The Feasibility Study of Producing Bioethanol
THE FEASIBILITY STUDY OF PRODUCING BIOETHANOL FROM CASSAVAPLANTED IN POST-MINING LAND USING BENEFIT COST RATIOAPPROACHRenewable Energy and Environmental Solutions
Content
Topic
Energy: Renewable Energy and Environmental Solutions
Title
THE FEASIBILITY STUDY OF PRODUCING BIOETHANOL FROM CASSAVA
PLANTED IN POST-MINING LAND USING BENEFIT COST RATIO
APPROACH
Author and Affiliation
Ratih Kartika Septiningtyas
Bachelor Degree, Industrial Engineering/ITB
Luh Vita Nurima
Bachelor Degree, Industrial Engineering/ITB
Gorby Gandhianto Rasyid
Bachelor Degree, Industrial Engineering/ITB
Dwini Rahmadina Nisahati
Bachelor Degree, Management/President Univ.
E-mail and Mobile Number
[email protected]
+6285 721 452 882
[email protected]
+6281 2324 0505
[email protected]
+6285 782 016 979
[email protected]
+6285 714 947 766
Fax Number
+6231 848 1637
Mailing Address
Jalan Tubagus Ismail V/2A Bandung 40134, West Java, Indonesia
The Feasibility Study of Producing Bioethanol from Cassava Planted in PostMining Land Using Benefit Cost Ratio Approach
Abstract
As the population in Indonesia is increasing, demand for energy is also increasing. One
of the ways to adapt to the global climate change is to use fuel from biomass like
bioethanol. This paper will discuss about bioethanol that can be made from cassava as
an act of applying renewable energy in Indonesia, and also will give environmental
solution through the act of planting cassava in a post-mining land. Benefit Cost Ratio
approach is used to test the feasibility of producing bioethanol from cassava planted in
post-mining land. The project used as a study case belongs to PT Indomining that is
been doing the project in Sangasanga district in East Kalimantan.
Keywords: bioethanol, cassava, post-mining land, benefit cost ratio, renewable energy
Introduction
As the population in Indonesia is increasing, demand for energy is also increasing.
According to the Ministry of Energy and Mineral Resources (EMR), gasoline fuel
consumption was 3.9% above the average quota for the year 2011 (66.06 thousand
kiloliter per day). While diesel fuel consumption reached 5.3% above quota (37.75
thousand kiloliters per day). Gasoline and diesel are the two refined petroleum
products, which are the most widely used in Indonesian society. But as we all know, oil
is a fuel that cannot be renewed.
Apart form gasoline; there are other available sources of energy such as coal.
Petroleum and coal are the energy sources that will release greenhouse gas (CO 2) to
the atmosphere. This gas is widely known as the prime cause of the global climate
change. Indonesia had declared to reduce its emission up to 26% by 2020 in United
Nations Climate Change Conference (COP15) in Copenhagen. The government
already issued some regulation to respond to this, such as Presidential Instruction No.
1/2006 and Regulation of the Minister of Energy and Mineral Resources No. 32/2008.
One of the ways to adapt to the global climate change is to use fuel from biomass like
bioethanol. It is renewable, has sustainability of supply and create cleaner environment.
Indonesia have potential ability to develop bioethanol, one of them by using the benefit
of planting cassava. Cassava (Manihot esculenta or Manihot glaziovii) is a starchcontaining root crop of worldwide importance as food, feed and non-food products.
With increasing population pressure and climate change it is predicted that the
production of cassava will increase over the next few decades, and, as a result,
cassava is now an international priority for crop improvement.
Even though, cassava is mainly grown by small-scale farmers, it is predicted that the
production of cassava will increase over the next few decades due to the demand of
cassava as food drived by increasing population and also its increasing use for agroindustrial processing in Asia. Apart from its traditional role as a food crop, cassava is
likely to increase its value by becoming an important biofuel crop due to its high yields
of starch. Beside the high yields of starch, the total dry matter in spite of drought
conditions and poor soil, together with low agro-chemical requirements, cassava is a
plant that is suitable for this project since the area used to plant the cassava is the post
mining-land. The cassava planting is needed to reclaim the post-mining land. Having
these characteristics resulted in an energy input that represents only 5–6% of the final
energy content of the total cassava biomass. This translates to energy profit of 95%,
assuming complete utilization of the energy content in the total biomass.
The energetic and economic aspects of using cassava as a biofuel crop are well
documented. For instance, Tabel 1.1 shows a direct comparison of bioethanol
production from different energy crops which was reviewed by Wang (2002). The
conclusion was that cassava compared favorably to other crops such as maize,
sugarcane and sweet sorghum. Indeed, the annual yield of bioethanol was found to be
higher for cassava than for any other crops, including sugarcane. Hence, the interest in
production of cassava starch-derived bioethanol is progressively increasing in
Indonesia and the rest of world. In this review, it is mainly addressed on biological
issues of cassava as a biomass for biofuel production and some of its economic
aspects in Indonesia.
Tabel 0.1 Comparison of bioethanol production from different energy crops
Crops
Yield
-1
Conversion rate to bioethanol
-1
-1
Bioethanol yield
-1
-1
(ton ha year )
(L ton )
(L ha year )
Sugarcane
70
70
4900
Cassava
40
150
6000
Sweet sorghum
35
80
2800
Maize
5
410
2050
Wheat
4
390
1560
Rice
5
450
2250
Mining companies have already planned to produce bioethanol from cassava planted in
post-mining land as a form of environmental stewardship and renewable energy
development. Toxic cassava (Manihot glaziovii) will be planted to avoid competition
between its role as food crop for local communities and as biofuel crop for producing
bioethanol.
In this paper, Benefit Cost Ratio approach is used to test the feasibility of producing
ethanol from cassava planted in post-mining land. The expected outcome of this paper
is that producing bioethanol from cassava planted in post-mining land is feasible and
commercially successful, according to the feasibility study. Then, the idea can be
proposed as a CSR (Corporate Social Responsibility) project for mining companies in
Indonesia. In addition, this project can help reducing emission from green house gas
that causes the global climate change because it is cleaner fuel, provides access to
energy for remote communities and hopefully can be a solution to the energy scarcity
problem in Indonesia. Moreover, there will be an analysis of competitiveness between
bioethanol from cassava and gasoline, diesel and kerosene.
Theory
1.1 Cost-benefit analysis
Cost-benefit analysis (CBA) is an economic decision-making approach, used
particularly in government and business. CBA is used in the assessment of whether a
proposed project, programmed or policy is worth doing or to choose between several
alternative ones. It involves comparing the total expected costs of each option against
the total expected benefits, to see whether the benefits outweigh the costs, and by how
much.
In CBA, benefits and costs are expressed in money terms, and are adjusted for the
time value of money, so that all flows of benefits and flows of project costs over time
(which tend to occur at different points in time) are expressed on a common basis in
terms of their "present value".
CBA usually tries to put all relevant costs and benefits on a common temporal footing
using time value of money formulas. This is often done by converting the future
expected streams of costs and benefits into a present value amount using a suitable
discount rate. Empirical studies suggest that in reality, people do discount the future
like this.
The practice of cost–benefit analysis differs between countries and between sectors
(e.g., transport, health) within countries. Some of the main differences include the types
of impacts that are included as costs and benefits within appraisals, the extent to which
impacts are expressed in monetary terms, and differences in the discount rate between
countries. Agencies across the world rely on a basic set of key cost–benefit indicators,
including the following:
NPV (net present value)
PVB (present value of benefits)
PVC (present value of costs)
BCR (benefit cost ratio = PVB / PVC)
Net benefit (net benefit = PVB - PVC)
The accuracy of the outcome of a cost–benefit analysis depends on how accurately
costs and benefits have been estimated.
1.2 Bioethanol production process
Both sugar-containing substrates such as sugar cane, sugar beet, molasses, and
starch-containing substrates such as cassava, and corn can be deployed for bioethanol
production. Although the bioethanol production processes from both type of substrates
are quite similar, their processing techniques are slightly different in the initial raw
materials preparation stage. Sugar-containing substrates, by nature, are fermentation
ready without further modification, while the starch-containing ones need an additional
step to convert them into fermentable sugar. Subsequent production processes are
essentially the same for both types of substrates.
Starch is converted into fermentable sugar via “hydrolysis”. Hydrolysis is a chemical
reaction between starch and water which breaks down the long chain of starch polymer
into fermentable sugar. There are two techniques for hydrolysis: enzymatic and acid
hydrolysis. After fermentable sugar is obtained, bioethanol can be produced directly by
microbial conversion through fermentation by the same strain of yeast used with sugarbased substrate. Yeast strain used in the sugar fermentation is usually baker’s yeast
(Saccharomyces cerevisiae). It is deployed as a seeding for the fermentation.
Initially, alcohol derived from yeast fermented sugar has a concentration of only about
5–15% by weight (Sorapipatana & Yoosin, 2011). Its concentration is then further
increased by separating it from water and other non-fermentable materials. The final
concentration of alcohol attained is 95–96% by weight using a distillation method. The
concentration at this level is normally called “hydrous alcohol” which can fuel only
specially designed internal combustion engine vehicles such as flex fuel cars.
In order to make sure that commercial gasohol (gasoline bioethanol) is compatible with
all types of vehicles, the purity of produced bioethanol must be an anhydrous
bioethanol (99.5% alcohol concentration) because bioethanol tends to separate from
gasoline in the blended gasohol after a period of time unless its purification is higher
than 96% by weight. Consequently, hydrous alcohol is further upgraded by removing
the remaining residual water by a “dehydration process” to produce anhydrous alcohol.
It should be remarked here that bioethanol production from starchbased crops
generally yields four main by-products: stillage, fusel oil, carbon dioxide, and distiller’s
dried grain (DDG) while bioethanol production from sugar-based crops does not
produce DDG. Thus, bioethanol production from starch-based crops yields one
additional by-product more than that of the sugar-based crops. Stillage is residual beer
remaining in the distillation waste after the alcohol has completely been removed from
a distillation column.
Two distillates are obtained during a distillation process: alcohol and fusel oil. CO2 is
produced by yeast during an anaerobic fermentation process. The amounts of CO2
produced, by weight, are nearly equal to the amounts of bioethanol obtained in the
fermentation process. The bioethanol production processes mentioned above are
summarized and illustrated in Figure 2.1.
Figure 0.1 Anhydrous bioethanol production processes from sugar and starch-based feedstock
Methodology
In this paper, Benefit Cost Ratio approach is used to test the feasibility of producing
ethanol from cassava planted in post-mining land. The methodology starts from
calculating the cost. Then, calculate the benefit. Finally, compare the benefit and the
cost.
According to Sorapipatana & Yoosin (2010), costs of bioethanol production from
cassava in post-mining land can be categorized into four groups which are feedstock
costs, capital investment costs, operating and maintenance costs, and gains of byproducts. Since this study discussed about bioethanol production from cassava planted
in post-mining land, there is one more cost to be accounted that is post-mining land
reclamation cost.
1. Feedstock costs
The price of cassava feedstock is varied by location, seasons, local supply-demand
conditions, and transportation (Sorapipatana & Yoosin, 2011). The type of cassava
can also affect its feedstock price. In Indonesia, the common type of cassava is
Manihot esculenta that is edible and Manihot glaziovii that is poisonous.
2. Operating and maintenance costs
Costs that are included in the operating and maintenance costs are labor, energy,
electricity, ingredients (e.g. enzymes, yeast, etc), machine repair and maintenance
costs, taxes, insurances and administrative expenses. (Sorapipatana & Yoosin,
2011)
3. Capital investment costs
Sorapipatana & Yoosin (2010) stated that capital costs cover all the initial costs such
as machines and equipments procurements and their installations. The capital costs
also include land site preparation and building, infrastructure and other facilities of a
processing plant. In this study, the land preparation costs are excluded from capital
costs since the land preparation costs can be treated as reclamation costs.
4. Reclamation costs
Reclamation cost is the cost needed to reclaim the post-mining land so that it can be
used to other purposes. In this study, reclaimed post-mining land will be used as
cassava field to produce bioethanol.
5. Gains of by-products
By products from bioethanol production from cassava are carbon dioxide, fusel oil,
stillage and DDG (Sorapipatana & Yoosin, 2011). Taken from Sorapipatana &
Yoosin (2010), the unit cost of bioethanol production is expressed by the equation:
CEt =CF + CO&M + C1 – CR – CB
(3-1)
where CEt is the bioethanol production costs (USD/L); CF is cassava feedstock costs
(USD/L); CO&M is operating and maintenance costs (USD/L); CI is capital investment
costs (USD/L); CR is reclamation costs (USD/L); CB is gains of by-product (USD/L).
The benefits that come from bioethanol production in post-mining land are divided into
two groups are the unit profit from the bioethanol sales and the economic value of
substituting gasoline, diesel and kerosene with bioethanol.
1. The unit profit from the bioethanol sales
The unit profit is the profit that the company gets for every liter bioethanol sold after
subtracted the unit selling price with total unit cost. In Indonesia, bioethanol is sold
for IDR 10,000/L.
2. The economic value of changing gasoline, diesel and kerosene with bioethanol
The economic value is estimated by calculating the amount of money the people of
East Kalimantan, especially in District Sangasanga district, can save if buy
bioethanol instead of gasoline, diesel and kerosene.
Results
1.3 Assumptions
The plant’s capacity is 150,000 L/day.
Operation days of plant are assumed to be 330 days/year.
The project life is assumed to be 20 years.
The annual interest rate of the investment is 6%.
Prices used in this study is based on prices in 2011. If there are financial values in
other years, then it will be converted to its present value using assumed interest rate
above.
The exchange value of USD to IDR is IDR 9045/USD based on Bank Indonesia rate
at 11th of August 2011 (Bank Indonesia, 2011).
The yield of bioethanol from cassava and the data of other raw materials needed,
such as enzymes, yeasts, water and chemicals, were taken from Sorapipatana &
Yoosin (2010) which based on figures obtained from Thailand Institute of Scientific
and Technological Research (TISTR)’s pilot plant.
1.4 Estimation of Bioethanol Production Cost from Cassava
1.4.1 Feedstock costs
In 2011, the price of feedstock is varied between IDR 350 to IDR 690 per kilogram
(Jiputro & Sutardi, 2010). The cost of cassava for a liter bioethanol produced can be
estimated with the yield of bioethanol from cassava at 160 L/ton (Table 4.1).
Tabel 4.1 Technical assumption in this study
Bioethanol yield (L/ton)
160
Plant’s capacity (L/day)
150,000
Annual production (million L/day)
49.5
Operation days (days)
330
Project life (years)
20
Annual interest rate
Year of cost basis
Exchange value of USD to IDR
6%
2011
IDR 9045/USD
The price of poisonous cassava feedstock based in 2010 and 2011 is ranged between
IDR 350,000 to IDR 690,000 per ton (Augusta Resource Corporation, 2007 & Sutardi,
2010). The average price based on prices above is IDR 500,000/ton. With the
bioethanol yield from cassava is 160 L/ton, then calculation of cassava feedstock cost
per liter bioethanol is IDR 2187.5 to IDR 4,312.5, with average of IDR 3,250 or
equivalent to 24.19 cents/L to 47.68 cents/L, with average of 35.93 cents/L (Table 4.2).
Tabel 4.2 The maximum, minimum, and average feedstock costs of cassava in IDR/ton and
IDR/Lbioethanol during 2010
Feedstock
Cassava
Maximum
Minimum
Average
IDR/ton
IDR/Lbioethanol
IDR/ton
IDR/Lbioethanol
IDR/ton
IDR/Lbioethanol
350,000
2,187.5
690,000
4,312.5
520,000
3,250
1.4.2 Capital investment costs
There are two techniques that can be used to estimate the capital investment costs.
First, the capital investment costs based on machines and equipments costs from the
manufacturer’s price. Second, the capital investment costs based on historical prices
adjusted to the present value in the reference year.
In this study, the calculation of Sorapipatana & Yoosin (2011) is adopted to estimate
the capital investment costs. The total capital investment costs were found to be 30.2
million USD (values in year 2005) for a project life of 20 years, with bioethanol
production capacity of 150,000 L/day. Then this value is adjusted to the present price in
2011 which are about 21.29 million USD.
To estimate the capital cost per liter of the bioethanol, Sorapipatana & Yoosin (2011)
annualized the capital cost with equation:
A = P (i(1+i)n /(1+i)n-1)
(4-1)
where A is the annual payments (IDR or USD/year); P is the present worth of the first
investment cost (IDR or USD); i is the annual interest rate; and n is the project life
(years).
Then the annualized capital investment cost is divided by annual amounts of bioethanol
produced resulted in the capital cost per liter of the bioethanol. After calculation, the
capital investment cost per liter of the bioethanol was 0.1 cents/L for the annual interest
rate of 6% and the project life of 20 years.
1.4.3 Operating and maintenance costs
In Indonesia, there are already several plants that produce bioethanol from cassava.
One of the plants is located in East Nusa Tenggara. Then we can estimate the
operating cost in this study by adopting the East Nusa Tenggara plant’s operating cost.
The operating cost in East Nusa Tenggara’s plant was IDR 750,000/day with
production up to 300 L/day in the plant with 3000 ton cassava/day capacity (Nur, 2011).
So, the unit operating cost is calculated by dividing operating cost/day with amount of
production/day. Thus, the unit operating cost is IDR 2,500/L or 27.63 cents/L.
1.4.4 Reclamation costs
To estimate reclamation cost, the calculation that had been done by Augusta Resource
Corporation (2007) is used. The total reclamation cost is USD 23.8 million to reclaim
3,625 acres in 16-19 years. The detail of reclamation cost done by Augusta Resource
Corporation (2007) can be seen in Appendix A1. Then, this number is adjusted to the
present value in 2011 which is USD 3,631,592 per 3,625 acres or USD
1,001,818/hectare.
To estimate the reclamation cost per liter of the bioethanol, Equation 4-1 is used to
annualize
the
reclamation
cost.
The
annualized
reclamation
cost
is
USD
87,343.1/hectare. PT Indomining as the project owner has allocated area of 100
hectares of post-mining land to be used as field to plant cassava for producing
bioethanol. Thus, the total annualized reclamation cost is USD 8,734,310. If the annual
production of 150,000 L/day and the capacity is 4.95 million L/year, then the unit
reclamation cost is 17.64 cents/L.
1.4.5 Gains of by-products
According to Sorapipatana & Yoosin (2010), one of the gains of by-products resulted
from bioethanol production that is useful is DDG. DDG can be sold as animal feeds.
The other is biogas resulted from waste water treatment can be used as fuel for
heating. Sorapipatana & Yoosin (2010) estimated the total value of the gains of byproduct from cassava is 0.273 cents/L.
1.4.6 Total unit cost
The total unit cost of the bioethanol production from cassava in the post-mining land
can be calculated by using Equation 3-1. Then, the total unit cost is 81.04 cents/L or
IDR 7,330.35.
1.5 Estimation of Bioethanol Production Benefit from Cassava
1.5.1 Unit profit from the bioethanol sales
The range of price of bioethanol used for gasoline replacement in 2011 is about IDR
11,000/L (Sutardi, 2010). With the total bioethanol cost per liter of IDR 7,330.35/L, then
the profit derived of the sale of one liter of bioethanol produced from cassava is IDR
3,669.65/L equivalent to 40.57 cents/L.
1.5.2 Economic value of substituting gasoline, diesel and kerosene
In the area like District Sangasanga, East Kalimantan, the availability of fuel, whether
gasoline, diesel or kerosene is quite rare. It is proven by the price of these fuel is
changing over time according to the scarcity of the product. The price of gasoline
reached IDR 15,000 in remote area of Kalimantan in June 2011 (Joewono, 2011) and
the price of kerosene reached IDR 12,000 in East Kutai, East Kalimantan in January
2011 (Minyak Tanah di Kutai Timur Rp 12 Ribu per Liter , 2011) while the prices set by
government are IDR 4,500/L for gasoline and IDR 2,500/L for kerosene (Gero &
Mulyadi, 2011).
The economic value is estimated by the amount of money that can be saved by using
bioethanol instead of gasoline, diesel or kerosene. The calculation can be seen below.
Tabel 4.3 Estimation of economic value of changing gasoline, diesel and kerosene with bioethanol
Difference
Price (IDR/L)
Bioethanol
Gasoline
11,000
Bioethanol
(IDR/L)
15,000
4,000
Kerosene*
11,000
22,500
11,500
*one liter of bioethanol is equivalent to nine liters of kerosene. (Etanol dari Singkong
Karet, 2008)
1.5.3 Total unit benefit
The estimation of total benefit is calculated by summing the unit profit from bioethanol
sales and the economic value of substituting gasoline and kerosene with bioethanol
which is IDR 19,170 equivalent to USD 2.12.
1.6 Benefit Cost Ratio
BCR can be calculated by using equation:
BCR = PVB / PVC
BCR = IDR 19,169.65 / IDR 7,329.90
(6-1)
Discussion
The objective of this paper is testing the feasibility of producing bioethanol from
cassava planted in post-mining land using Benefit Cost Ratio approach. The
methodology starts from calculating the cost; feedstock costs, capital investment costs,
operating and maintenance costs, reclamation costs and gains of by-products. Then,
calculate the benefit; unit profit from the bioethanol sales and economic value of
substituting gasoline, diesel and kerosene. Finally, calculate the ratio between the
benefit and the cost. Table 5.1 contains the summary of the computation.
Table 0.1 Benefit cost ratio
Benefit
Costs
Detail
IDR/L
Unit profit from the bioethanol
sales
Economic value of substituting
gasoline, diesel and kerosene
Detail
3,669.65
Feedstock costs
15,500.00
Capital investment costs
Operating and maintenance
costs
Reclamation costs
Gains of by-products
Total unit benefit
19,169.65
Benefit Cost Ratio
Total unit costs
IDR/L
3,250.00
9.05
2,500.00
1,595.54
24.69
7,329.90
2.62
From the calculation, the ratio is 2.62 > 1. Based on Benefit Cost Ratio approach result,
producing bioethanol from cassava planted in post-mining land is feasible and
commercially successful. But this study hasn’t included the intangible benefit of
producing bioethanol from cassava planted in post-mining land, such as economic
value derived from adding jobs for local community and claimed carbon credit potential
for reducing CO2 emission.
After that, there are few things that will be discussed as the matter of effects of the use
of cassava-based ethanol. The discussion will consist of certain categories based on
some aspects, there are:
Politic
In terms of political, the implementation and utilization of cassava refers to some
regulations of the government of Indonesia, and those are Presidential Instruction
No. 1/2006 and Regulation of the Minister of Energy and Mineral Resources No.
32/2008. Presidential Instruction No. 1/2006 explains about supplies and the use of
bio-fuel as alternate fuel. Thus, it can be concluded that the use of cassava to
produce bio-ethanol is one thing that can be done to meet the Presidential
Instruction. Then the minister of energy and mineral resources’ regulation contains
the rules of supplying, utilizing, and bio-fuel trade system as an alternate fuel. In the
minister’s regulations, there are guidelines in using, distributing, and sale of bio-fuels
as a substitute for fuel. Therefore, in order to produce bioethanol it is required to
form a business entity that the use of bioethanol can be ordered and distributed and
sold to the society.
Economy
In terms of economical, the utilization of cassava to produce bioethanol has some
very good feedbacks. It can provide employment to local inhabitants who live in the
post-mining area which will lead to the increasing of economics degrees for the
people. Besides, it can give advantages to the company who execute the process of
producing bioethanol. In other words, it can be expected to give positive contribution
to the country’s economy.
Social
In terms of social, the utilization cassava as bioethanol can be proved by the
increasing of development of small industries as the result of establishment of
domestic industries so that it will improve the livelihood for the local people. Then
the ex-mining land use can be an object in the CSR project of the mining company,
so it can provide benefits in other aspects.
Energy scarcity
The utilization of cassava as bioethanol can be used as an alternative solution to the
energy shortages isusue in Indonesia. Thus, this feasibility analysis is meant to find
out whether the bioethanol production can be used to substitute the common fuel
Indonesian people consume. From analysis that have been done, it can be proved
that it can be implemented to substitute the common used energy. Besides that, the
utilization of bioethanol can also fulfill the energy needs of inhabitants around the
production of bioethanol area or other remote areas.
Environment
In terms of environmental, the process of cultivating cassava in post-mining areas
can restore the mineral soil so that the area can’t decay. This is because cassava
does not require soil with high mineral, so it can be grown in any land. Then, the
utilization of bioethanol can lessen greenhouse emissions, for it is more eco-friendly
fuel. By reducing greenhouse gas emissions, it can contribute to achieve the
proficiency level targets to reduce emissions by 26% in 2020 as the United Nations
Climate Change Conference (COP15) stated it in Copenhagen.
Obstacles
In addition to the positive impacts that can be generated by the use of cassava to
produce bioethanol as a fuel substitute, there are several obstacles to be
encountered in implementing them. The Cassava-Based Fuel Ethanol production at
industrial level meets challenges of the lagged cassava planting scale and
management. As cassava is able to grow in poor soils on marginal lands, expansion
of cassava cultivation in the region can make use of the hillside wasteland in
Kalimantan, but logistical problems associated with transportation of these feed
stocks should be of concern. Another problem is that excessive use of fertilizers,
especially inorganic fertilizers that cause more emissions, may be used to achieve
high yield of cassava in plain soil.
Future Work and Conclussions
From this study we can conclude that the ethanol production from cassava planted in
the post-mining land by is feasible according to the result of Cost Benefit Analysis. It is
shown in the ratio of cost and benefit estimated from this project. The ratio is 2.62
which is higher than 1. The project itself is highly potential to be applied in Indonesia,
from the political view; the government has established several law and legislations to
encourage the production of bioethanol, from the economical and social aspect; the
project is already proven to be able to give profits to the producer and to encourage the
growth of small industries in Indonesia, in the terms of energy; the bioethanol produced
from cassava is environmentally friendly and able to produce less carbon emission
than the fuel we use now, the last but not least, from the view of environment, the
cassava planted in the post-mining area can help enrich the soil in the area.
This study acknowledge that this project can reducing emission from green house gas
because the ethanol is cleaner fuel, provide access to energy for remote communities
and also generate profit for the producers.
However, there are some flaws in this study that is opened for further study in the area
of bioethanol production from cassava or even the renewable energy solutions. Due to
lack of data, this study cannot calculate all intangible benefit derived from the project,
such as economic value derived from adding jobs for local community and claimed
carbon credit potential for reducing CO 2 emission.
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<http://regional.kompas.com/read/2011/06/06/16495735/Premium.di.Pedalaman.Kal
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[online]
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<http://www.mediaindonesia.com/read/2011/01/16/195961/127/101/Minyak-Tanahdi-Kutai-Timur-Rp12-Ribu-per-Liter> [Accessed 15 August 2011].
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Mamuju Sudah Bisa Beroperasi. Kompasiana.com, [blog] 19 March, Available at:
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[Accessed
15 August 2011].
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Cassava in Thailand. Renewable and Sustainable Energy Reviews 15 , 1343-1349.
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[Accessed
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Appendix A1
Annual “Early Closure” Costing
Overall Reclamation Costing
Reclamation Activities Summary (1)
Reclamation Activities Summary (2)
Reclamation Activities Summary (3)
Reclamation Activities Summary (4)
Reclamation Cost Summary per Activity Area
Energy: Renewable Energy and Environmental Solutions
Title
THE FEASIBILITY STUDY OF PRODUCING BIOETHANOL FROM CASSAVA
PLANTED IN POST-MINING LAND USING BENEFIT COST RATIO
APPROACH
Author and Affiliation
Ratih Kartika Septiningtyas
Bachelor Degree, Industrial Engineering/ITB
Luh Vita Nurima
Bachelor Degree, Industrial Engineering/ITB
Gorby Gandhianto Rasyid
Bachelor Degree, Industrial Engineering/ITB
Dwini Rahmadina Nisahati
Bachelor Degree, Management/President Univ.
E-mail and Mobile Number
[email protected]
+6285 721 452 882
[email protected]
+6281 2324 0505
[email protected]
+6285 782 016 979
[email protected]
+6285 714 947 766
Fax Number
+6231 848 1637
Mailing Address
Jalan Tubagus Ismail V/2A Bandung 40134, West Java, Indonesia
The Feasibility Study of Producing Bioethanol from Cassava Planted in PostMining Land Using Benefit Cost Ratio Approach
Abstract
As the population in Indonesia is increasing, demand for energy is also increasing. One
of the ways to adapt to the global climate change is to use fuel from biomass like
bioethanol. This paper will discuss about bioethanol that can be made from cassava as
an act of applying renewable energy in Indonesia, and also will give environmental
solution through the act of planting cassava in a post-mining land. Benefit Cost Ratio
approach is used to test the feasibility of producing bioethanol from cassava planted in
post-mining land. The project used as a study case belongs to PT Indomining that is
been doing the project in Sangasanga district in East Kalimantan.
Keywords: bioethanol, cassava, post-mining land, benefit cost ratio, renewable energy
Introduction
As the population in Indonesia is increasing, demand for energy is also increasing.
According to the Ministry of Energy and Mineral Resources (EMR), gasoline fuel
consumption was 3.9% above the average quota for the year 2011 (66.06 thousand
kiloliter per day). While diesel fuel consumption reached 5.3% above quota (37.75
thousand kiloliters per day). Gasoline and diesel are the two refined petroleum
products, which are the most widely used in Indonesian society. But as we all know, oil
is a fuel that cannot be renewed.
Apart form gasoline; there are other available sources of energy such as coal.
Petroleum and coal are the energy sources that will release greenhouse gas (CO 2) to
the atmosphere. This gas is widely known as the prime cause of the global climate
change. Indonesia had declared to reduce its emission up to 26% by 2020 in United
Nations Climate Change Conference (COP15) in Copenhagen. The government
already issued some regulation to respond to this, such as Presidential Instruction No.
1/2006 and Regulation of the Minister of Energy and Mineral Resources No. 32/2008.
One of the ways to adapt to the global climate change is to use fuel from biomass like
bioethanol. It is renewable, has sustainability of supply and create cleaner environment.
Indonesia have potential ability to develop bioethanol, one of them by using the benefit
of planting cassava. Cassava (Manihot esculenta or Manihot glaziovii) is a starchcontaining root crop of worldwide importance as food, feed and non-food products.
With increasing population pressure and climate change it is predicted that the
production of cassava will increase over the next few decades, and, as a result,
cassava is now an international priority for crop improvement.
Even though, cassava is mainly grown by small-scale farmers, it is predicted that the
production of cassava will increase over the next few decades due to the demand of
cassava as food drived by increasing population and also its increasing use for agroindustrial processing in Asia. Apart from its traditional role as a food crop, cassava is
likely to increase its value by becoming an important biofuel crop due to its high yields
of starch. Beside the high yields of starch, the total dry matter in spite of drought
conditions and poor soil, together with low agro-chemical requirements, cassava is a
plant that is suitable for this project since the area used to plant the cassava is the post
mining-land. The cassava planting is needed to reclaim the post-mining land. Having
these characteristics resulted in an energy input that represents only 5–6% of the final
energy content of the total cassava biomass. This translates to energy profit of 95%,
assuming complete utilization of the energy content in the total biomass.
The energetic and economic aspects of using cassava as a biofuel crop are well
documented. For instance, Tabel 1.1 shows a direct comparison of bioethanol
production from different energy crops which was reviewed by Wang (2002). The
conclusion was that cassava compared favorably to other crops such as maize,
sugarcane and sweet sorghum. Indeed, the annual yield of bioethanol was found to be
higher for cassava than for any other crops, including sugarcane. Hence, the interest in
production of cassava starch-derived bioethanol is progressively increasing in
Indonesia and the rest of world. In this review, it is mainly addressed on biological
issues of cassava as a biomass for biofuel production and some of its economic
aspects in Indonesia.
Tabel 0.1 Comparison of bioethanol production from different energy crops
Crops
Yield
-1
Conversion rate to bioethanol
-1
-1
Bioethanol yield
-1
-1
(ton ha year )
(L ton )
(L ha year )
Sugarcane
70
70
4900
Cassava
40
150
6000
Sweet sorghum
35
80
2800
Maize
5
410
2050
Wheat
4
390
1560
Rice
5
450
2250
Mining companies have already planned to produce bioethanol from cassava planted in
post-mining land as a form of environmental stewardship and renewable energy
development. Toxic cassava (Manihot glaziovii) will be planted to avoid competition
between its role as food crop for local communities and as biofuel crop for producing
bioethanol.
In this paper, Benefit Cost Ratio approach is used to test the feasibility of producing
ethanol from cassava planted in post-mining land. The expected outcome of this paper
is that producing bioethanol from cassava planted in post-mining land is feasible and
commercially successful, according to the feasibility study. Then, the idea can be
proposed as a CSR (Corporate Social Responsibility) project for mining companies in
Indonesia. In addition, this project can help reducing emission from green house gas
that causes the global climate change because it is cleaner fuel, provides access to
energy for remote communities and hopefully can be a solution to the energy scarcity
problem in Indonesia. Moreover, there will be an analysis of competitiveness between
bioethanol from cassava and gasoline, diesel and kerosene.
Theory
1.1 Cost-benefit analysis
Cost-benefit analysis (CBA) is an economic decision-making approach, used
particularly in government and business. CBA is used in the assessment of whether a
proposed project, programmed or policy is worth doing or to choose between several
alternative ones. It involves comparing the total expected costs of each option against
the total expected benefits, to see whether the benefits outweigh the costs, and by how
much.
In CBA, benefits and costs are expressed in money terms, and are adjusted for the
time value of money, so that all flows of benefits and flows of project costs over time
(which tend to occur at different points in time) are expressed on a common basis in
terms of their "present value".
CBA usually tries to put all relevant costs and benefits on a common temporal footing
using time value of money formulas. This is often done by converting the future
expected streams of costs and benefits into a present value amount using a suitable
discount rate. Empirical studies suggest that in reality, people do discount the future
like this.
The practice of cost–benefit analysis differs between countries and between sectors
(e.g., transport, health) within countries. Some of the main differences include the types
of impacts that are included as costs and benefits within appraisals, the extent to which
impacts are expressed in monetary terms, and differences in the discount rate between
countries. Agencies across the world rely on a basic set of key cost–benefit indicators,
including the following:
NPV (net present value)
PVB (present value of benefits)
PVC (present value of costs)
BCR (benefit cost ratio = PVB / PVC)
Net benefit (net benefit = PVB - PVC)
The accuracy of the outcome of a cost–benefit analysis depends on how accurately
costs and benefits have been estimated.
1.2 Bioethanol production process
Both sugar-containing substrates such as sugar cane, sugar beet, molasses, and
starch-containing substrates such as cassava, and corn can be deployed for bioethanol
production. Although the bioethanol production processes from both type of substrates
are quite similar, their processing techniques are slightly different in the initial raw
materials preparation stage. Sugar-containing substrates, by nature, are fermentation
ready without further modification, while the starch-containing ones need an additional
step to convert them into fermentable sugar. Subsequent production processes are
essentially the same for both types of substrates.
Starch is converted into fermentable sugar via “hydrolysis”. Hydrolysis is a chemical
reaction between starch and water which breaks down the long chain of starch polymer
into fermentable sugar. There are two techniques for hydrolysis: enzymatic and acid
hydrolysis. After fermentable sugar is obtained, bioethanol can be produced directly by
microbial conversion through fermentation by the same strain of yeast used with sugarbased substrate. Yeast strain used in the sugar fermentation is usually baker’s yeast
(Saccharomyces cerevisiae). It is deployed as a seeding for the fermentation.
Initially, alcohol derived from yeast fermented sugar has a concentration of only about
5–15% by weight (Sorapipatana & Yoosin, 2011). Its concentration is then further
increased by separating it from water and other non-fermentable materials. The final
concentration of alcohol attained is 95–96% by weight using a distillation method. The
concentration at this level is normally called “hydrous alcohol” which can fuel only
specially designed internal combustion engine vehicles such as flex fuel cars.
In order to make sure that commercial gasohol (gasoline bioethanol) is compatible with
all types of vehicles, the purity of produced bioethanol must be an anhydrous
bioethanol (99.5% alcohol concentration) because bioethanol tends to separate from
gasoline in the blended gasohol after a period of time unless its purification is higher
than 96% by weight. Consequently, hydrous alcohol is further upgraded by removing
the remaining residual water by a “dehydration process” to produce anhydrous alcohol.
It should be remarked here that bioethanol production from starchbased crops
generally yields four main by-products: stillage, fusel oil, carbon dioxide, and distiller’s
dried grain (DDG) while bioethanol production from sugar-based crops does not
produce DDG. Thus, bioethanol production from starch-based crops yields one
additional by-product more than that of the sugar-based crops. Stillage is residual beer
remaining in the distillation waste after the alcohol has completely been removed from
a distillation column.
Two distillates are obtained during a distillation process: alcohol and fusel oil. CO2 is
produced by yeast during an anaerobic fermentation process. The amounts of CO2
produced, by weight, are nearly equal to the amounts of bioethanol obtained in the
fermentation process. The bioethanol production processes mentioned above are
summarized and illustrated in Figure 2.1.
Figure 0.1 Anhydrous bioethanol production processes from sugar and starch-based feedstock
Methodology
In this paper, Benefit Cost Ratio approach is used to test the feasibility of producing
ethanol from cassava planted in post-mining land. The methodology starts from
calculating the cost. Then, calculate the benefit. Finally, compare the benefit and the
cost.
According to Sorapipatana & Yoosin (2010), costs of bioethanol production from
cassava in post-mining land can be categorized into four groups which are feedstock
costs, capital investment costs, operating and maintenance costs, and gains of byproducts. Since this study discussed about bioethanol production from cassava planted
in post-mining land, there is one more cost to be accounted that is post-mining land
reclamation cost.
1. Feedstock costs
The price of cassava feedstock is varied by location, seasons, local supply-demand
conditions, and transportation (Sorapipatana & Yoosin, 2011). The type of cassava
can also affect its feedstock price. In Indonesia, the common type of cassava is
Manihot esculenta that is edible and Manihot glaziovii that is poisonous.
2. Operating and maintenance costs
Costs that are included in the operating and maintenance costs are labor, energy,
electricity, ingredients (e.g. enzymes, yeast, etc), machine repair and maintenance
costs, taxes, insurances and administrative expenses. (Sorapipatana & Yoosin,
2011)
3. Capital investment costs
Sorapipatana & Yoosin (2010) stated that capital costs cover all the initial costs such
as machines and equipments procurements and their installations. The capital costs
also include land site preparation and building, infrastructure and other facilities of a
processing plant. In this study, the land preparation costs are excluded from capital
costs since the land preparation costs can be treated as reclamation costs.
4. Reclamation costs
Reclamation cost is the cost needed to reclaim the post-mining land so that it can be
used to other purposes. In this study, reclaimed post-mining land will be used as
cassava field to produce bioethanol.
5. Gains of by-products
By products from bioethanol production from cassava are carbon dioxide, fusel oil,
stillage and DDG (Sorapipatana & Yoosin, 2011). Taken from Sorapipatana &
Yoosin (2010), the unit cost of bioethanol production is expressed by the equation:
CEt =CF + CO&M + C1 – CR – CB
(3-1)
where CEt is the bioethanol production costs (USD/L); CF is cassava feedstock costs
(USD/L); CO&M is operating and maintenance costs (USD/L); CI is capital investment
costs (USD/L); CR is reclamation costs (USD/L); CB is gains of by-product (USD/L).
The benefits that come from bioethanol production in post-mining land are divided into
two groups are the unit profit from the bioethanol sales and the economic value of
substituting gasoline, diesel and kerosene with bioethanol.
1. The unit profit from the bioethanol sales
The unit profit is the profit that the company gets for every liter bioethanol sold after
subtracted the unit selling price with total unit cost. In Indonesia, bioethanol is sold
for IDR 10,000/L.
2. The economic value of changing gasoline, diesel and kerosene with bioethanol
The economic value is estimated by calculating the amount of money the people of
East Kalimantan, especially in District Sangasanga district, can save if buy
bioethanol instead of gasoline, diesel and kerosene.
Results
1.3 Assumptions
The plant’s capacity is 150,000 L/day.
Operation days of plant are assumed to be 330 days/year.
The project life is assumed to be 20 years.
The annual interest rate of the investment is 6%.
Prices used in this study is based on prices in 2011. If there are financial values in
other years, then it will be converted to its present value using assumed interest rate
above.
The exchange value of USD to IDR is IDR 9045/USD based on Bank Indonesia rate
at 11th of August 2011 (Bank Indonesia, 2011).
The yield of bioethanol from cassava and the data of other raw materials needed,
such as enzymes, yeasts, water and chemicals, were taken from Sorapipatana &
Yoosin (2010) which based on figures obtained from Thailand Institute of Scientific
and Technological Research (TISTR)’s pilot plant.
1.4 Estimation of Bioethanol Production Cost from Cassava
1.4.1 Feedstock costs
In 2011, the price of feedstock is varied between IDR 350 to IDR 690 per kilogram
(Jiputro & Sutardi, 2010). The cost of cassava for a liter bioethanol produced can be
estimated with the yield of bioethanol from cassava at 160 L/ton (Table 4.1).
Tabel 4.1 Technical assumption in this study
Bioethanol yield (L/ton)
160
Plant’s capacity (L/day)
150,000
Annual production (million L/day)
49.5
Operation days (days)
330
Project life (years)
20
Annual interest rate
Year of cost basis
Exchange value of USD to IDR
6%
2011
IDR 9045/USD
The price of poisonous cassava feedstock based in 2010 and 2011 is ranged between
IDR 350,000 to IDR 690,000 per ton (Augusta Resource Corporation, 2007 & Sutardi,
2010). The average price based on prices above is IDR 500,000/ton. With the
bioethanol yield from cassava is 160 L/ton, then calculation of cassava feedstock cost
per liter bioethanol is IDR 2187.5 to IDR 4,312.5, with average of IDR 3,250 or
equivalent to 24.19 cents/L to 47.68 cents/L, with average of 35.93 cents/L (Table 4.2).
Tabel 4.2 The maximum, minimum, and average feedstock costs of cassava in IDR/ton and
IDR/Lbioethanol during 2010
Feedstock
Cassava
Maximum
Minimum
Average
IDR/ton
IDR/Lbioethanol
IDR/ton
IDR/Lbioethanol
IDR/ton
IDR/Lbioethanol
350,000
2,187.5
690,000
4,312.5
520,000
3,250
1.4.2 Capital investment costs
There are two techniques that can be used to estimate the capital investment costs.
First, the capital investment costs based on machines and equipments costs from the
manufacturer’s price. Second, the capital investment costs based on historical prices
adjusted to the present value in the reference year.
In this study, the calculation of Sorapipatana & Yoosin (2011) is adopted to estimate
the capital investment costs. The total capital investment costs were found to be 30.2
million USD (values in year 2005) for a project life of 20 years, with bioethanol
production capacity of 150,000 L/day. Then this value is adjusted to the present price in
2011 which are about 21.29 million USD.
To estimate the capital cost per liter of the bioethanol, Sorapipatana & Yoosin (2011)
annualized the capital cost with equation:
A = P (i(1+i)n /(1+i)n-1)
(4-1)
where A is the annual payments (IDR or USD/year); P is the present worth of the first
investment cost (IDR or USD); i is the annual interest rate; and n is the project life
(years).
Then the annualized capital investment cost is divided by annual amounts of bioethanol
produced resulted in the capital cost per liter of the bioethanol. After calculation, the
capital investment cost per liter of the bioethanol was 0.1 cents/L for the annual interest
rate of 6% and the project life of 20 years.
1.4.3 Operating and maintenance costs
In Indonesia, there are already several plants that produce bioethanol from cassava.
One of the plants is located in East Nusa Tenggara. Then we can estimate the
operating cost in this study by adopting the East Nusa Tenggara plant’s operating cost.
The operating cost in East Nusa Tenggara’s plant was IDR 750,000/day with
production up to 300 L/day in the plant with 3000 ton cassava/day capacity (Nur, 2011).
So, the unit operating cost is calculated by dividing operating cost/day with amount of
production/day. Thus, the unit operating cost is IDR 2,500/L or 27.63 cents/L.
1.4.4 Reclamation costs
To estimate reclamation cost, the calculation that had been done by Augusta Resource
Corporation (2007) is used. The total reclamation cost is USD 23.8 million to reclaim
3,625 acres in 16-19 years. The detail of reclamation cost done by Augusta Resource
Corporation (2007) can be seen in Appendix A1. Then, this number is adjusted to the
present value in 2011 which is USD 3,631,592 per 3,625 acres or USD
1,001,818/hectare.
To estimate the reclamation cost per liter of the bioethanol, Equation 4-1 is used to
annualize
the
reclamation
cost.
The
annualized
reclamation
cost
is
USD
87,343.1/hectare. PT Indomining as the project owner has allocated area of 100
hectares of post-mining land to be used as field to plant cassava for producing
bioethanol. Thus, the total annualized reclamation cost is USD 8,734,310. If the annual
production of 150,000 L/day and the capacity is 4.95 million L/year, then the unit
reclamation cost is 17.64 cents/L.
1.4.5 Gains of by-products
According to Sorapipatana & Yoosin (2010), one of the gains of by-products resulted
from bioethanol production that is useful is DDG. DDG can be sold as animal feeds.
The other is biogas resulted from waste water treatment can be used as fuel for
heating. Sorapipatana & Yoosin (2010) estimated the total value of the gains of byproduct from cassava is 0.273 cents/L.
1.4.6 Total unit cost
The total unit cost of the bioethanol production from cassava in the post-mining land
can be calculated by using Equation 3-1. Then, the total unit cost is 81.04 cents/L or
IDR 7,330.35.
1.5 Estimation of Bioethanol Production Benefit from Cassava
1.5.1 Unit profit from the bioethanol sales
The range of price of bioethanol used for gasoline replacement in 2011 is about IDR
11,000/L (Sutardi, 2010). With the total bioethanol cost per liter of IDR 7,330.35/L, then
the profit derived of the sale of one liter of bioethanol produced from cassava is IDR
3,669.65/L equivalent to 40.57 cents/L.
1.5.2 Economic value of substituting gasoline, diesel and kerosene
In the area like District Sangasanga, East Kalimantan, the availability of fuel, whether
gasoline, diesel or kerosene is quite rare. It is proven by the price of these fuel is
changing over time according to the scarcity of the product. The price of gasoline
reached IDR 15,000 in remote area of Kalimantan in June 2011 (Joewono, 2011) and
the price of kerosene reached IDR 12,000 in East Kutai, East Kalimantan in January
2011 (Minyak Tanah di Kutai Timur Rp 12 Ribu per Liter , 2011) while the prices set by
government are IDR 4,500/L for gasoline and IDR 2,500/L for kerosene (Gero &
Mulyadi, 2011).
The economic value is estimated by the amount of money that can be saved by using
bioethanol instead of gasoline, diesel or kerosene. The calculation can be seen below.
Tabel 4.3 Estimation of economic value of changing gasoline, diesel and kerosene with bioethanol
Difference
Price (IDR/L)
Bioethanol
Gasoline
11,000
Bioethanol
(IDR/L)
15,000
4,000
Kerosene*
11,000
22,500
11,500
*one liter of bioethanol is equivalent to nine liters of kerosene. (Etanol dari Singkong
Karet, 2008)
1.5.3 Total unit benefit
The estimation of total benefit is calculated by summing the unit profit from bioethanol
sales and the economic value of substituting gasoline and kerosene with bioethanol
which is IDR 19,170 equivalent to USD 2.12.
1.6 Benefit Cost Ratio
BCR can be calculated by using equation:
BCR = PVB / PVC
BCR = IDR 19,169.65 / IDR 7,329.90
(6-1)
Discussion
The objective of this paper is testing the feasibility of producing bioethanol from
cassava planted in post-mining land using Benefit Cost Ratio approach. The
methodology starts from calculating the cost; feedstock costs, capital investment costs,
operating and maintenance costs, reclamation costs and gains of by-products. Then,
calculate the benefit; unit profit from the bioethanol sales and economic value of
substituting gasoline, diesel and kerosene. Finally, calculate the ratio between the
benefit and the cost. Table 5.1 contains the summary of the computation.
Table 0.1 Benefit cost ratio
Benefit
Costs
Detail
IDR/L
Unit profit from the bioethanol
sales
Economic value of substituting
gasoline, diesel and kerosene
Detail
3,669.65
Feedstock costs
15,500.00
Capital investment costs
Operating and maintenance
costs
Reclamation costs
Gains of by-products
Total unit benefit
19,169.65
Benefit Cost Ratio
Total unit costs
IDR/L
3,250.00
9.05
2,500.00
1,595.54
24.69
7,329.90
2.62
From the calculation, the ratio is 2.62 > 1. Based on Benefit Cost Ratio approach result,
producing bioethanol from cassava planted in post-mining land is feasible and
commercially successful. But this study hasn’t included the intangible benefit of
producing bioethanol from cassava planted in post-mining land, such as economic
value derived from adding jobs for local community and claimed carbon credit potential
for reducing CO2 emission.
After that, there are few things that will be discussed as the matter of effects of the use
of cassava-based ethanol. The discussion will consist of certain categories based on
some aspects, there are:
Politic
In terms of political, the implementation and utilization of cassava refers to some
regulations of the government of Indonesia, and those are Presidential Instruction
No. 1/2006 and Regulation of the Minister of Energy and Mineral Resources No.
32/2008. Presidential Instruction No. 1/2006 explains about supplies and the use of
bio-fuel as alternate fuel. Thus, it can be concluded that the use of cassava to
produce bio-ethanol is one thing that can be done to meet the Presidential
Instruction. Then the minister of energy and mineral resources’ regulation contains
the rules of supplying, utilizing, and bio-fuel trade system as an alternate fuel. In the
minister’s regulations, there are guidelines in using, distributing, and sale of bio-fuels
as a substitute for fuel. Therefore, in order to produce bioethanol it is required to
form a business entity that the use of bioethanol can be ordered and distributed and
sold to the society.
Economy
In terms of economical, the utilization of cassava to produce bioethanol has some
very good feedbacks. It can provide employment to local inhabitants who live in the
post-mining area which will lead to the increasing of economics degrees for the
people. Besides, it can give advantages to the company who execute the process of
producing bioethanol. In other words, it can be expected to give positive contribution
to the country’s economy.
Social
In terms of social, the utilization cassava as bioethanol can be proved by the
increasing of development of small industries as the result of establishment of
domestic industries so that it will improve the livelihood for the local people. Then
the ex-mining land use can be an object in the CSR project of the mining company,
so it can provide benefits in other aspects.
Energy scarcity
The utilization of cassava as bioethanol can be used as an alternative solution to the
energy shortages isusue in Indonesia. Thus, this feasibility analysis is meant to find
out whether the bioethanol production can be used to substitute the common fuel
Indonesian people consume. From analysis that have been done, it can be proved
that it can be implemented to substitute the common used energy. Besides that, the
utilization of bioethanol can also fulfill the energy needs of inhabitants around the
production of bioethanol area or other remote areas.
Environment
In terms of environmental, the process of cultivating cassava in post-mining areas
can restore the mineral soil so that the area can’t decay. This is because cassava
does not require soil with high mineral, so it can be grown in any land. Then, the
utilization of bioethanol can lessen greenhouse emissions, for it is more eco-friendly
fuel. By reducing greenhouse gas emissions, it can contribute to achieve the
proficiency level targets to reduce emissions by 26% in 2020 as the United Nations
Climate Change Conference (COP15) stated it in Copenhagen.
Obstacles
In addition to the positive impacts that can be generated by the use of cassava to
produce bioethanol as a fuel substitute, there are several obstacles to be
encountered in implementing them. The Cassava-Based Fuel Ethanol production at
industrial level meets challenges of the lagged cassava planting scale and
management. As cassava is able to grow in poor soils on marginal lands, expansion
of cassava cultivation in the region can make use of the hillside wasteland in
Kalimantan, but logistical problems associated with transportation of these feed
stocks should be of concern. Another problem is that excessive use of fertilizers,
especially inorganic fertilizers that cause more emissions, may be used to achieve
high yield of cassava in plain soil.
Future Work and Conclussions
From this study we can conclude that the ethanol production from cassava planted in
the post-mining land by is feasible according to the result of Cost Benefit Analysis. It is
shown in the ratio of cost and benefit estimated from this project. The ratio is 2.62
which is higher than 1. The project itself is highly potential to be applied in Indonesia,
from the political view; the government has established several law and legislations to
encourage the production of bioethanol, from the economical and social aspect; the
project is already proven to be able to give profits to the producer and to encourage the
growth of small industries in Indonesia, in the terms of energy; the bioethanol produced
from cassava is environmentally friendly and able to produce less carbon emission
than the fuel we use now, the last but not least, from the view of environment, the
cassava planted in the post-mining area can help enrich the soil in the area.
This study acknowledge that this project can reducing emission from green house gas
because the ethanol is cleaner fuel, provide access to energy for remote communities
and also generate profit for the producers.
However, there are some flaws in this study that is opened for further study in the area
of bioethanol production from cassava or even the renewable energy solutions. Due to
lack of data, this study cannot calculate all intangible benefit derived from the project,
such as economic value derived from adding jobs for local community and claimed
carbon credit potential for reducing CO 2 emission.
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Appendix A1
Annual “Early Closure” Costing
Overall Reclamation Costing
Reclamation Activities Summary (1)
Reclamation Activities Summary (2)
Reclamation Activities Summary (3)
Reclamation Activities Summary (4)
Reclamation Cost Summary per Activity Area
