Life cycle cost (LCC) and the economic impact of the national biofuels development through biorefinery concept and circular economy

Abstract

The challenge in the life cycle costing (LCC) analysis of the national biofuel industry is an economic analysis to determine all production costs incurred by the production process from facility construction to waste management. Regarding the Biofuel Supply Chain, the entire process of producing palm oil biodiesel is divided into three stages: production of fresh fruit bunches (FFB), production of crude palm oil (CPO), and biodiesel. LCC analysis is applied by adding an externality variable, providing comprehensive information on the cost structure of palm oil-based biodiesel production. To determine the total cost of externalities that occur due to biodiesel production, the impacts of land use, social costs and environmental costs such as emissions of air pollutants on palm oil biodiesel are considered. The results show that the LCC analysis applied by adding externality variables provides detailed information about biofuel production costs' composition and hotspots. It can be used to determine hotspots, streamline production, obtain an overview of the most competitive total production costs, and minimize environmental impacts along its supply chain.