The Development Strategy of Sustainable Bioethanol Industry on Iconic Sumba Island, Eastern Indonesia

Abstract

The development of biofuel industry in Indonesia represents the emerging phase, because of the impetus of government commitment to reduce greenhouse gas emission regulations which are decanted in President Decree No. 61 the year 2011.  Indonesia has committed to reducing greenhouse gasses by 26% below 2005 levels, equivalent to 767 million tons of greenhouse gasses on their own.  National Energy Policy set to blending bioethanol in premium 10% and 20% in 2020 and 2050 respectively.  Potency that owned by Sumba Island, especially in east eastern Indonesia, encourages the growth of bioethanol industry regarding the availability of raw material resources and tropical climate for biofuel crop cultivation. Therefore it is necessary to analyze the feasibility of bioethanol production from potential raw materials in Sumba Island. It combines a Bayes method with financial analysis and a Strengths, Weakness, Opportunities and Threats (SWOT) framework to propose the development strategy of sustainable bioethanol industry in the Sumba Island.  Recommended feedstock for the development of the bioethanol industry in Sumba Island is sweet sorghum and cassava.  Financial feasibility assessment of bioethanol industry is based on the assumption that at least 70% of the feedstock is supplied by the company’s land and the rest comes from the farming communities.  The proposed integration pattern is by integrating the ethanol industry with bio-farming and bio-manure to utilize the waste completely. The development of bioethanol industry in Sumba Island is still faced with many obstacles, including the sustainability of feedstock both for cassava and sweet sorghum, infrastructure constraints, and regulation enforcement. Alternative strategies for the development of an integrated bioethanol industry are (1) conducting intensification and extensification of agricultural land to meet the needs of raw materials, (2) promoting technological innovation and institutional innovation to accelerate the delivery and adoption bioethanol, and (3) developing bioethanol industry cluster that is supported by the infrastructure cluster.