ECONOMIC PILLAR

Dr. Yandra Arkeman

Objectives

• To assess the impacts of bioenergy business to

our national economyour national economy

Bioenergy:

• CPO-based Biodiesel

• Bioethanol

• Biogas

• Biomass• Biomass

List of Indicators

• Indicator 17: Productivity

• Indicator 18: Net Energy Balance

• Indicator 19: Gross Value Added

• Indicator 20: Change in consumption of fossil fuels and traditional use of biomass

• Indicator 21: Training and re-qualification of the workforce• Indicator 21: Training and re-qualification of the workforce

• Indicator 22: Energy Diversity

• Indicator 23: Infrastructure and logistics for distribution of bioenergy

• Indicator 24: Capacity and flexibility of use of bioenergy

Indicator 17

Productivity

• This indicator is primarily related to the theme

of resource availability and use, efficiencies in

bioenergy production, processing, and

distribution.distribution.

• Productivity is a measure of output from a

production process, per unit of input and can

be used to measure the efficiency with which

inputs are transformed into end-products.

Key findings/values

• Palm Oil Productivity:– Case study (Private) : 4.8 T/Ha/Yr

– National (Average) : 3.8 T/Ha/Yr• Government : 4.2 T/Ha/Yr

• Private : 4.1 T/Ha/Yr

• Smallholders : 3.4 T/Ha/Yr• Smallholders : 3.4 T/Ha/Yr

– Malaysia : 4.6 T/Ha/Yr

– Potential : 7.0 T/Ha/Yr

• Biodiesel Productivity : 39,380 MJ/T CPO

• Biogas (POME) Productivity : 501 MJ/m3

• Biomass (rice husk) Productivity : 280 Kg/T Paddy

• Bioethanol (molasses) Productivity: 3.4 T/Kl ethanol

Productivity of Bioenergy per Hectare

Biodiesel Productivity : 4.64 T/Ha

Biogas Productivity (from manure): No land use

Biomass Productivity (from by product, i.e. rice-Biomass Productivity (from by product, i.e. rice-

husk) : No land use

Bioethanol Productivity (from molasses) : No land

use

So, productivity can not directly compared to

each other)

Data gaps/limitations

• Difficulties in defining productivity measure

used to compare biofuels where the feedstock

comes from main product vs. by product in

term of land useterm of land use

• Difficulties in determining land area used for

bioenergy (i.e bio-diesel) production

Key trade-offs

• Yield vs Pollution?

• Smallholders vs Productivity?

Recommendations

• Monitoring?– Survey including smallholders

• Policies to manage impacts of efforts to increase productivity:– Good agricultural practices guidelines– Good agricultural practices guidelines

– Extension services for farmer groups

– Increase plant breeding

– Process efficiency � Apply new technology

• Is this a critical concern here? Yes– Because we need to increase productivity without

increasing the risk

Indicator 18

Net Energy Balance

• Production of bioenergy requires energy as an

input at different steps of the value chain.

• The net energy ratio (i.e. ratio of energy

output to total energy input) is a useful output to total energy input) is a useful

indicator of the relative energy efficiency from

plantation to end-product

Key findings/values

• Biodiesel Net Energy Ratio : 5.36

– Main contributor: Methanol, Electricity, Urea

• Lampung (2008) : 3.10

• Thailand (2008) : 3.58 • Thailand (2008) : 3.58

• Malaysia : 3.53

• Brazil and Colombia in the range : 6.0 – 8.0

Inter-feedstock comparisons?

No data available yet for energy inputs in biogas

production, though for biogas from manure, fossil

energy inputs are considered zero. Calculations for

ethanol and biomass in progress.ethanol and biomass in progress.

Net energy ratio can be calculated for all pathways.

However, care should be taken in comparing energy

ratios for forms of bioenergy that displace different

forms of fossil fuels.

Data gaps/limitations

• Data regarding equipment for land clearing

• Need to repeat calculation for more plants

Trade-offs

• Net energy balance versus access to

technology (e.g. investment costs) and energy

inputs

• Net energy balance versus employment• Net energy balance versus employment

• Improving energy efficiency versus improving

profit (which could be achieved simply

through increasing production)

Recommendations

• Monitoring?

Increase surveys of producers, including smallholders

• Policies to manage impacts

– Encourage more use of biomass waste (including biogas from POME) as process fuel in mills, refineries biogas from POME) as process fuel in mills, refineries and bioenergy plants

– Reduce fertilizer use in plantations through application of residues (e.g. EFB) to soil

• Is this a critical concern here?

– Yes, since helps reduce fossil fuel use

Indicator 19

Gross Value Added

• The indicator shows the size of the

contribution of the bioenergy sector to the

national economy.

• The indicator also shows the contribution to • The indicator also shows the contribution to

GDP per unit of bioenergy.

Key findings/values

• Gross value added of biodiesel is 0.00248 US$/MJ

PME (Palm Methyl Ester)

ItemValue

(USD/MJ PME)Item

(USD/MJ PME)

Biodiesel (PME) 0.03008

CPO 0.02638

Methanol 0.00122

Gross Value Added 0.00248

• Further data required to calculate GVA from

biodiesel production and “biodiesel portions”

of GVA from CPO and refinery phases of value

chainchain

Indicator 20Change in consumption of fossil fuels and traditional use of biomass

• The use of locally produced biomass for

bioenergy can displace the consumption of

fossil fuels and/or traditional use of biomass

for energy.for energy.

• Reducing the consumption of imported fossil

fuels can bring about savings in convertible

currency.

Key findings/values• Displacement of traditional bioenergy by modern bionergy:

– only case study where this effect is observed (historically) is the

Haurngombong village, where if we assume that fuelwood rather than LPG is

displaced, the traditional bioenergy displaced is 32.2 GJ/day for a village of

700 households

• Displacement of fossil fuels by modern bioenergy:

– at the national level this is approximately equal to the energy content of

domestically produced and consumed biodiesel multiplied by (1 – 1/NER), i.e.domestically produced and consumed biodiesel multiplied by (1 – 1/NER), i.e.

• Approx. 1 Million BOE (Barrel Oil Equivalent) of fossil fuels displacement by

biodiesel (B100)

– the amount of convertible currency saved depends on whether the marginal

diesel displaced by biodiesel is imported (further information required)

– export of biodiesel will also lead to convertible currency earnings

– the fossil fuel displaced by biogas case studies was also calculated

– fossil fuel use is also displaced by cases such as INDOCEMENT (where coal is

displaced) and CPO mills, where provision of electricity from the mill to works

leads to displacement of grid-supplied fossil-fuel based electricity

Indicator 21Training and re-qualification of the workforce

• Share of trained workers in the bioenergy

sector out of total bioenergy workforce, and

• Share of re-qualified workers out of the total

number of jobs lost in the bioenergy sector number of jobs lost in the bioenergy sector

Key findings/values

• Data on number of trained workers in the bioenergy sector is being sought from the industry

• At the biodiesel case study level,

– Plantation � total employee: 545 (Skilled 3%, Unskilled 97%)97%)

– Mill � total employee: 133 (Skilled 27%, Unskilled 73%)

• On the case study, share of re-qualified workers out of the total number of jobs lost in the bioenergy sector is not available

• There is lack of data on the number of workers on the bioenergy sectors

Data gaps/limitations

• If data from government or companies are not

readily available, the cost of conducting the

surveys/interviews and the coverage of the

entire workforce in the bioenergy sector entire workforce in the bioenergy sector

needs to be taken into consideration.

Key trade-offs?

• Labor-intensive vs Technology application (i.e.

Mechanization)

Recommendations

• Monitoring

– Data recording on bioenergy industries

• Identified all bioenergy industries especially the small

scale imdustries

• Policies to manage impacts

– Obligation to report to the government

• Is this a critical concern here?

– Yes, to better understand the impact of bioenergy

industries at the job sector

Indicator 22

Energy Diversity

• Change in diversity of total primary energy

supply (TPES) due to bioenergy

• This indicator refers primarily to the theme of

Energy security/Diversification of sources and Energy security/Diversification of sources and

supply.

Key findings/values

• Based on Secondary Data from Ministry of Energy (ESDM, 2010):

• Only biomass is included in the primary energy supply.

• Biofuel is included in the oil energy supply• Biofuel is included in the oil energy supply

• Traditional biomass contribute 19.69% to the Indonesia energy supply

• Modern bioenergy contributes 0.10% in the form of biodiesel plus some amount from heat and power (further data required: 71MW capacity connected to grid in 2012). Energy from biodiesel represents 0.56% of energy in the transport sector

Key trade-offs

• Energy diversity vs Energy fulfillment

Recommendations

• Monitoring?

– Type of energy categorization

• Differentiate between Non Renewable Energy and

Renewable Energy

Indicator 23Infrastructure and logistics for distribution of bioenergy

Number and capacity of routes for critical

distribution systems, along with an assessment

of the proportion of the bioenergy associated

with eachwith each

Key findings/values

• Biofuel distribution routes are utilizing water

and road transport (vessel, truck)

• Biogas mostly utilized onsite

Data gaps/limitations

• Potential data gap relates to flexible bioenergy

supply routes (such as road transport or naval

shipments) as capacity could be difficult to

estimate.estimate.

Key trade-offs

• Centralized vs decentralized of bioenergy

production

Recommendations

• Monitoring?

– Industries report on bioenergy distribution

Indicator 24Capacity and flexibility of use of bioenergy

• Ratio of capacity for using bioenergy compared with actual use for each significant utilization route

• Ratio of flexible capacity which can use either • Ratio of flexible capacity which can use either bioenergy or alternative fuel sources to total capacity

• A flexible bioenergy system helps to reduce the risks and further bring down operating costs.

Key findings/values• Ratio of potential/actual production of:

• Biofuels for road transport-biodiesel is 2.48

• Biofuels for road transport-bioethanol is n/a

• Ratio of flexible/actual use of:

• Biodiesel: technically feasible for biodiesel plants to switch feed-stocks in appropriate economic conditions;

• Biofuels for road transport-biodiesel is 1.33 (assuming maximum blend of B10 • Biofuels for road transport-biodiesel is 1.33 (assuming maximum blend of B10 for road fleet engines. Noted that: actual percentage of mixture 7.5%)

• Bioethanol: PT MEL case shows flexibility in that bioethanol plant designed for cassava can switch to molasses for ethanol production in light of feedstock prices

• Biomass: Wilmar case suggests high flexibility between coal and biomass (100% flexibility if designed for biomass; limited flexibility if designed for coal)

• Biomass: INDOCEMENT case: Biomass usage is 15% from total energy required: technical upper limit is restricted due to lower heating value of biomass compared to coal

Key trade-offs

• Production vs Price

Recommendations

• Monitoring?– Report on various energy source that being utilized

• Policies to manage impacts– Obligation to report to the government

• Is this a critical concern here? Yes• Is this a critical concern here? Yes– Provide information on the flexibility of utilization

systems to switch between bioenergy and alternative fuels sources.

– Understanding the capacity constraints and margin and the flexibility on fuel use allows an appreciation of the risks associated with using bioenergy.

Thank YouThank You