BALANCING EMISSION REDUCTION EFFORT AND BUSINESS PROFITABILITY WITHIN PETROCHEMICAL INDUSTRY IN INDONESIA: A SYSTEM DYNAMIC MODELLING APPROACH

• Main Author: Sylvia, Endang
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/68319
• Institution: Institut Teknologi Bandung

The petrochemical industry in Indonesia is still expected to be growing align with the high demand of petrochemical products which is driven by population growth and lifestyle. However, petrochemical is classified as intensive-energy industry which contribute significantly to the amount of greenhouse gas emission emitted from the industrial sector. As a commitment following Paris Agreement to combat the climate crisis caused by excessive carbon emission, the Government of Indonesia (GoI) released a Nationally Determined Contribution (NDC) to reduce 29% of Emission in 2030 including from industry sector. However, the emission reduction in the petrochemical company is a complex situation considering the high demand for petrochemical products and high dependency on fossil fuels within the industry. Literature review and stakeholders interview are conducted to define the key factors that may contribute to the petrochemical industry emission reduction. The contributors are map through the rich picture which illustrated all of the stakeholders and variables involves. The identified key variables from literature and stakeholders’ interview are product supply and demand, product price, energy consumption, industry capacity, investment, feedstock and alternative feedstock, innovation and technological advancement, and also society awareness and NDC of the government. Those key factors are then developed into a system dynamic model to measure the quantitative impact from changes of those variables to GHG emission and industry profitability. There were sixteen scenarios developed from six group scenarios including one combination of interventions. The other group scenarios are process optimization, bio-based feedstock development, advance technology utilization, carbon tax imposition, and also reduction of oil demand from non-petrochemical. The simulation result shows that process optimization can lead to a small amount reduction of GHG emissions while a significant reduction in GHG emission shows in the simulation result of bio-based feedstock utilization. The advanced technology also has a promising result in reducing carbon emisions as well as improving industry profitability. To sustain the implementation of emission reduction while improve the industry profitability, strong commitment from the stakeholders to invest in advanced technology as well as continuously optimize their process conditions will be important factors. The support from government also plays an important role in develop a supporting policy for the investment and promoting biomass utilization in Indonesia that surely will become a game-changer in petrochemical emission reduction.