Observing the management of palm-oil gasoline development in Indonesia: alternative policy selection

Abstract

Abstract The creating of new renewable energy by converting fossil fuels into biofuels is a wise solution for reducing emissions. Palm-oil gasoline, relatively unknown alternative fuel for replacing gasoline, has begun to be produced in Indonesia. As the world’s largest Crude Palm Oil (CPO) producer, Indonesia has the potential to become a best practice for palm-oil gasoline development, particularly in terms of production management. There are three ways to manage palm-oil gasoline production i.e: integration of palm-oil gasoline factories with smallholder farms, co-processing, and a mixture of the two. This paper aims to assess the preparedness of the three alternatives and provide policy recommendations for the development of palm-oil gasoline in Indonesia. Data collection were conducted in 2022 through in-depth interviews and Focus Group Discussion with a variety of energy experts. The Analytical Hierarchy Process (AHP) approach was used to analyse the data, using 5 alternative selection criteria, including: governance, fuel oil import substitution, local content use, stakeholder acceptance of the project, and impact on community. As a result, impact on community criteria are the most considered factor in palm-oil gasoline production and the integration of palm-oil gasoline factories with smallholder farms is the optimum development option.