biodiesel adoption.