Significance to the Field

1.7. Limitation

This research has limitation on the data collected from interview. There are 5 participants consisting of one researcher, one industrial practitioner, one people from government and two people from business. This data may not cover and represent all of the population which means it cannot be generalized for all palm oil biodiesel industry. However, this research focuses more on the exploration of the development strategy of biodiesel. It is very important given the fact that collaboration among the stakeholders is key factor in developing and implementing the strategy. Moreover, the action plan and policy design may become the guidance for further development of sustainable biodiesel development 2 LITERATURE REVIEW

2.1. Biodiesel Development Policy

Biodiesel is made from biological resources such as vegetable oils or animal fats. The main compound of biodiesel is a methil ester compound. Biodiesel can be made from the transesterification of fatty acids. Fatty acids, from vegetable oils, are mixed with fatty esters and alcohol to produce by products such as glycerine. In the market, glycerine has a high economic value. Biodiesel has been widely used as a substitute for diesel fuel. Biodiesel feedstock development depends on the natural resources of a nation, for example canola oil in Germany and Austria, soybean oil in USA, palm oil in Malaysia and Indonesia, coconut oil in the Philippines Abdullah, Salamatinia, Mootabadi, Bhatia, 2009. The national team of biofuels provided a biodiesel development roadmap in 2006. They targeted to use 10 biodiesel from total consumption of Automotive Diesel Oil ADO in 2006 – 2010 and then increased until 20 in 2016. The target of biodiesel usage from total usage is ambitious Caroko et al. 2011. Increasing mandatory blending is one of the policies to increase biodiesel usage Handoko 2012, but the problems of palm oil biodiesel continue from the plantation until distribution. The government should provide a set of effective regulation in the biodiesel supply chain Daryanto 2010. Figure 1 Biodiesel development roadmap in 2006 Wirawan, Tambunan 2006 In 2014, the government targeted to increase biodiesel mixing to 10 B10 that was stated in Minister of Energy and Mineral Resources Regulation No: 202014. This regulation targeted to utilize the biodiesel in Transportation, Industry and Power Plant sector. Table 1 Mandatory biodiesel blending in regulation No. 202014 Sector Sep 2013 Jan 2014 Jan 2015 Jan 2016 Jan 2020 Jan 2025 Remark Household - - - - - - Not Regulated Micro Industry, Fishery and agriculture industry, Transportation PSO 10 10 10 20 30 30 From Total Usage Transportation Non PSO 3 10 10 20 30 30 From Total Usage Industrial and commercial 5 10 10 20 30 30 From Total Usage Power Plant 7.5 20 25 30 30 30 From Total Usage PSO : Public Service Obligation Source: Minister of Energy and Mineral Resources As the substitute of petroleum, the main advantage of using palm oil biodiesel is there is no direct negative effect on the engine. However, Jayed et al. 2011 has listed many engine problems using the palm oil biodiesel usage e.g. fuel injector coking, carbon deposit on piston, gum and wax formation and corrosion on some high pressure parts. The government should develop a tight controlling regulation on the palm oil biodiesel quality standards. One of the aims of biodiesel development is to reduce rural poverty. According to Manik, Leahy, and Halog 2013, exploitative labor relations, alienation, and other negative impacts on the well-being of localtribal communities are the most noticeable social hotspots that prevent the sustainability of palm oil biodiesel. The social effect of the palm oil biodiesel