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Bioenergy Policy: The Biodiesel Sustainability Dilemma in Indonesia

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Palm oil-based biodiesel in Indonesia is facing critical issue with regard to its sustainability status in both upstream and downstream sides. International market of palm oil keeps questioning this sustainability standard of Indonesia oil palm. Three interrelated dimensions of sustainability should be fulfilled only if a product to gain growing market acceptance internationally, i.e. economically profitable, ecologically sound and socially acceptable. To determine the sustainability of Indonesia’s palm oil-based biodiesel, this paper pays attention in particular to measuring sustainability status of biodiesel in the upstream to downstream side along its supply chain. The analysis of the sustainability of palm oil-based biodiesel in Indonesia is done thoroughly all related activities on the upstream (agricultural-cultivation activities) up to the downstream (manufacturing activities) side. A rap-bioenergy approach, which included the use of MDS (multidimensional scaling) analyses is applied in the analysis. The results of these analyses show that palm oil-based biodiesel in Indonesia is facing serious sustainability status. Among other three parameters, ecological aspect/parameter is a very serious one. This is especially the case for cultivation activities. This paper concludes that if Indonesia desires international markets to accept the existence of palm oil-based biodiesel, then improvements in ecological aspect should be priority.

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