The Biofuel Technology

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The Biofuel Technology

Chapter two describes biofuels from a technical perspective in order to gain an understanding of the biofuel technologies and its possible drawbacks and benefits from a technical perspective. These may also serve as a clue to already acknowledged problems in Indonesia with the biofuel technologies, which later on can be taken into consideration in the barrier analysis, giving a greater understanding of the biofuel development in Indonesia. It will also provide a starting point in modeling with the LEAP tool as it provides current conditions of the fuel usage and important characteristics of the fuel.
The sustainability issues are known to be one of the most discussed problems with biofuels, which could serve as a drawback for the biofuel technologies development in Indonesia and is therefore discussed in more detail in this chapter (Food and Agriculture organization of the United Nations [FAO], 2015). What more to acknowledge in this assessment is that it is limited to the first and second generations of biodiesel and the first generation of bioethanol, as these are the only biofuels currently occurring in Indonesia and therefore the ones who will be discussed more in detail (see chapter 3.4).


Biofuels are liquid fuels coming from different kinds of biomass, as for example soybean, palm oil or jatropha and produced through biological processes using the direct product or its byproducts (FAO, 2013). Example of byproducts could be organic waste or logs (Biofuel Indonesia, 2007) but what kind of product used is heavily connected with the probability to grow it in the area, for example is this why biofuels from palm oil is heavily exported by Asia (FAO, 2013).
Biofuels has been known as a replacement for crude oil for many decades, but as crude oil was seen as both cheaper and easier to produce, the biofuels has always come as a second choice, resulting in the already established fossil fuel sector working as a barrier for biofuels to come through (Biofuel Indonesia, 2007). As environmental concerns and the concept of peak oil came up on the agenda, biofuels has started to be regarded with more interest (Figure 2) (Biofuel Indonesia, 2007). This led to an increased production of biofuels from 80 billion liters in 2008 to 140 billion liters in 2016 (IEA, 2015a).
Generally, biofuels can be referred to three different types of plant-based liquid fuels; biodiesel, bioethanol and bio-oil (Vasudevan and Shamra, 2005). What kind of biofuel are depending on mainly three different characteristics; from what it is produced, how it is produced and what kind of fuel molecules that emerge from the production (Janda and Stankus, 2017). Biofuels can from this be categorized into three different generations;
1st generation; biofuels produced from sources like starch, vegetable oils, animal fats and sugar products.
2nd generation; biofuels made from cellulosic products, usually used to feed livestock, mainly wastes, energy crops or agricultural leftovers.
3rd generation; biofuels made from algae, which can give arise to both biodiesel and some components of gasoline. (Beyene, 2016; Janda and Stankus, 2017)
Biofuels are according to Kazamina and Smith (2014) usually produced as following: farming of the feedstock by plantation, harvesting and processing, crushing and extracting oil from the feedstock, transportation of extracted oil to the production factory where the biofuels is produced, transportation and storage of extracted fuel and finally the usage of the fuel (see Figure 3). As seen, the production process of biofuels consists mainly of the agriculture and the processing sector, where the agricultural sector produces the feedstock for biofuels and the processing sector turns the feedstock into biofuels and consumes them (Vasudevan and Shamra, 2005).
Figure 3. Biofuel production stages. Compilation by authors as perceived from Kazamina and Smith (2014).


Biodiesel or green diesel that some call it, can be produced by combining alcohol with different oils from plants, fat from animals or greases, such as for example palm oil, soybean oil or jatropha carcass (Beyene, 2016; Janda and Stankus, 2017). It is generally used as a substitute for diesel oil (Cordes and Schutter, 2011). Biodiesel blending is a common trait around the world, with everything from 5% to 20% biodiesel blending with diesel.
Biodiesel has similar properties as crude-oil based diesel as seen in Table 1.
Generally, biodiesel can only use a diesel engine but some blends can go directly into heat and power operators. In older engines, Biodiesel can be used up to a blend rate of 20% without necessary improvements, which is especially interesting in countries with older cars still in usage. Studies have shown that including it in mix with diesel could increase the safety in warmer countries as the flash point for ignition increases and increase the lifetime of various engine components due to the greasing effect (Agarwal, 2006; Vasudevan et al., 2005). However, one drawback could be that the same properties can lead to ignition problems in colder countries and the clogging of fuel filters (Agarwal, 2006). The requirement for newer engines is sometimes seen as the largest technical barrier for implementing biofuels (Janda and Stankus, 2017).


First generation bioethanol, is made by doing bioethanol from the alcohol coming from fermented agricultural crops containing sugar, such as sugarcane or corn (Beyene, 2016). The second generation bioethanol is cellulosic bioethanol, where a range of different materials’ cellulose (e.g. solid waste or wood) can be used to make the bioethanol, making it relatively easy to obtain (Janda and Stankus, 2017). Bioethanol is generally used as a substitute for gasoline (Cordes and Schutter, 2011). For more information, see Table 2.
Table 2. Properties of gasoline and bioethanol. Compilation by authors based on Diffen (2017), Eriksson and Ahlgren (2013) and Vasudevan et al. (2005).
Traditional motors can run on E5 (5% bioethanol and 95% gasoline) as well as E10 but E85 and E100 is only used in motors with a flex-fuel engine. Gasoline also contains more energy per volume compared to bioethanol or in other words, the same amount of bioethanol as gasoline generate less energy to the motor. This makes it harder to sell and a possible market barrier (Janda and Stankus, 2017)
Additionally, this will require the vehicles to have larger fuel tanks or be limited to shorter distances (Agarwal, 2006). However, studies have found that the inclusion of bioethanol will increase performance of engines in terms of torque at lower levels (Thakur et al., 2017).

The Sustainability of Biofuels

The sustainability perspective in this report is a central perspective in many parts, especially when talking about the sustainability of biofuels. The sustainable development concept is famously defined in the report Our Common Future – Brundtland Report as; “Sustainable Development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” (United Nations 1987, p. 41). This definition serves as this reports view on sustainable development.
There are also a number of other different factors to consider in order to touch the three different pillars of sustainability; the economic, the environmental and the social sustainability (FAO, 2013). To be deemed truly sustainable, biofuels has to be able to meet all of these three pillars. These sustainability aspects in relation to biofuels are therefore discussed below, especially as biofuels for long has gained negative attention in relation to a number of sustainability aspects which are discussed below.
Due to Indonesia being an “emerging economy”, Tukker (2005) deemed it’s important for Indonesia to be careful with new technologies in relation to sustainable development and not repeat the sustainability ‘mistakes’ already developed economies have done in regard to new technology. With this in light, the biofuel technology in Indonesia should be carefully monitored in relation to the sustainability concept, particularly as many emerging technologies also have a close relation with social issues (FAO, 2013). Indonesia’s sustainability issues related to biofuels are discussed more in detail below. These sustainability issues have been chosen due to their occurrence in Indonesia and they were the most frequently mentioned during the interviews with stakeholders in the biofuel sector (see chapter 4 and 5.1).

Main Sustainability Issues with Biofuels in Indonesia

Biofuels has during a long time been considered sustainable, mainly from the fact that biofuels are considered to release none or a low amount of GHG emissions into the atmosphere. The GHG emissions is one of the largest sources for climate change and therefore it is an important metric to consider regarding sustainability (FAO, 2013; IPCC, 2007). Nowadays, biofuels such as bioethanol and biodiesel is not considered CO2-neutral, but are considered to reduce the emissions in a larger extent than crude-oil based fuels (Janda and Stankus, 2017; Petterson and Grahn, 2012; Zaimes et al., 2017).
When talking about the farming of biofuels, a number of sustainability issues arise. Two of the most spoken about in Indonesia is the loss of biodiversity and land degradation which mainly occur when land has to be altered in order to farm biofuels, putting pressure to turn forest land into a farming area (Beyene, 2016; Cordes and Schutter, 2011). What type of land you alter is also deemed important, as for example rainforest have a higher environmental impact than forestland due to its rich biodiversity (Hidayatno et al., 2011).
According to Beyene (2016), another problem is the high amount of water used in the farming and conversion stages of biofuel production, affecting Indonesia’s water security. Cordes and Schutter (2011) state that bioethanol conversion is twice more water consuming than gasoline. The increased farming of biofuels also causes an increased amount of fertilizers and pesticides used, triggering problems with polluted land and water and eutrophication, affecting both humans and animals (Cordes and Schutter, 2011).
Another problem related to the farming of biofuels is the food-water-energy nexus, which refers to the interlink in between food, water and energy and that scarcity in one of these areas, is heavily linked to the others and always affect each other (FAO, 2013). The increasing food and water demand, mainly due to an increasing population in Indonesia, causes a food and water vs biofuels problem (Rulliet et al., 2016).
Energy security is indeed one of the biggest benefits talked about today with biofuels, which is especially appreciated on the political agenda (Kazamia and Smith, 2014). An improvement of energy security with biofuels for Indonesia would mean less reliance on foreign energy import (e.g. oil import) and more reliance on energy the country can produce by itself and be less influenced of the global market. It could through also make the country more sensitive to environmental phenomena like drought or diseases affecting the harvest as supplies can be volatile (Cacciatore, 2012).


Study Context

In this chapter, the case context of Indonesia will be presented with specific information on the country and its current trends and future projections. This chapter also gives a background to do an adequate study with the tools MLP and LEAP as it gives insight how historic trends has resulted in the current situation. Biofuel related policies, laws and regulations in Indonesia is presented in the end of this chapter, to give insight in what have been done to implement biofuels nationally in Indonesia and what have been done to develop the biofuel sector.

General Information about Indonesia

Indonesia is a lower middle-income country located in east Asia with a GDP of 942 billion USD1 ranking it as the 9th largest economy worldwide in 2014 (Hawksworth and Chan, 2015; World Development Indicators [WDI], 2017). For the last 25 years the average GDP per capita have grown by 3.44% annually and were around 3700 USD/capita2 by 2014 (WDI, 2017). Projections in Figure 4 suggests that the GDP per capita will pass 5000 USD/capita in 2020 and reach 8350 USD/capita in 2030 if the recent high economic growth continues.
The population of Indonesia reached over a quarter billion in 2013 making it the 4th populous nation in the world (MoEF, 2015; WDI, 2017). The historic population growth rate has been decreasing until it stagnated in the early 2000s and remained so for the following decade, in the recent years it has showed a trend of further reducing its speed as shown in Figure 5. Indonesia’s population growth is expected to follow the current trend of decline as it is estimated to drop below 1% in 2020 and decreasing to 0.7% in 2030. In 2030, it is projected that Indonesia’s population will have reached 295 million as can be seen in Figure 6. There is an ongoing urbanization in Indonesia and since 2011, more than half of the population is living in urban areas (WDI, 2017).
More than 75% of the national primary energy supply came from fossil fuels in 2014, indicating a high reliance on fossil fuels (MEMR, 2016a). As of 2011, Indonesia has been exporting more energy than it uses domestically and have been seen a net energy exporter for decades (WDI, 2007). Due to its large energy consumption increase the last decade, it went from being a net oil export to a net oil importer in 2004 and is today the second largest oil importer in the region, making it want to increase its national energy production due to energy security improvements (IEA, 2015b). Moreover, in terms of fuels for transportation, more than half is directly imported while over a fifth is indirectly imported through crude oil (MEMR, 2016a). Since the transport sector accounted for 47% of the final energy demand in Indonesia 2014 (Figure 7), it plays a major role in terms of energy self-dependence.
Indonesia’s final energy demand have grown rapidly in the past decades and is projected to continue doing so in the future (Agency for the Assessment and Application of Technology [BPPT], 2016). It is expected to have doubled in the period from 2000-2015 and is projected to grow with 150% in 2030 compared to 2015 (Figure 8).
According to Presidential Regulation No.79/2014 the energy consumption in 2025 should consist of at least 30% gas, 22% coal, less than 25% petroleum and 23% from new energy and renewables, new energy can be sources as nuclear and coal bed methane (Presidential Regulation, 2014). These shares should change to be minimum 25% gas, 24% coal, less than 20% petroleum and at least 31% new energy and renewables in 2050 (President of the republic of Indonesia, 2014). The regulation has been formed as a push to make Indonesia completely self-sufficient in energy (IEA, 2015b).
Agriculture have historically been an important sector in Indonesia as it accounted for 56.2% of the total employment and 23.4% of the GDP in 1989. Even though its significance has declined somewhat it still accounted for 34% of the employment in 2014 and 13.3% of the GDP, making it one of Indonesia’s largest sectors. The area used for agriculture purposes have continued to grow from a quarter of Indonesia’s 190 million hectares in 1989 to 31.5% in 2014 (WDI, 2017). Even though Indonesia has a large agricultural sector, it is still a country that is plagued with food security issues and have experienced increased food security problems since 2008. An Asian Development Bank [ADB] study identified grains, horticulture and livestock as some of the major food imports in Indonesia (Quincieu, 2015).

Table of contents :

1. Introduction
1.1 Research Problem
1.2 Research Significance
1.3 Research Objective and Questions
1.4 Structure of the Thesis
2. Background
2.1 The Biofuel Technology
2.1.1 Biofuels
2.1.2 The Sustainability of Biofuels
2.2 Study Context
2.2.1 General Information about Indonesia
2.2.2 Biofuels in Indonesia
3. Methodology
3.1 Research Approach and Strategy
3.2 Theoretical and Conceptual Framework
3.2.1 Framework for Determine Factors Hampering the Biofuel Development: The Multi-Level Perspective
3.2.2 Projections and Scenario Analysis with LEAP: Indonesia’s Transport Sector by 2030
3.3 Identification of Relevant Renewable Energy Penetration Barriers
3.4 Research Scope and Limitation
4. Data
4.1 Methods for Data Collection and Analysis
4.1.1 Data Collection
4.1.2 Data Analysis
4.2 Data for Projections and Scenario Analysis with LEAP
5. Result
5.1 Identified Factors Hampering the Development of the Biofuel Sector
5.1.1 The Multi-Levels Related to Biofuels in Indonesia
5.1.2 Main Barriers Regarding the Development of the Biofuel Sector in Indonesia as Perceived by Stakeholders
5.1.3 Biofuel Sector Development According to the Actors
5.2 Projections and Scenario Analysis with LEAP: Indonesia’s Transport Sector by 2030
5.2.1 Projections of Fuel Consumption
5.2.2 Projections of Global Warming Potential
6. Discussion
6.1 The Biofuel Development in Indonesia’s Transport Sector
6.2 Accuracy of Report Findings
7. Conclusion
7.1 Summary of Research Findings
7.2 Recommendations
7.3 Further Research Orientation
8. References


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