This study performs sustainability analysis of palm oil biodiesel production systems in Indonesia. Life Cycle Assessment (LCA) approach is used to evaluate the net GHG emissions (climate change impact) and energy inputs (resource consumption) in the entire production chain. The main aim of the study is to investigate the energy and environmental aspects of the palm oil biodiesel production chain. The worthiness of biodiesel production and use in terms of GHG emissions is compared with conventional diesel. The system boundary includes the mass and energy flows during the cultivation, harvesting, palm oil milling, and bio-refining phases. Energy inputs and emissions due to agricultural activities such land preparation, seedling, application of fertilizers/chemicals, and planting are considered in the analysis. The scope of the study also includes collection and transport of palm oil feedstock, fresh fruit brunch (FFB) and crude palm oil (CPO) for biodiesel production. Assessment of climate change impact is also performed when it comes to improvements of agricultural practices and alternation of soil carbon stocks due to land use change.

The study examines the utilization of co-products (e.g. kernel oil, glycerol), palm oil residues, and waste water (effluents) generated during the palm biodiesel production system. Palm kernel and glycerol are important commodities/products which have high market values. The use of biomass residues (e.g. fibres and shells) for energy production in efficient cogeneration, and different waste management options for the treatment of palm oil milling effluent (POME) are also explored. Sensitivity analysis is performed for the most influencing parameters such as palm oil yield, the rate of fertilizer application, plant conversion efficiencies while determining the environmental and energy gains. Since the palm oil biodiesel production systems involve multiple co-products and services, it is of utmost importance to use appropriate allocation methods in order to divide environmental burdens and resource inputs. We use allocation by energy content and economic values, and system expansion considering the substitution of fossil based power by bioelectricity derived from biomass cogeneration plants and/or electricity generation using biogas produced from POME treatment. The study finds that bioelectricity generation from surplus biomass residues and biogas from POME, and their use for fossil fuel substitution can significantly help improve energy and environmental gains. The study also compares important results with other relevant international LCA studies and discusses issues related to land use on climate change impact. Recommendations are made for the appropriate utilization of palm oil, its co-products, and residues for the both energy and climate benefits.