Cost-benefit analysis of biodiesel related policies: The assessment of applicability. A case study in new biodiesel policies in Indonesia

Until recently, biodiesel development in Indonesia is far from the target. The previous government policy cannot substantially increase its domestic consumption. Moreover, as the crude price oil decrease, the viability of biodiesel development is still questionable. This is due to the fact that biodiesel still remains uncompetitive since the production cost of biodiesel is higher than fossil diesel. A cost benefit analysis (CBA), as an important and systematic approach in estimating the best possible policy options has already been conducted in biodiesel sectors. It was applied specifically to analyze the financial feasibility of the industries in different countries. Despite its remarkable use, the applicability assessment of CBA in investigating the impact of different policies has been hardly examined. Thus, this research aims to investigate the applicability of CBA within biodiesel related policy changes in Indonesia. It should be noted that the Indonesian government has particularly implemented the new biodiesel related policy. The applicability of CBA to analyze the impact of any biodiesel current and future policy has given some new insights. Beside several effects that cannot be monetized, a stakeholder’s analysis plays an important role in analyzing the added value of CBA in this particular case study. The application of CBA can be used to briefly determine what the main purpose of each policy will be.

Subject

Indonesia biodiesel policy
cost-benefit analysis
applicability
future energy policy

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