Potential Thesis Topic Problems: 1. Indonesia’s palm oil derivatives industry are underdeveloped. Of the four main producers of palm oil in the world, Malaysia in 2004-2012 had the highest export performance with the RCA index valued above 1 (one) for CPO (1.04) and PKO (1.08). The Indonesian RCA index in 2004-2012 is below one, namely CPO of 0.98 and PKO of 0.94 (Ermawati and Septia 2013). Likewise, derivative products are far behind Malaysia, especially PKO processed commodities (61.39), processed CPO (41.53), and oleo chemicals (37.36) while Indonesia is processed by PKO (31.66), processed CPO (30.17 ), and oleo chemical (3.19) (Arip et al. 2013). 2. To maintain the long-term development of the agricultural sector, this sector must move from the low sector to high value added over time. In the palm oil industry, its comparative advantage can be maintained by diversifying from upstream to the broader range of downstream industrial products with higher added value 3. With the fact that 71% of CPO produced in Indonesia are still exported in raw form (CPO or Refined Palm Oil). Palm oil industry is still in asset-based mode, not yet in added value-based mode. Low value added products and the fact that the prices of crude products are consistently the most volatile rather than finished goods (Falianty, 2012 report from Faculty of Economics UI). 4. CPO price are currently dropping, hurting Indonesia as palm oil is a key industry to the country’s economy, contributing between 1.5-2.5% of Indonesia’s GDP. Reason: a. increased CPO output in Indonesia and Malaysia (less demand but the production stays or even improve because palm oil are harvested in a whole year) b. European Union (EU) proposed to ban the use of palm oil in biofuel from 2021 in an effort to meet the block's broader climate goals that affect countries perception toward Indonesia’s palm oil sustainability c. India, the world's biggest palm oil consumer, to raise palm oil import taxes by a significant margin (44% from 30% earlier this year) has also negatively affected export prospects and prices d. concerns over a rising trade war between China and the United States (Although palm oil is not affected by the looming trade war in a direct manner, rising uncertainty does make stakeholders avoid palm oil) 5. The dependence of Indonesia with CPO price is dangerous because palm oil is now affected with geopolitics. The CPO commodity from different countries will not be treated as equal. Nowadays, there are movements in several countries to prohibit buying CPO from country known with its unsustainable palm oil production. Anti-dumping policy toward biodiesel and fatty alcohol export from Indonesia to EU, Renewable Energy Directive (RED) contains the ban the use of palm oil in biofuel for 2021 are the examples.
6. B20 is hard to be implemented, only Brazil who has succeeded. It will be better to develop another high added-value products with promising markets in the near future to help absorb the domestic use of CPO. 7. The giant expansion of palm oil plantation land can affect the area of the land for food crops. Land expansion should not be decided by the economical aspect, social aspect should too.
Enviro-Economic Optimization of Oil Palm-Based Basic Oleo Chemicals, Propylene Glycol and Activated Carbon Production
Maximizing NPV, Minimizing Emission o
NPV is used because, net present value approach is the most intuitive and accurate valuation approach to capital budgeting problems. Discounting the after-tax cash flows by the weighted average cost of capital allows managers to determine whether a project will be profitable or not. The NPV rule states that all projects which have a positive net present value should be accepted while those that are negative should be rejected.
Product to be produced: o
Biodiesel and Glycerol
Production process: Transesterification 1. Esterification (pre-treatment) (converts FFA to methyl ester with alcohol and using acidic catalyst) o
Sulfuric acid and methanol mixed with the oil with stirrer tank.
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Heat up to 60oC, 600 rpm.
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Separate the water soluble component and washed by hot water. Dry it at 120oC.
2. Transesterification (converts Triglyceride with alcohol to form methyl ester and glycerol) (ester to another ester with alcohol)
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KOH and methanol mixed with the oil with stirrer tank.
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Heat up to 60oC, 600 rpm.
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Purified by washing with hot water. Dry at 120oC.
Reason to produce: 1. Basic oleochemicals (important building block to produce different kinds of other products) 2. For biodiesel, Indonesia has an ambitious plan to keep increasing the biodiesel consumption from palm oil 3. Glycerol demands globally is increasing 5.7% each year until 2024 4. Biodiesel and glycerol have been produced in Indonesia, so the technology is already there for Indonesia, just needs to improve the sustainability factor.
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Fatty acids
Production process: CPO hydrolysis 1. Linear alkyl benzene sulfonate catalyst (0.5% w/w) of oil added into the oil, heated and agitated. 2. Boiling water with 10% (v/v) sulfuric acid of mass 25% (w/w) of oil added to the hot oil and the catalyst in the hydrolyzer. 3. Hydrolysis reaction happen in the splitter with 90oC. Should be done in two stages. Each stage could be 5 – 15 hours.
Reason to produce: 1. Basic oleochemicals (important building block to produce different kinds of other products). 2. It has been produced in Indonesia, so the technology is already there for Indonesia, just needs to improve the sustainability factor. 3. Fatty acids were the leading oleo chemical product consumed, and oleochemicals market keeps increasing each year globally.
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Fatty alcohols
Production process: Hydrogenation of FAME 1. Seal the reactor, flush H2 gas, pressurize into 75- psig. 1000 rpm. 2. Set temperature to 135oC, react for 24 hours.
Reason to produce: 1. Basic oleochemicals (important building block to produce different kinds of other products). 2. It has been produced in Indonesia, so the technology is already there for Indonesia, just needs to improve the sustainability factor. 3. Also projected to grow within several years at 6.1% in Asia Pacific.
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Propylene Glycol
Production process: Hydrogenolysis of glycerol (cutting OH bond with hydrogen with dehydration and hydrogenation) 1. Flush reactor with nitrogen gas, followed by hydrogen. 2. The catalyst (Copper-chromite) were put into the reactor first in a form of a bed, hydrogen stream pass at 300oC for 4 hours. 3. Pressurize system with hydrogen (200 psi), in 200oC system, with 100 rpm.
4. Reactant were immediately transferred.
Reason to produce: 1. Propylene glycol has so many applications, start from making resins, antifreeze fluids, food industry coolants, detergents, brake fluids, and it is an excellent solvent for many chemical reactions. 2. Global bio-based propylene glycol market to grow at 8.27% to 2021 3. It has been produced in Indonesia, so the technology is already there for Indonesia, just needs to improve the sustainability factor.
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Activated Carbon
Production process: Alkaline Activation: form of carbon processed to have small, low-volume pores that increase the surface area available for adsorption or chemical reactions. 1. Drying with furnace (500oC) with Nitrogen gas flown to ensure inert condition to prevent oxidation 2. Activation happens under CO2 gas flow (900oC), followed by KOH impregnation (soaked in KOH) and left 2 hours at room temperature and then washed with hot distilled water until the washing effluent reached pH 7. Dry them at the oven (105oC) overnight).
Reason to produce: 1. Using free, waste, raw material (EFB) that is abundant in Indonesia, considering the amount of CPO production. 2. Activated carbon already has a market in Indonesia with about 16.000 tons per year. Globally, the market will grow at 14.7% to 2026. 3. The selling price increase is very high (1500 USD/ton), with good conversion factor (0.5), and produce less emission than producing briquette or pellet (0.02 t CO2e / t)
NPV is calculated with
APAT: Annual Profit After Tax
AGP: Annual Gross Profit
TCI consists of:
Emission is calculated with LCA (cradle-to-gate)
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Purpose : Environmental impact analysis of the production
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Boundary : Crade-to-gate
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Functional unit : Each product produced
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Time frame year : 100 years (based on Kyoto Protocol)
Decision variable: o
Several operating conditions
Methanol-to-oil molar ratio (1-11), reaction time (40-140 min) (transesterification of CPO – biodiesel and glycerol production)
Temperature of hydrogenation (115-135oC), hydrogen pressure (100750 psig) (hydrogenation of FAME – fatty alcohol production)
Water-to-oil ratio (25-75 %w/w), duration (5-15 h) (CPO hydrolysis – palm crude fatty acid production)
Wt% of catalyst-glycerol (1-20%) (glycerol hydrogenolysis – propylene glycol production)
KOH concentration (0.5-2 M) (alkaline activation of EFB – activated carbon production)
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FFB production emission factor (smart farming)
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Using PFAD from industry to produce biodiesel (titanium butoxide catalyst)
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Biodiesel production capacity (150-250K MT/year) (based on the biggest biodiesel producer in Indonesia PT Batara Elok Semesta Terpadu dan PT Ciliandra Perkasa)
Fixed variable: o
Cost sizing factor of equipment (using bare module cost table)
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Cost index (Chemical Engineering Plant Cost Index - CEPCI)
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Minimum production capacity
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Environmental impact factors (accounts for GWP and Eco-Indicator 99)
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Income tax and discount rate throughout the project (25% (assumed the plant will receive more than Rp.50 B AGP) and 10% (chemical industry in between 8-10% based on NYU School of Business))
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Selling price of each product
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Buying price of each raw materials
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Un-optimized operating conditions
Dependent variable: o
Energy requirement
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GHG emission released
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Waste released
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Total Capital Investment
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Operating and Maintenance cost
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Mass or volume flow of products produced
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Revenue
LCA calculation skills will be received from Principle of Biobased Economy course, capital investment estimation skills will be received from Advanced Biorefinery course, process optimization and selection skills will be received from Conversion of Biobased Science course and self-taught from asking notable docents (below).
Software that will be used are SuperPro Designer and, or Aspen Plus for process simulation, and optimization will be done with Excel or GAMS.
This research will be useful for Indonesia because it will show its complete picture of how important palm oil derivatives should be manufactured, it will show the most optimal process economically and environmentally. The FFB usage will be optimal too. Land expansion for oil palm plantation will be minimized.
Reference paper: (Gebreslassie et al., 2013), (Sukjit dan Pansuvon, 2013), (Fairweather, Gibson, Guan, 2014), (Anozie dan Zobo, 2006), (Dasari et al., 2004), (Arshad et al., 2016).
Notable docents: dr.ir. PM (Ellen) Slegers, dr.ir. NJM (Norbert) Kuipers, dr.ir. AMJ (Maarten) Kootstra and dr.ing. RJC (Rachel) van Ooteghem MSc