Life cycle cost and sensitivity analysis of palm biodiesel production

H. C. Ong, T.m. Indra Mahlia, H. H. Masjuki, Damon Honnery

Research output: Contribution to journalArticle

58 Citations (Scopus)

Abstract

Increased biodiesel production is being proposed as one solution to the need to ease the impact of increased demand for crude oil and to reduce emissions of greenhouse gases. Despite this, biodiesel has yet to reach its full commercial potential, especially in the developing countries. Besides technical barriers, there are several nontechnical limiting factors which impede the development of biodiesel such as feedstock price, production cost, fossil fuel price and taxation policy. This study assesses these by undertaking a techno-economic and sensitivity analysis of biodiesel production in Malaysia, the second largest producer of crude palm oil feedstock. It was found that the life cycle cost for a 50 ktons palm biodiesel production plant with an operating period of 20 years is $665 million, yielding a payback period of 3.52 years. The largest share is the feedstock cost which accounts for 79% of total production cost. Sensitivity analysis results indicate that the variation in feedstock price will significantly affect the life cycle cost for biodiesel production. One of the most important findings of this study is that biodiesel price is compatible with diesel fuel when a fiscal incentive and subsidy policy are implemented. For instance, biodiesel price with subsidies of $0.10/l and $0.18/l is compatible and lower than fossil diesel price at crude palm oil price of $1.05/kg or below. As a conclusion, further research on technical as well as nontechnical limitations for biodiesel production is needed before biodiesel can be fully utilized.

Original languageEnglish
Pages (from-to)131-139
Number of pages9
JournalFuel
Volume98
DOIs
Publication statusPublished - 01 Aug 2012

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Biofuels
Biodiesel
Sensitivity analysis
Life cycle
Costs
Feedstocks
Palm oil
Economic analysis
Petroleum
Diesel fuels
Taxation
Fossil fuels
Developing countries
Greenhouse gases
Crude oil

All Science Journal Classification (ASJC) codes

  • Chemical Engineering(all)
  • Fuel Technology
  • Energy Engineering and Power Technology
  • Organic Chemistry

Cite this

Ong, H. C. ; Mahlia, T.m. Indra ; Masjuki, H. H. ; Honnery, Damon. / Life cycle cost and sensitivity analysis of palm biodiesel production. In: Fuel. 2012 ; Vol. 98. pp. 131-139.
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Life cycle cost and sensitivity analysis of palm biodiesel production. / Ong, H. C.; Mahlia, T.m. Indra; Masjuki, H. H.; Honnery, Damon.

In: Fuel, Vol. 98, 01.08.2012, p. 131-139.

Research output: Contribution to journalArticle

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