Sustainable business model for biofuel industries in Indonesia

Abstract

PurposeThis study aims to focus on the design of a sustainable business model on the development of a biofuel industry in Indonesia.Design/methodology/approachThe changed status from a net oil exporter to net importer in 2004, the highly subsidized price of fossil fuel, the depleting oil resources and a strong dependency on oil for domestic production are the driving forces for introducing biofuel in Indonesia. The Indonesian government enacted an energy policy in 2006 which aims to partially shift fossil fuel consumption to renewable energy sources including biofuel. The mandatory requirement to use biofuel and the given subsidies will help to make biofuel competitive. However, till now, biofuel still has not achieved the aimed target for several reasons, e.g. higher cost of production relative to fossil fuel, distribution barriers due to geographical constraints, reluctance from industry due to uncertain markets and relative low participation from local government. This paper develops strategic analysis based on the diffusion process of biofuel development.FindingsThe tools applied are a SWOT analysis, Porter 5 Force analysis, and Business Portfolio analysis to understand the position of the biofuel industry.Originality/valueThis study provides an innovative business model to accelerate the integration of biofuel into the Indonesian energy markets and create profitable and sustainable business.

Designing Business Model and Implementation of Sustainability Evaluation Model for B20 Biodiesel Machinery Industry

“…Based on the test results, there are no problems that occur with the use of B20 and there are no significant changes in the performance of vehicles using B20. In this test also obtained CO, NOx, and HC emissions at B20 lower than B0, while particulate and opacity tend to be the same [3]. While the test on the train obtained good results, the test locomotive engine using B20 can reach its maximum power, CO exhaust emissions are lower than the use of B0, and the injector and filter are declared no problem.…”

A PESTLE Policy Mapping and Stakeholder Analysis of Indonesia’s Fossil Fuel Energy Industry

“…Apart from the Ministry of Energy and Mineral Resources, the Ministry of Agrarian Affairs and Spatial Planning has also interactively coordinated with BKPM on the Central One-stop Integrated Service, in order to mitigate obstacles to incoming investments in the real sectors. Some interesting work on business models for the development of energy investments in Indonesia can be found in [56]. It is important to state that for the evaluation of different investments, systematic life cycle costing models should be employed such as the one presented in [57].…”

Large-scale plantations, bioenergy developments and land use change in Indonesia

“…• It is required to (1) design a blueprint for biofuel production to accelerate poverty alleviation and job creation, (2) design a road map for biofuel development, (3) prepare the technical implementation of biofuel and set up an institutional task force, (4) evaluate biofuel development and its potential to alleviate poverty and create jobs and (5) periodically report on biofuel development to the president (Jupesta et al 2011a). …”