Economic Value of Wood Processing Mill Residues as Feedstock for Bioenergy in Indonesia

Abstract

Indonesia has abundant forest biomass resource, which should not be considered as a low economic value resource. This forest biomass resource can be converted into bioenergy through various technologies and it becomes one of sources in Indonesia’s energy mix. This paper focuses on the wood processing mill residues, one type of forest biomass resources. Data were obtained from observation and survey at one of large private wood processing companies in Indonesia. An economic value of US$19.0 per ton wood residue would be created when the company sold its wood processing mill residues as fuelwoods. In contrast, using a conversion return approach, the economic value of wood residues increased to be about US$ 29.6 per ton wood residue when they were pelletized, an economic value increase of 56%. Sensitivity analysis further showed that the economic value of wood processing mill residues is more sensitive to changes in the price of wood pellets than to changes in the price of fuelwoods.