Cost Assessment of Emission Mitigation Technology for the Palm Oil Sector in Indonesia

Abstract

Indonesia must establish a policy on the application of technology for mitigating greenhouse gas emissions because it is the nation that produces the most palm oil. When evaluating different technologies, policymakers should consider how much the technology will cost compared to the potential emissions abated, in terms of marginal abatement cost (MAC), which reflects priorities in the form of marginal abatement cost curves (MACC). The objective of this research is to evaluate and estimate the ranking of MAC from eight mitigation technologies used in Indonesia’s palm oil sector between 2020 and 2030. The least MAC is given as technology ranked first, namely the high-capacity boiler, with a value of $-19.61/tonne CO2eq followed by the high-efficiency steam turbine with $-7.2/tonne CO2eq, and the POME-to-biogas technology with $-0.1/tonne CO2eq. Additionally, the MAC of five additional technologies is positive, suggesting that implementation expenses were incurred. Subsequently, a sensitivity analysis is performed to see which technology ranks are impacted by interest rate fluctuations. Biogas upgrading technology is therefore liable to changes in the discount rate, which occur at different values. Other mitigation technologies, however, are also increasing their parameters, although less significantly than biogas upgrading, therefore this has no bearing on mitigation technology ranking.

Keywords

• marginal abatement cost, mitigation technology, palm oil sector, greenhouse gas emissions