A Superstructure Based Enviro-Economic Optimization for Production Strategy of Oil Palm Derivatives

Abstract

Indonesia is one of the largest palm oil producers in the world. Palm oil has a wide range of derivative products that have higher values than in the upstream oil palm products. Indonesia still exports mostly crude palm oil rather than its derivatives. The objective of this research is to obtain the best strategy of developing downstream palm oil industry by considering the total price and greenhouse gas emission. Economic objective function is the total selling price of all products and environmental objective measured by the total greenhouse gas emissions. Multi-objective optimization is based on State-Task Network superstructure with fixed variable of product selling price, emission factor, conversion factor, national demand and global demand of the products. Multi-objective optimization is carried out using GAMS with Cplex 12.6.3 solver. The total selling price obtained amounted to 51.67 billion USD and total GHG emissions generated were 88.05 million tons CO2e. The selected production pathway is the production of 54 palm oil derivatives products to meet domestic needs and 21 of them can be exported (1 FFB derivative product, 4 CPO derivative products, 1 POME derivative product, 4 EFB derivative products, 2 PKS derivative products, and 9 Palm Kernel derivative products).