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Sustainable business model for biofuel industries in Indonesia

Sustainable business model for biofuel industries in Indonesia Purpose – This study aims to focus on the design of a sustainable business model on the development of a biofuel industry in Indonesia. Design/methodology/approach – The changed status from a net oil exporter to net importer in 2004, the highly subsidized price of fossil fuel, the depleting oil resources and a strong dependency on oil for domestic production are the driving forces for introducing biofuel in Indonesia. The Indonesian government enacted an energy policy in 2006 which aims to partially shift fossil fuel consumption to renewable energy sources including biofuel. The mandatory requirement to use biofuel and the given subsidies will help to make biofuel competitive. However, till now, biofuel still has not achieved the aimed target for several reasons, e.g. higher cost of production relative to fossil fuel, distribution barriers due to geographical constraints, reluctance from industry due to uncertain markets and relative low participation from local government. This paper develops strategic analysis based on the diffusion process of biofuel development. Findings – The tools applied are a SWOT analysis, Porter 5 Force analysis, and Business Portfolio analysis to understand the position of the biofuel industry. Originality/value – This study provides an innovative business model to accelerate the integration of biofuel into the Indonesian energy markets and create profitable and sustainable business. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Sustainability Accounting, Management and Policy Journal Emerald Publishing

Sustainable business model for biofuel industries in Indonesia

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Publisher
Emerald Publishing
Copyright
Copyright © 2011 Emerald Group Publishing Limited. All rights reserved.
ISSN
2040-8021
DOI
10.1108/20408021111185394
Publisher site
See Article on Publisher Site

Abstract

Purpose – This study aims to focus on the design of a sustainable business model on the development of a biofuel industry in Indonesia. Design/methodology/approach – The changed status from a net oil exporter to net importer in 2004, the highly subsidized price of fossil fuel, the depleting oil resources and a strong dependency on oil for domestic production are the driving forces for introducing biofuel in Indonesia. The Indonesian government enacted an energy policy in 2006 which aims to partially shift fossil fuel consumption to renewable energy sources including biofuel. The mandatory requirement to use biofuel and the given subsidies will help to make biofuel competitive. However, till now, biofuel still has not achieved the aimed target for several reasons, e.g. higher cost of production relative to fossil fuel, distribution barriers due to geographical constraints, reluctance from industry due to uncertain markets and relative low participation from local government. This paper develops strategic analysis based on the diffusion process of biofuel development. Findings – The tools applied are a SWOT analysis, Porter 5 Force analysis, and Business Portfolio analysis to understand the position of the biofuel industry. Originality/value – This study provides an innovative business model to accelerate the integration of biofuel into the Indonesian energy markets and create profitable and sustainable business.

Journal

Sustainability Accounting, Management and Policy JournalEmerald Publishing

Published: Nov 8, 2011

Keywords: Biofuel industry; Energy policy; Key player; Strategic analysis; Sustainable business model; Sustainable development; Indonesia

References